☄️ High Output Decision Making - Master High-Stakes Decisions (3/3)

99% of your success comes from just 1% of your decisions.

The power law of decision-making has a bigger impact on your life than anything else.

In Parts 1 and 2 of High Output Decision-Making, we covered how decision fatigue drains your judgment and how to systematically eliminate low-stakes decisions.

Now, for the final piece, we’ll cover how to master the few critical decisions that can fundamentally alter your trajectory for years to come.

What Makes a Decision Truly High-Stakes

High-stakes decisions create asymmetric payoffs and can put you on a different path:

1. They have outsized consequences relative to other choices

2. They're difficult (or impossible) to reverse

3. They establish momentum that carries forward for years

These choices — like selecting co-founders, having kids, or pivoting your business — are much more important than routine decisions. Given their outsized influence, they deserve your peak decision-making ability and attention.

3 Mental Models For High-Stakes Decisions

When facing decisions with big consequences, your everyday thinking patterns often fall short.

Mental models are frameworks that help you see problems from different angles, challenge your assumptions, and avoid common cognitive traps.

These three mental models are particularly powerful for navigating high-stakes territory:

1. First-Principles Thinking: Break Past Assumptions

Most leaders make decisions by analogy. "This worked there, so it should work here."

First-principles thinking does the opposite.

Start from scratch. Break every problem down to fundamental truths.

Before building SpaceX, Elon Musk learned that the cost of purchasing a rocket was an astounding $65 million. Then, he thought from first principles and calculated the raw materials cost of how much it actually should cost to make a rocket.

This forced a radical rethink and reduced the launch costs by 10x.

For your next critical decision, first lay out your assumptions and ruthlessly question each one.

2. Second-Order Thinking: See Beyond the Immediate

First-order thinking only solves the immediate problem.

High-stakes decisions demand seeing several moves ahead.

Warren Buffett's most important question for every investment decision is simple: "And then what?"

Consider a price cut. First-order effect: more sales. Second-order: competitors match you, triggering a price war. Third-order: permanently erode margins across your entire industry.

Ask yourself: “If I do this, what would happen as a result (and what would happen next)?"

3. Pre-Mortem Analysis: Anticipate Failure to Avoid It

For most people, the higher the stakes, the harder it is to make a decision.

Gary Klein, a cognitive psychologist specializing in decision-making, developed the "pre-mortem" technique now used by McKinsey and Fortune 500 companies.

While a post-mortem analyzes a failure after it happens, a pre-mortem works backwards: "Six months into the future, our decision has failed spectacularly. What would have gone wrong to produce this failure?"

McKinsey found that pre-mortems reduce overconfidence and surface uncomfortable truths that traditional planning often misses.

This simple exercise can reveal blind spots that might otherwise remain hidden until it's too late.

Leverage AI Strategically for High-Stakes Decisions

AI is good at pattern-matching, data analysis, and simulation modeling. However, it’s still has a way to go in considering the nuances for high-stakes decisions.

So, while it’s helpful to involve AI in your decision-making, AI shouldn’t make the final call.

Here are a few prompts you can use today to leverage AI in your own decision-making.

I’m a fan of reasoning models for decision-making, but these prompts would still be useful across all models:

For Challenging Assumptions (most effective):

"I'm evaluating [decision]. Here’s some context to help: [context about decision] Act as a highly skeptical analyst: identify the most important, potentially unexamined assumptions underpinning this decision's viability. For each assumption, detail (a) why it might be flawed, and (b) a plausible negative scenario if that assumption fails, significantly impacting the outcome.”

For Uncovering Blind Spots:

"I’m planning on making a decision to [decision], I need help to identify critical blind spots. Drawing on common pitfalls for [my role/type of company/industry context if applicable, otherwise 'similar strategic choices'], outline three distinct, high-impact risks or overlooked negative consequences. For each, explain the typical oversight leading to it.”

For Second-Order Effects:

"If I proceed with [decision], I need to anticipate cascading effects. Map out: 1) The most significant immediate (1st order) consequence. 2) Based on that, give me 3 plausible and impactful second-order effects. 3) For each of those 2nd order effects, provide one critical 3rd order implication. Focus on impacts across key areas like [add more context here] over the next 6-18 months."

For Stress-Testing Your Confidence:

“I'm [X%] confident in my decision to [specific decision]. What evidence would be helpful to significantly increase or decrease my confidence? What specific data point would most quickly validate or invalidate my thinking?”

Remember: AI excels at being a thinking partner and could help you determine what you might be missing, but you must apply your judgment, taste, and vision to make the final call.

Powerful Decision Frameworks From Top Performers

Jeff Bezos's Regret Minimization Framework

When making decisions, Bezos asks himself: “At the end of my life, will I regret not having done this?”

This cuts through short-term fears by focusing on long-term satisfaction. Bezos credits this approach for making his decision-making “incredibly easy” and encourages others to use it for any major life or business choice.

Quick 10-10-10 Analysis:

Developed by Suzy Welch, the 10-10-10 Rule is a structured approach to decision-making that asks:

• How will I feel about this decision in 10 minutes?

• In 10 months?

• In 10 years?

This method forces you to step back from immediate emotions and consider both short and long-term consequences.

It helps reduce emotional bias, encourages alignment with long-term goals, and provides instant clarity.

Decide at 70% Confidence

Reid Hoffman notes that waiting for perfect certainty means missed opportunities.

About 70% confidence is typically the sweet spot — enough information to be directionally correct while maintaining speed.

Decision Journal: Your Performance Improvement Tool

There's one more critical step that separates exceptional decision-makers from everyone else: learning and improvement.

It’s not always easy to implement change, but a decision journal can help with this tremendously.

A decision journal is your personal database for capturing and improving your decision-making process. It's a simple document that dramatically improves performance by forcing clarity before decisions and honest evaluation after them.

The concept is straightforward: document your thinking before deciding, then return later to compare outcomes against expectations. This breaks the cycle of hindsight bias ("I knew it all along") and builds pattern recognition for future decisions.

To implement it, next time you are deciding on something, first, define the exact decision. Then note down your confidence level, critical assumptions, and success metrics.

This builds a database of decisions that you can use to glean patterns to dramatically improve your judgment over time. You can use a simple template like Farnam Street's decision journal to get started.

Bottom Line

A great life and career are defined by a handful of high-leverage decisions.

Throughout this decision-making series, we've laid out a complete system for high-output decisions. We started by addressing decision fatigue to preserve your judgment, then created systems to eliminate low-stakes decisions, and now we've equipped you with frameworks for the choices that truly matter most.

This three-part approach – managing energy, eliminating the routine, and mastering high-stakes decisions – creates compound effects over time. Each high-quality decision builds on the last, creating an upward spiral of better outcomes and expanded opportunities.

Getting started

Start with a single framework from this newsletter. Apply it to your next significant decision. Document the process and results. Then gradually incorporate other elements as you grow more comfortable with the approach.

The compound effect of improving your decision-making, even by just a few percentage points, is the ultimate leverage for high-output work and an extraordinary life.

Until next week,

David Lobo

Head of Growth, Workmate

P.S. What's your go-to question when facing a major decision? Reply and let me know – I read every response.

P.P.S. Want to free up mental bandwidth for these critical decisions? Workmate's AI Executive Assistant handles your scheduling, protects your calendar, and gives you back hours of focused time. Join the waitlist today.