Techniques for Evaluating Long-Term Impacts of Decisions

Are your programs making the impact you envision or are they costing more than they give back? A few years ago, I worked with an organization grappling with a tough question: Which programs should we keep, grow, or let go? They felt stretched thin, with some initiatives thriving and others barely holding on. It was clear they needed a clearer strategy to align their programs with their long-term goals. We introduced a tool that breaks programs into four categories: Heart, Star, Stop Sign, and Money Tree each with its strategic path. -Heart: These programs deliver immense value but come with high costs. The team asked, Can we achieve the same impact with a leaner approach? They restructured staffing and reduced overhead, preserving the program's impact while cutting costs by 15%. -Star: High impact and high revenue programs that beg for investment. The team explored expanding partnerships for a standout program and saw a 30% increase in revenue within two years. -Stop Sign: Programs that drain resources without delivering results. One initiative had consistently low engagement. They gave it a six-month review period but ultimately decided to phase it out, freeing resources for more promising efforts. -Money Tree: The revenue generating champions. Here, the focus was on growth investing in marketing and improving operations to double their margin within a year. This structured approach led to more confident decision-making and, most importantly, brought them closer to their goal of sustainable success. According to a report by Bain & Company, organizations that regularly assess program performance against strategic priorities see a 40% increase in efficiency and long-term viability. Yet, many teams shy away from the hard conversations this requires. The lesson? Every program doesn’t need to stay. Evaluating them through a thoughtful lens of impact and profitability ensures you’re investing where it matters most. What’s a program in your organization that could benefit from this kind of review?

The simple practice that has improved my decision making Shane Parrish from Farnam Street introduced me to decision journaling in 2019. What started as a simple concept has become one of my most valuable leadership tools. After years of making big decisions and wondering why some worked out better than others, I started doing something that felt almost too simple: writing them down. Not just the decision itself, but the assumptions behind it. For every major decision such as product launches, key hires and more, I document three things: 1. What decision we're making and why 2. What key assumptions are driving this decision 3. What outcomes we expect and by when Then, six months later, I revisit the journal. Not to judge past decisions, but to understand which assumptions were wrong and why. Where This Gets Really Powerful: Hiring I apply this to every senior hire. During interviews, I document what we think this person will excel at and what outcomes we expect. Six months later, during performance reviews, I compare the interview notes to reality. "We thought Sam would spike on innovation. She scored high in interviews. But looking at her first six months, where are the innovative ideas?" This isn't about being right or wrong—it's about calibrating my assessment skills. I've done this for every promotion and attrition too. When someone leaves, I go back to their original interview notes and ask: What did we think they'd be great at? What actually happened? The Compound Effect After two years of decision journaling, I can see my own blind spots clearly. I tend to underestimate implementation complexity. I overvalue certain interview signals. These insights don't just improve future decisions—they help me know when to seek different perspectives. The practice takes a few minutes per decision and has fundamentally changed how I think about leadership accountability. What systems do you use to improve your decision-making over time?

Learning must come before deciding. As explained in Chapter One, your brain stores different types of learning in your subconscious, your rote memory bank, and your habits. But no matter how you acquire your knowledge or where you store it, what’s most important is that what you know paints a true and rich picture of the realities that will affect your decision. That’s why it always pays to be radically openminded and seek out believable others as you do your learning. Many people have emotional trouble doing this and block the learning that could help them make better decisions. Remind yourself that it’s never harmful to at least hear an opposing point of view. Deciding is the process of choosing which knowledge should be drawn upon—both the facts of this particular “what is” and your broader understanding of the cause-effect machinery that underlies it—and then weighing them to determine a course of action, the “what to do about it.” This involves playing different scenarios through time to visualize how to get an outcome consistent with what you want. To do this well, you need to weigh first-order consequences against second- and third-order consequences, and base your decisions not just on near-term results but on results over time. Failing to consider second- and third-order consequences is the cause of a lot of painfully bad decisions, and it is especially deadly when the first inferior option confirms your own biases. Never seize on the first available option, no matter how good it seems, before you’ve asked questions and explored. To prevent myself from falling into this trap, I used to literally ask myself questions: Am I learning? Have I learned enough yet that it’s time for deciding? After a while, you will just naturally and open-mindedly gather all the relevant info, but in doing so you will have avoided the first pitfall of bad decision making, which is to subconsciously make the decision first and then cherry-pick the data that supports it. #principleoftheday

Economic concepts aren’t just for policymakers and macroeconomic analysts—they’re also powerful tools for tech companies making data-driven decisions. In a recent tech blog, economists at Instacart share how their team applies economic concepts to estimate the long-term impact of membership incentives using surrogate indexes. Instacart offers a paid membership program (i.e. Instacart+), and the company provides incentives like free trials or discounted annual memberships to encourage users to explore its benefits. The challenge lies in optimizing these incentives to maximize a user’s long-term value (LTV) joining the program. However, since LTV unfolds over time, it isn't easy to measure directly. This raises a crucial question: how can the team create a reliable metric that effectively captures LTV, enabling faster experimentation and product optimization? To solve this, the team applies the concept of surrogate indexes from economics. A surrogate acts as a proxy for an unobserved outcome—whether because the outcome hasn’t occurred yet or because the data isn’t accessible. By mapping multiple observed variables to an unobserved outcome, a surrogate index enables a more accurate estimation of long-term effects. The process begins with building a strong data foundation by integrating historical incentive results and user behavior insights. With this foundation in place, the team develops a surrogate index model to estimate long-term effects, followed by rigorous backtesting to validate its accuracy. This ensures the model can reliably serve as a proxy for LTV, enabling data-driven decisions about membership incentives. By leveraging surrogate indexes, Instacart can make faster decisions about membership incentives impacts, and effectively balance short-term costs with long-term user retention and profitability. #DataScience #Economics #Analytics #SurrogateIndexes #Metrics #SnacksWeeklyonDataScience – – –  Check out the "Snacks Weekly on Data Science" podcast and subscribe, where I explain in more detail the concepts discussed in this and future posts:    -- Spotify: https://lnkd.in/gKgaMvbh   -- Apple Podcast: https://lnkd.in/gj6aPBBY    -- Youtube: https://lnkd.in/gcwPeBmR https://lnkd.in/dYqzXPBr

Bad decisions aren't usually about intelligence or experience⁣. ⁣ They're about making choices without a clear process⁣. ⁣ The best leaders don't have perfect judgment. ⁣ They have reliable systems that guide them toward better choices consistently⁣. ⁣ Here are 8 frameworks that turn decision-making from guesswork into strategy:⁣ ⁣ 1: The Reverse Advocate Protocol⁣ ↳ Assign someone to argue against your choice before finalizing any major decision.⁣ ↳ Challenging your own bias reveals blind spots and strengthens your final choice.⁣ ⁣ 2: The Energy Drain Audit⁣ ↳ Evaluate how much mental and emotional energy each option will require ongoing.⁣ ↳ High maintenance decisions often fail because they exhaust you before creating results.⁣ ⁣ 3: The Up/Down Impact Chain⁣ ↳ Trace how your decision will influence decisions that come before and after it.⁣ ↳ Single decisions create cascading effects that multiply their importance beyond immediate outcomes.⁣ ⁣ 4: The Constraint Liberation Test⁣ ↳ What would become possible if this decision removes your biggest current obstacle.⁣ ↳ The best decisions don't just solve problems they unlock entirely new opportunities.⁣ ⁣ 5: The Identity Alignment Filter⁣ ↳ Consider which option moves you closer to who you want to become as a leader.⁣ ↳ Decisions shape identity over time, and identity shapes all future decisions.⁣ ⁣ 6: The Network Effect Multiplier⁣ ↳ Evaluate how each choice affects your access to people, information, and opportunities.⁣ ↳ Great decisions don't just create direct value, they position you for better future decisions.⁣ ⁣ 7: The Teaching Test Framework⁣ ↳ Ask which decision you'd be most comfortable explaining and defending to your team.⁣ ↳ Choices you can't teach or justify usually indicate unclear thinking or misaligned values.⁣ ⁣ 8: The Pattern Break Analysis⁣ ↳ Identify whether this decision continues existing patterns or creates new ones.⁣ ↳ Sometimes the best choice is the one that breaks you out of cycles that aren't serving you.⁣ ⁣ What's one framework you use?⁣⁣ ⁣⁣⁣⁣ 💚 Follow Hetali Mehta, MPH for more.⁣⁣⁣⁣ 📌 Share this with your network.⁣⁣⁣⁣⁣⁣⁣⁣⁣ 👇Subscribe to my newsletter: https://lnkd.in/eFPeE4gQ