How To Make Smarter Bets
Tactics To Make Better Decisions When Dealing With Uncertainty
As you gain seniority, you have to make harder decisions. Often, these involve managing greater resources across more important projects that can define your organization’s trajectory and even your own career. However, it’s also more challenging to assess if or when your bets will pay off. You may not have enough information to make the right choice. Even if you do, things can evolve in unpredictable ways. Therefore, you need more effective decision-making strategies.
Making a smart bet is about informed decision-making in the face of uncertainty. You define a hypothesis that you can test in a controlled, measurable way. Then you use your validated insights to concentrate on fewer, higher-impact targets. Ambiguity and risk are inevitable when dealing with real-world problems. The key is not to avoid risk, but to make calculated, informed bets that shift the odds in your favor, maximizing the upside potential while mitigating downside risks.
Tactics For Making Smarter Bets
#1 Assess Reversibility
Evaluate the impact and the reversibility of the decision.
We often overthink decisions to create the best possible outcome while minimizing negative consequences. However, not all decisions need exhaustive analysis. Therefore, we must identify which decisions require deep analysis before investing too much time. This helps you make decisions faster, speed up execution, and accelerate progress.
There are two types of decisions:
One-Way Doors - Irreversible, high-stakes decisions requiring thorough deliberation. They are much harder to reverse so the risk is much higher. They deserve extensive evaluation and consideration.
Two-Way Doors - Reversible decisions should be made quickly. They can be easily reversed so there is relatively low risk even if things go wrong. Spending time debating or justifying them is usually not worth it.
Every time you need to make a decision, first decide whether it is a one-way door or a two-way door. If it’s a two-way door decision, make it quickly. Things might still go wrong, but you can easily fix things and gain insight and experience in the process.
The more two-way door decisions product leaders can identify, the faster they can move.
— Noah Desai Weiss, How to Take Bigger, Bolder Product Bets
#2 Understand And Manage Uncertainty
Identify the sources of uncertainty.
Uncertainty can originate internally (from your organization, customers, etc.) and externally (from market forces, socio-economic conditions, etc.). You cannot control every single factor, nor should you try to. Instead, you must systematically review the unknowns you are dealing with to determine how to manage them. When you can diagnose where and how you lack clarity, you can develop a plan to gain the necessary information.
Establish clear goals to provide a path to navigate uncertainty.
Uncertainty makes it hard to determine the best course of action. Therefore, you must break down large goals into smaller, achievable milestones. These must clarify what needs to be done, how it will be executed, why it’s important, and who will be responsible. They act as guideposts for course correction. As you move forward, you can revisit these milestones to ensure they remain relevant as new information and challenges arise.
Early-stage startups are inherently risky — and taking big swings comes with the territory. After all, there aren’t too many wholly safe bets when you’re building from 0-1.
— Noah Desai Weiss, How to Take Bigger, Bolder Product Bets
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#3 Make The Implicit Explicit
Clearly state the underlying assumptions.
Every decision starts with a hypothesis. Therefore, before making a decision, we must consider the assumptions we are making. We must separate what we know to be true from what we believe to be true. People often believe certain signals are predictors of success, but when measured explicitly, they might not be. Taking what's implicit and making it explicit improves decision quality because it helps us evaluate assumptions, examine logic, and identify problems. It gives us a more objective way to assess our judgment when making decisions.
Don’t rely on intuition alone.
People default to intuition when they face uncertainty. While our intuition is a powerful combination of knowledge, experience, and judgment, it can still be wrong. It is shaped by biases and preconceived notions that may prevent us from objectively assessing information. When we articulate why we believe what we believe to other people, we are forced to clarify, evaluate, and structure our thinking. This helps us identify the verifiable insights driving our intuition and act with greater confidence.
Your intuition is sometimes right, sometimes wrong. If you don’t make it explicit, you don’t get to find out when it’s wrong.”
— Annie Duke, A framework for making better decisions
#4 Use Structure To Improve Decision-Making
Create a process that provides clarity.
Decision-making is stressful because people often don’t know what information they need to consider and how to assess it. However, implementing structured decision-making can streamline how we make decisions, making the process more focused and efficient. It eliminates the guesswork, allowing us to consistently apply rules when evaluating decisions. While speed matters, processes can help us focus on building the right things and maximize the return on our efforts.
Establish clear decision-making criteria.
Decision-making criteria help us understand IF a decision should be made AND what success looks like. It needs to be defined before we make a decision. Without predefined criteria, decisions are often driven by instinct, bias, or urgency rather than a structured assessment of what truly matters. Clear and consistent criteria help us understand what benchmarks to consider, what measurable outcomes indicate success or failure, what constraints and trade-offs matter, etc. They help people decide objectively if they should make a bet without getting stuck in endless debates.
Use Post-Mortems to review the good and the bad.
People use retrospectives (after completing a project) to evaluate what went well and what didn’t. However, often we focus more on analyzing failure rather than success. The truth is that good and bad decisions can both have good results. Missing and exceeding targets both signal that something may have been overlooked, so we must identify the real contributors to success. The review process should help you uncover what to do less and what to do more. When we fail to understand the root causes of success, we miss out on opportunities to maximize gains.
Use Pre-Mortems to identify kill criteria.
Pre-mortems are about anticipating what might go wrong. You imagine potential bad outcomes of the decision and work backward to identify red flags and warning signs. You must identify kill criteria that signal it’s time to reassess, pivot, or stop the project. You must commit to taking specific actions in response to red flags/warning signs. People stick with doomed projects for too long because of the sunk cost. Their attempts to salvage these projects only result in wasting more time, effort, and resources. By the time they actually consider quitting, it's likely already overdue. Therefore, clear kill criteria are critical to ensure you quit before going too far.
For some decisions, the scrappy startup ‘Let’s just try it,’ mentality works great, but for others, you really need to step back and establish some regular process for triaging, especially when you have limited resources.”
— Annie Duke, The Tactical Guide to Making Better Decisions When Starting and Scaling Companies
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#5 Validate Before Committing To Decisions
Test hypotheses to discover what works.
Instead of committing significant resources to untested ideas, de-risk decisions through small, controlled experiments. Experiments are a practical way to test hypotheses, validate assumptions, and assess the likelihood of success. Each experiment helps us better understand what works and what doesn’t. However, sometimes teams stop thinking about ‘the why’ and start experimenting without thought, gathering data to support things they already believe. Therefore, it’s important to ensure that an experiment provides actionable insights that help the team decide what to build, improve, or abandon. It must answer an important question, rather than just confirming what the team already suspects.
Use data but don’t be completely reliant on it.
Typically, better information leads to better decisions. You can use quantitative and qualitative data to assess the likelihood of a decision producing the intended result — to make evidence-based decisions. However, this assumes you know what to look for. It might be unclear what data is needed, how much, and where to get it. Even if you can identify the necessary data, it may not be available, accessible, or affordable. Sometimes, you can only explore how different variables influence the desired outcomes by taking action, so you have to make bets that minimize risk while maximizing insight. When you optimize for learning, you gain more information with each step you take, allowing you to better navigate ambiguity.
“Most decisions should probably be made with somewhere around 70% of the information you wish you had. If you wait for 90%, in most cases, you’re probably being slow. Plus, either way, you need to be good at quickly recognizing and correcting bad decisions. If you’re good at course correcting, being wrong may be less costly than you think, whereas being slow is going to be expensive for sure.”
— Jeff Bezos, Amazon Letter To Shareholders 2016
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#6 Create A Portfolio Of Bets
Balance risk across multiple bets to achieve the best possible results.
Successfully managing uncertainty is about seeing each initiative as part of a portfolio of bets, where some failure is expected but the wins pay off disproportionately. You don’t put all your resources into one big bet that must succeed. Instead, break big ambitions into smaller bets and spread your efforts. This way, you systematically limit the downside of failures while maximizing the potential upside of a breakthrough.
Evaluate bets based on potential risk vs. reward.
The 70-20-10 framework can be helpful when deciding how to spread out risk: Spend 70% of your time on obvious wins (low-risk, low-reward bets), 20% of your time on proven new projects (low-risk, high-reward bets), and 10 of your time on high-potential, unproven projects (high-risk, high-reward bets). This ensures you don’t overcommit to highly risky bets while allowing you to take big swings. When you have a mix of high and low risk bets, you are better positioned to capitalize on those that really take off.
“Just be deliberate about what your allocation looks like and how it’s changing over time”
— Noah Desai Weiss, How to Take Bigger, Bolder Product Bets
Conclusion
We thrive by making smarter decisions, not by avoiding risk entirely.
We all want to make good decisions. Good judgment can positively impact your organization, your team, and your career. However, as you become responsible for making bigger decisions, both the impact of success and the cost of failure rise substantially. You must make more significant commitments to support your decisions, so you want to get it right. Ultimately, making smarter bets is not about eliminating risk—it is about managing it intelligently and making informed decisions, even when you don’t have all the answers.