Recoverable and irrecoverable decisions – Herbert Lui

When you need to make an anxiety-inducing decision, ask yourself: What is the worst realistic outcome? Will you be able to recover from it?

Let’s say you want to make a product and sell it, and you need to invest in inventory. The manufacturer needs you to order $1,000 worth to meet their minimum. The worst outcome: you only sell to a few friends. Can you recover from spending nearly $1,000? If not, how do you put yourself in a position to recover from it? In other words, how can you make this decision more recoverable? 

Or, can you make an irrecoverable outcome less likely or drastic (by taking pre-orders, earning extra with a part-time job or freelancing, or selling some old devices or clothes you don’t use—amongst many other ideas)? 

Keep in mind: when you’re in a good position, you can win in all sorts of ways. 

Here’s a day-to-day example: A haircut is recoverable because it grows back. Yes, a bad haircut can feel mortifying, but it won’t be permanent. It’s still a decision—and for some, anxiety-inducing—but it’s one you will recover from.

Conventional leadership advice suggests looking at decisions as reversible or non-reversible. Many important, non-reversible, decisions are recoverable, though. The more recoverable a decision is, the more useful it is to bias for action.

Entrepreneurship involves the skill of making more decisions recoverable.

Thanks to my partner Bernice Liu for the idea.