A practical way to evaluate a strategic decision before you make it

There is no framework that guarantees a good strategic decision. But there are questions that reliably surface the assumptions worth examining before you commit. This article describes the approach we use in decision audits and clarity sessions, stripped down to the parts that are most consistently useful.

Start with the reversibility question ¶

Before anything else, ask how hard this decision is to reverse. Decisions that are easy to reverse deserve less scrutiny than decisions that are not. A pricing experiment you can roll back in a month is different from a lease you are signing for five years.

Most organizations apply roughly the same level of scrutiny to all decisions, which means they over-analyze the reversible ones and under-analyze the irreversible ones. Getting this calibration right is one of the more useful things a leadership team can do.

Map the key assumptions explicitly ¶

Every strategic decision rests on a set of assumptions. Some of them are factual: the market is this size, the customer will pay this price, the technology will work this way. Some of them are about people: this person will stay, this team will execute, this partner will deliver.

Write them down. All of them. Then ask, for each one: how confident are we in this, and what would we do if it turned out to be wrong? The assumptions you are least confident in and least prepared for are the ones that deserve the most attention before you commit.

The pre-mortem ¶

A pre-mortem is a structured exercise where you imagine that the decision has been made and it has gone badly, then work backward to figure out why. It sounds pessimistic. It is actually one of the most useful things you can do before a major commitment.

The exercise works because it gives people permission to voice concerns they might otherwise hold back. In a normal planning conversation, there is social pressure to be constructive and forward-looking. A pre-mortem removes that pressure by making the failure hypothetical and the analysis the point.

• Set the scene: 'It is 18 months from now and this decision has not worked out.'
• Ask each person to write down the most likely reasons why.
• Share the answers and look for patterns.
• For each pattern, ask what you could do now to reduce the risk.
• Decide which risks are acceptable and which ones change the decision.

These three steps do not take long. A focused two-hour session is usually enough to work through all of them for a single decision. If you want to do this with an outside reader in the room, that is what the strategic clarity session is designed for.