Type One vs. Type Two Decisions

Introduction

• Fear: False Evidence Appearing Real (Acronym).
• Video focused on making faster decisions, especially in business contexts.
• Importance of not dragging feet in decision-making.

The Framework: Type One vs. Type Two Decisions

• Idea from Jeff Bezos of Amazon.
• Type One Decision:
  • One-way door.
  • Once you step through, it closes.
  • Examples: Buying a company, bringing on investors.
• Type Two Decision:
  • Revolving door.
  • Can step back if things go wrong.
  • More frequent, requires less thought and rigour.

Importance of Decision Types

• Don’t use Type One rigour for Type Two decisions.
• Jeff Bezos: Only needs to make 1-2 good decisions a day, frontloads them in the morning.

Strategies for Better Decision-Making

Understanding Fear

• Fear: False Evidence Appearing Real.
• Past experiences can cloud current decisions.
• Audit your fear: Is it true?

Upside vs. Downside Analysis

• Consider both upside and downside of decisions.
• Examples:
  • Hiring: Downside = Training new person if it doesn’t work out; Upside = Huge value add.
  • Investment: Don’t risk life savings without understanding downside.
• Asymmetric Reward Scenarios: Upside should outweigh downside.

Building Systems

• Create decision trees or processes.
• Examples:
  • Recruiting: Use a structured process.
  • Investment Decisions: Use criteria lists.
• Delegation: Move some decisions off your plate by providing process guidelines.

Conclusion

• Three Big Ideas:
  1. Fear is false evidence appearing real.
  2. Measure upside and downside before deciding.
  3. Use systems to delegate decisions.
• Future Living Framework: Live six months into the future in your mind for better decision-making.

Additional Resource

• Future Living Framework: Link provided for deeper dive into future living strategies.