Judge the Decision, Not Only the Outcome.
Many good decisions lose. Many bad decisions get bailed out by a rising market. Judge the decision first.
The Creator's Journey · Chapter V, What the Losses Taught
There is a trap in every debrief of a loss. It is the habit of judging a decision only by how it turned out. Poker players have a name for it. Annie Duke, a former professional player who now writes about decision-making, calls it resulting.
A player makes a smart bet, loses the hand to bad luck and walks away convinced the bet was a mistake. Another makes a reckless bet, gets lucky and walks away convinced he is brilliant. Both have learned the wrong lesson. Over enough hands, the reckless player goes broke and the smart one wins.
Founders result all the time. A company fails, and every decision behind it gets labeled a mistake. A company succeeds, and every decision gets labeled genius. Neither is true. In 1999 a lot of bad decisions looked brilliant. In 2000 a lot of reasonable ones looked foolish.
Many good decisions lose. Many bad decisions get bailed out by a rising market.
Thinking in bets starts with recognizing that there are exactly two things that determine how our lives turn out: the quality of our decisions and luck.
Holding two thoughts at once
In 2001 I handed back the capital for Internet Venture Works and shut the company down. I might have done better by holding it and searching for a pivot. I also believe the decision was sound, given what I knew, what I valued and what I had promised the people who backed me. The first thought is about the outcome. The second is about the decision. A founder who cannot hold both will either never forgive himself or never learn anything.
Capture the bet before the result
The fix is to record the decision before the outcome arrives. Write down what you know, what you assume and what you expect while it is still a bet. The psychologist Gary Klein adds the premortem, from Harvard Business Review in 2007. Before a project starts, the team imagines it has already failed and lists the reasons why. Doubts surface while they can still change the plan, not after the result has rewritten everyone’s memory.
Debrief in this order
- Judge the decision firstAsk what you knew at the time and what you could reasonably have known. Did the decision make sense given both?
- Then judge the outcomeHow did it turn out, and how much of that was luck?
- Name the missing inputWhat would you need to know, or believe, to make a better decision next time?
- Turn that answer into a toolA question or a check you will run before every similar decision.
Quick answers
What is resulting in decision-making?
A term from Annie Duke for judging a decision only by its outcome. Rob Frasca applies it to founders: many good decisions lose, and many bad ones get bailed out by a rising market.
How do you judge a decision separately from its outcome?
Rob Frasca’s debrief asks first what you knew at the time, what you could reasonably have known and whether the decision made sense given both. Only then does it ask how things turned out.