This is a continuation of the previous post on Learning Loops. Decision making frameworks guide execution and are the “problem solving” step in the learning loop. This post is a collection of frameworks that can help with decision making in a variety of contexts. Note that a decision is also informed by your current understanding of the world through mental models.

Just like other frameworks - think of these as tools in your toolbelt when faced with any decision. If given the luxury of time, apply multiple frameworks to make the decision.

• Inversion is thinking about a problem backwards - it is about achieving positive outcomes by simply avoiding any negative outcomes. This was popularized by Charlie Munger, who also used a great example to illustrate it: “If you want to help India, the question you should ask is not “how can I help India,” it’s “what is doing the worst damage in India? What will automatically do the worst damage and how do I avoid it?”. Often the things you want to avoid end up happening because of wrong information, wrong mental models, or our own failure to learn. More on Inversion here and here.

• Divergent and Convergent Thinking is the exercise of creating multiple options (divergence), and then narrowing down on those options (convergence). When faced with decisions, it’s always useful to articulate all the possible outcomes before making a choice about any specific one. From the Wikipedia page for convergent thinking is this important insight - “it is most effective in situations where an answer readily exists and simply needs to be either recalled or worked out through decision making strategies”.

• Decision Reversibility and Consequence is an evaluation of a decision based on how easy it is to undo. This concept was made famous by Jeff Bezos in one of his annual letters, in which he described decisions that are difficult to undo as “Type 1” and those that are not as Type 2. Type 1 decisions, given they have greater consequences, require more thought. Type 2 decisions should be made quickly. Related to this concept is the decision matrix.

• Second Order Thinking is the exercise of thinking of decision consquences beyond the immediate and obvious. It’s about asking - “and then what?”. Second order thinking recognizes everything is a system and our decisions will have ripple effects, and it’s our responsibility to [at a minimum] understand those impacts. It often reveals whether we should do something. More on second order thinking here.

• Charlie Munger’s Two Step Framework (unofficial name) is a simple way of making decisions by considering two factors. First, understand the forces at play. This is simply understanding what you know and what you don’t know. It’s your job to educate yourself as much as possible. Second, understand how your subconscious might be leading you astray. There are a number of cognitive biases that affect our decision making, and being aware of them helps you make more objective decisions. For example, recency bias is when we place too much weight on something because we’ve just experienced or read about it. More on this framework here.

• Checklist Manifesto is a book by Atul Gawande about how checklists help professions like pilots to surgeons make the right decisions. In effect, the checklist manifesto is a systematic approach to decision making which creates discipline, enables teamwork, and most importantly, avoid mistakes. Whether it’s an investment decision or a heart surgery - a well structured checklist can be the different between success and disaster. More on the Checklist Manifesto approach to decisions.

• 80/20 Rule of Decisions is a an application of the Pareto Principle to decision making. In essence, it says that once you have 80% of the information to make a decision, it’s best to make the call and decide. Getting that additional 20% is often expensive and inconsequential, given that most decisions are reversible.

• First Principles Thinking is an approach to making decisions that trys to recognize and eliminate any engrained assumptions about how the world works. It’s often used as a tool to unlock creativity. It forces you to go to the fundamental constraints of a problem - the things you absolutely cannot change even if you tried - and build up a solution from there. First Principles thinking is classic Elon Musk.