Type 1 vs. type 2 decisions: The art of decision-making in business

Decision-making can be optimized by distinguishing between type 1 and type 2 decisions, concepts popularized by Jeff Bezos. Type 1 decisions, or "one-way door" decisions, are difficult to reverse and require thorough consideration, such as entering a new market or changing a product’s pricing. These decisions should be approached with objectivity and nuanced analysis, often involving criteria-based assessments and extensive stakeholder consultation. Type 2 decisions, or "two-way door" decisions, are easily reversible and benefit from a faster, more experimental approach, where the cost of reversing is lower than that of delaying. This involves using prioritization principles, product values, and sometimes gut feelings to guide decisions, as seen in companies like eBay. The key is to balance the time spent on decision-making with the potential impact of the decision, ensuring more substantial decisions are thoroughly vetted, while smaller, reversible decisions are acted upon swiftly.