The only decision framework that matters

Tinashe Mutepfa
Aug 26, 2017 · 2 min read

Traditional business school tells you that the best way to frame a decision is to do a cost benefit analysis or a variation of it. Using this frame, a good decision is simply one that maximises benefit and minimises cost. While this technique is tried and true and has served the best of businesses ab initio, it is fundamentally flawed and is starting to show its weaknesses, particularly in the new connection economy. Why? Decisions based on cost benefit analysis are either too internally focused (limiting benefit to the broader community) or set to maximise an artificial metric like market value that has zero societal or practical value (more on market value in another post).

Cost benefit analysis encourages short termism, we over value the impact of a decision when it needs to be measured against the year’s bottom line and as result undervalue long term impact. This is counter intuitive given change, particularly a step change, takes time and only be measured in years, not quarterly performance reports.


I believe a better decision framework, call it heuristic should try to understand two things:

  1. Is it useful?— the ‘Utility’ score
  2. What are the risks? — the ‘What happens if this doesn’t work’ score

If the thing you trying to do has a high utility score and low downside risk then it must be done. Everything else (profit, market share, mindshare, brand) is a second order effect. Using this frame, things get done because they are the right thing to do versus the current game of who can ‘construct’ the best business case. In the utility/risk decision-making frame, you get democratisation and long shot businesses like Tesla, Air BnB and Uber versus the current incumbents. In the utility/risk decision-making frame, you collapse politics, agenda and personal bias. The only thing that matters is your things objective utility and upside risk, it either has agency or it doesn’t.


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