My Product Management Toolkit (54): Making Decisions — Part 2
Last September, I wrote my first post about decision-making. Being able to make informed decisions should be part of every product manager’s toolkit. In my earlier post I wrote about decision-making techniques such as Type 1 and Type 2 Decisions, Decision-Making Guardrails and S.P.A.D.E. Techniques like these help us gain confidence in the evaluating available options and making decisions. I’ve since then come across a few more techniques that aid decision-making: Second-Order Thinking and Inversion Thinking.
Second-order thinking help us consider long term consequences of our decisions. Longtime investor Ray Dalio author of “Principles” explains how “Failing to consider second — and third-order consequences is the cause of a lot of painfully bad decisions, and it is especially deadly when the first inferior option confirms your own biases.” Dalio urges us to “Never seize on the first available option, no matter how good it seems, before you’ve asked questions and explored.”
These are some simple but effective ways to apply second-order thinking:
- Ask yourself “What are the immediate consequences — positive and negative — of this solution?”
- Then ask yourself “What are the future consequences of this solution, e.g. in 10 days, 10 months or 10 years?”
- Compare and contrast your options, based on whether the second-order consequences are positive.
The primary value of second-order thinking is that it helps us review our decisions consistently, by thinking through the immediate and long term consequences.
In my experience, second-order thinking also opens door for fact-based decision making, taking into account the things that we know, even if some of that information might be considered unwelcome. Kim Scott, author of “Radical Candor”, encourages people involved in making the decision to “go spelunking” first before making a decision: getting to the source of the facts versus deciding based on ego or emotion.
Even if you have limited data available or need to make a decision at speed, techniques like the “OODA Loop” — described by serial entrepreneur Reid Hoffman as a ‘speed loop’ — help to make sure we take into account any available facts or information:
- Observe — Our observations, circumstances or facts are the raw information which we base our decisions on.
- Orient — To take the bias out of our decision-making, we need to consider the OODA loop from the viewpoint of a competitor or someone outside of our organisation or team.
- Decide — Based on your current mental perspective, you will make a decision and determine what actions you need to take.
- Act — You now act on the decision made; implementing the action or approach that you decided on during the previous ‘Decide’ stage.
“What if the opposite was true?” is the main question we should ask when applying inversion thinking. It’s thinking about the opposite from what you want to happen. We’re primed to think about a positive outcome of decision, a happy path. But what if a decision doesn’t go our way?!
Instead of focusing on success, you flip the script and look at the things that could go wrong or the mistakes that we could make. We can then focus our efforts on trying to mitigate setbacks or avoid certain mistakes.
It’s why I like the concept of pre-mortems so much, thinking upfront about how a product or project could fail.
Considering the inverse effects of our decisions enables us to both think through our decisions and to plan more realistically for the implementation of our decisions.
Main learning point: Both Second-Order Thinking and Inversion Thinking are decision-making techniques that help us to assess relevant information and consider long-term or unintended consequences.
Related links for further learning: