Decision Making Framework

QUICK DECISION (low stakes, reversible):
  Use: Gut + one mental model
  Time: 5 minutes
  Examples: What to eat, which task to do first, routine purchases

MODERATE DECISION (medium stakes, somewhat reversible):
  Use: First Principles + Second-Order Thinking
  Time: 1-2 hours
  Examples: Job offers, major purchases, project approaches, hiring

MAJOR DECISION (high stakes, difficult to reverse):
  Use: Full Decision Architecture (all five tools)
  Time: Days to weeks
  Examples: Career changes, business pivots, large investments, relocations

RULE OF THUMB: Spend 10% of the time you will live with the consequences
on making the decision. A 10-year decision deserves serious analysis.

STEP 1: STATE THE PROBLEM CLEARLY
  "I want to [goal] but [obstacle]."

STEP 2: LIST YOUR CURRENT ASSUMPTIONS
  What are you taking for granted?
  What does "everyone know" about this situation?
  What constraints are you accepting without questioning?

STEP 3: BREAK DOWN TO FUNDAMENTALS
  For each assumption, ask: "Is this actually true? What evidence do I have?"
  Continue asking "Why?" until you reach a fundamental truth that cannot be
  broken down further.

STEP 4: REBUILD FROM THE GROUND UP
  Starting only from verified fundamentals, what solution can you construct?
  Ignore what everyone else does. What would you build from scratch?

EXAMPLE:
Assumption: "Starting a restaurant requires $500K and a storefront."
First Principles: What does a restaurant fundamentally require?
- Food preparation ability
- Customers who want to eat
- A way to deliver food to customers
Rebuilt: Ghost kitchen + delivery apps = restaurant with $50K startup cost.

STEP 1: STATE WHAT YOU WANT TO ACHIEVE
  "I want to build a successful team."

STEP 2: INVERT - ASK HOW YOU WOULD GUARANTEE FAILURE
  "How would I guarantee building a terrible team?"
  - Hire people just like me (no diversity of thought)
  - Never give feedback (problems fester)
  - Micromanage everything (destroy autonomy)
  - Take credit for team successes (destroy trust)
  - Tolerate toxic behavior (poison the culture)
  - Change priorities weekly (create chaos)

STEP 3: CREATE THE ANTI-FAILURE LIST
  Avoid each failure mode identified:
  - Hire diverse perspectives
  - Give regular, candid feedback
  - Set clear expectations then delegate
  - Attribute successes to the team
  - Address toxic behavior immediately
  - Maintain stable priorities for meaningful periods

STEP 4: CHECK YOUR CURRENT PLAN
  Are any of the failure modes present in your current approach?

For each option, trace the chain of consequences:

FIRST ORDER:   What happens immediately?      (obvious, everyone sees this)
SECOND ORDER:  Then what happens?              (less obvious, most people stop here)
THIRD ORDER:   And then what happens?          (rarely considered, often decisive)

EXAMPLE: Decision to cut prices 20% to gain market share

FIRST ORDER:   More customers buy. Revenue per unit drops.
SECOND ORDER:  Competitors may match the price cut. Margins shrink industry-wide.
               Customers who would have paid full price now expect discounts forever.
THIRD ORDER:   Lower margins reduce ability to invest in quality and innovation.
               Race to the bottom. Brand perception shifts from premium to cheap.
               Best employees leave for companies that can afford them.

SECOND-ORDER THINKING TEMPLATE:
Decision: _______________

Option A: _______________
  1st order: _______________
  2nd order: _______________
  3rd order: _______________

Option B: _______________
  1st order: _______________
  2nd order: _______________
  3rd order: _______________

Which option looks better when you consider second and third-order effects?

STEP 1: STATE YOUR PRIOR BELIEF AND CONFIDENCE
  "I believe [X] with [N]% confidence."
  Example: "I believe this job candidate will be a strong performer. Confidence: 60%."

STEP 2: IDENTIFY WHAT NEW EVIDENCE WOULD CHANGE YOUR MIND
  "If I saw [evidence A], my confidence would increase to ___%."
  "If I saw [evidence B], my confidence would decrease to ___%."

STEP 3: AS EVIDENCE ARRIVES, UPDATE
  New evidence: Reference check was lukewarm.
  How much should this change my belief?
  - If strong candidates usually get glowing references: decrease confidence significantly
  - If references are generally unreliable: decrease slightly
  Updated belief: 40% confidence (down from 60%)

STEP 4: MAKE THE DECISION WHEN CONFIDENCE REACHES A THRESHOLD
  For this decision, I will proceed if confidence exceeds ___%
  I will decline if confidence drops below ___%
  I will gather more information if confidence is between ___% and ___%

KEY PRINCIPLES:
- Strong evidence should move your belief a lot; weak evidence should move it a little
- Evidence that SURPRISES you should move your belief more than expected evidence
- Do not ignore evidence that contradicts your current belief (confirmation bias)
- Do not overweight the most recent evidence (recency bias)

STEP 1: ASSUME THE DECISION HAS BEEN MADE AND IT FAILED
  "It is 12 months from now. We chose [option]. It was a disaster. Why?"

STEP 2: BRAINSTORM ALL POSSIBLE REASONS FOR FAILURE
  Each person (or each mode of thinking) independently lists reasons:
  - What could go wrong technically?
  - What could go wrong with people/team?
  - What could go wrong with the market/environment?
  - What could go wrong with our assumptions?
  - What could go wrong with execution/timing?
  - What risks are we ignoring because we are excited?

STEP 3: PRIORITIZE THE RISKS
  For each failure mode:
  Probability (1-5): How likely is this?
  Impact (1-5):     How bad would it be?
  Risk score = Probability x Impact
  Focus on scores of 15+

STEP 4: BUILD MITIGATION PLANS
  For each high-risk failure mode:
  - Can we prevent it? How?
  - Can we detect it early? What would the warning signs be?
  - Can we reduce the impact if it happens? How?
  - Does this risk change our decision?

PRE-MORTEM TEMPLATE:
Decision: _______________

| Failure Mode | Probability (1-5) | Impact (1-5) | Score | Mitigation |
|-------------|-------------------|--------------|-------|------------|
|             |                   |              |       |            |
|             |                   |              |       |            |
|             |                   |              |       |            |

DECISION AFTER PRE-MORTEM:
[ ] Proceed as planned
[ ] Proceed with mitigations added
[ ] Reconsider the decision
[ ] Choose a different option

DECISION JOURNAL ENTRY

Date: ___________
Decision: _______________
Options considered: _______________
Option chosen: _______________

Context:
- What I knew at the time: _______________
- What I was uncertain about: _______________
- My emotional state: _______________

Reasoning:
- Tools used: [ ] First Principles [ ] Inversion [ ] Second-Order [ ] Bayesian [ ] Pre-mortem
- Key factors that drove the decision: _______________
- What I expected to happen: _______________

(Fill in later - 3-6 months after the decision)
OUTCOME:
- What actually happened: _______________
- Was the process good? [ ] Yes [ ] No
- Was the outcome good? [ ] Yes [ ] No
- What would I do differently? _______________