Decision-Making Amidst Uncertainty: Invest in Flexible Decisions

Retailers and brands face difficult decisions after years of disruptions and macroeconomic challenges:

• Eight in 10 US adults expect economic turmoil in 2023. Six out of 10 believe prices will continue to rise while the stock market falls.
• US retail sales remain volatile, with another decline in February. And consumer sentiment fell after four strong months.
• Freight companies cut demand expectations for H2 2023 as many retailers pause big orders.

Volatility leaves many organizations indecisive. With indecision, loss aversion takes over and prevents many from moving beyond the current state—the status quo. They protect existing systems, strategies and business models instead of investing in future opportunities.?

Leaders beat loss aversion and boost innovation with effective, flexible decision-making. That means redefining how they make decisions. It’s worth the effort. Inefficient decision-making costs the average Fortune 500 company $250M per year.?

Beat the status quo. Focus on impact and optionality?

Here’s how to make flexible decisions—fast.?

First, leaders recognize they cannot have 100% certainty. Decision strategist and former professional poker player Annie Duke explains, “Embrace uncertainty and acknowledge luck and hidden information. Otherwise, you’ll be constantly surprised by the world. And you’ll be overconfident—not looking for ways to change your mind in situations that demand it.”

And Duke describes the following flexible decision framework:

Impact x optionality = effective, flexible decisions

Learn how to define impact and optionality—and how to reduce risks through a test and learn approach to decisions.?

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