Every decision is a bet
Why good leadership is about judgment, not prediction
In boardrooms and leadership teams, decisions are often framed as exercises in prediction. Forecasts are debated. Scenarios are refined. Models are stress-tested. The implicit belief is simple: if we analyse the future thoroughly enough, the right decision will reveal itself.
That belief is comforting.
It is also misleading.
At the moment a decision is made, the future is not visible. No amount of data, dashboards, or expert reports can fully remove that uncertainty. What leaders control is not the outcome — but the quality of the commitment they make in the face of the unknown.
In that sense, every decision is a bet.
Not a reckless gamble — but a reasoned commitment under uncertainty, where outcomes remain probabilistic rather than predictable.
Understanding this distinction changes how decisions should be evaluated, discussed, and learned from.
Judgment before prediction
One of the most common errors in leadership decision-making is the failure to distinguish between two very different forms of judgment.
Evaluative judgment asks:
How strong is our position right now?
Do we have the capabilities, resources, resilience, and optionality required to act?
Predictive judgment asks:
What do we believe will happen next?
How will markets evolve? How will customers respond? Which technologies will prevail?
Both matter — but they are not equally reliable.
Evaluative judgments are grounded in present reality. They can be tested, stress-tested, and challenged. Predictive judgments, by contrast, are attempts to peer into an unknowable future. They are fragile by nature, especially in environments shaped by innovation, regulation, geopolitics, or shifting behaviour.
Yet leadership discussions often overweight prediction and underweight position strength. Boards debate forecasts instead of exposure. They argue about what will happen, rather than how robust the organisation will be if it does not.
Good decisions do not require certainty about the future.
They require confidence that the organisation can survive — and adapt — across multiple futures.
The illusion of control
Forecasts, scenarios, and expert reports play an important psychological role. They give structure to uncertainty. They replace ambiguity with numbers, curves, and narratives. And in doing so, they offer something leaders crave: the feeling of control.
But that feeling is often an illusion.
Especially in emerging domains, forecasts fail not because they are dishonest, but because the systems they describe are inherently unpredictable. Small differences in adoption, regulation, timing, or behaviour can produce radically different outcomes. Confidence in the model does not make the future more obedient.
This does not mean forecasts should be ignored. It means they should be treated as inputs, not answers — and never confused with certainty.
Not all uncertainty is created equal
Once leaders accept that uncertainty is unavoidable, a more dangerous question emerges:
What kind of uncertainty are we dealing with?
Many managerial tools are built for environments where outcomes cluster neatly around an average. In these thin-tailed worlds, variation exists but is bounded. Planning works. Buffers can be calculated. Risk can be priced.
But many strategic risks do not behave that way.
In fat-tailed environments, rare events dominate outcomes. A small number of extreme scenarios — unlikely but possible — account for a disproportionate share of value creation or destruction. In such contexts, averages mislead and precision becomes dangerous.
This distinction has been explored extensively by thinkers such as Nassim Nicholas Taleb, who contrasts stable, predictable domains with those ruled by extremes, and by Spyros Makridakis, whose work urges leaders to stop treating uncertainty as a temporary inconvenience and start treating it as a permanent condition.
In fat-tailed worlds, the primary objective is not optimisation — it is survival. Decisions must be robust to being wrong.
Learning requires consequences
Another uncomfortable reality separates good decision systems from bad ones: the speed and clarity of feedback.
Learning accelerates when consequences are direct, personal, and timely. It slows dramatically when outcomes are delayed, diluted, or borne by others.
In many organisations, the gap between a strategic decision and its visible consequences can span years. By the time results materialise, roles have changed, contexts have shifted, and accountability has blurred. The organisation moves on — but the lesson never fully lands.
This is why organisations often repeat the same strategic mistakes with different actors and slightly different stories. The system learns slowly because the feedback loop is weak.
Strong governance does not eliminate uncertainty. But it can sharpen learning by shortening feedback loops, clarifying ownership, and making exposure explicit.
What good decisions really look like
If outcomes cannot reliably validate decisions, how should leaders judge quality?
A good decision is not one that leads to success.
It is one that would still make sense if it fails.
It reflects:
A clear understanding of position strength versus prediction
Explicit recognition of uncertainty type
Awareness of tail risks and exposure
Built-in optionality and reversibility where possible
Honest ownership of consequences
This reframing is uncomfortable because it strips away hindsight heroics and post-hoc blame. But it is also liberating. It allows leaders to focus on judgment quality rather than outcome storytelling.
Uncertainty Is the System
Uncertainty is not a flaw in the system.
It is the system.
Leaders do not succeed by eliminating it, denying it, or outsourcing it to experts. They succeed by learning how to operate within it — placing thoughtful commitments, managing exposure, and building organisations that remain coherent even when the future refuses to cooperate.
Every decision is a bet.
The question is not whether you are betting — but whether you understand what kind of bet you are placing, and whether you can live with the consequences when the world surprises you.
