Decision Making

Inventor and engineer Elon Musk has successfully started four billion-dollar companies: PayPal, Solar City, SpaceX, and Tesla.

To launch them -- and to answer any complex question -- he uses the same approach each time.

It's "the scientific method," Musk said. "It's really helpful for figuring out the tricky things." He describes his process this way:

1. Ask a question.

2. Gather as much evidence as possible about it.

1. Develop axioms based on the evidence, and try to assign a probability of truth to each one.

2. Draw a conclusion based on cogency in order to determine: Are these axioms correct, are they relevant, do they necessarily lead to this conclusion, and with what probability?

1. Attempt to disprove the conclusion. Seek refutation from others to further help break your conclusion.

1. If nobody can invalidate your conclusion, then you're probably right, but you're not certainly right.

Musk utilizes these six questions any time he needs to come up with an idea, solve a problem, or decide to start a business. He values this kind of evidence-based decision making, and criticized individuals who can't separate fact from figures.

Amazon CEO Jeff Bezos also has a set framework for decision-making. In a 2016 shareholder letter, he distinguished between Type 1 and Type 2 decisions.

Type 1 decisions are "are consequential and irreversible or nearly irreversible - one-way doors - and these decisions must be made methodically." Type 2 decisions are "changeable, reversible - they’re two-way doors," which "can and should be made quickly by high judgment individuals or small groups."