How The Best Leaders Make Decisions

As an entrepreneur, you'll face moments when everything hangs in the balance. A critical funding decision. A pivot that could make or break your company. Whether to let go of team members you care about. Entering or exiting a major market. These high-stakes decisions in complicated times separate successful entrepreneurs from those who struggle.

The challenge is that complicated times rarely provide the luxury of perfect information, ample time, or clear-cut choices. Markets shift unexpectedly. Economic conditions deteriorate overnight. Competitors make surprising moves. Technologies disrupt entire industries. In these moments of crisis and uncertainty, your decision-making process becomes your most valuable asset—or your greatest liability.

The encouraging news is that exceptional decision-making under pressure isn't an innate gift reserved for a select few. It's a skill that can be developed through understanding key principles, adopting proven frameworks, and cultivating specific mental habits. This guide will show you exactly how the best leaders navigate high-stakes decisions when the path forward is anything but clear.

Understanding What Makes Decisions Truly High-Stakes

Before diving into decision-making strategies, it's crucial to understand what actually makes a decision high-stakes. Not every choice your company faces qualifies, and recognizing the distinction helps you allocate your mental energy appropriately.

High-stakes decisions share several defining characteristics. They involve significant consequences that will materially impact your business's future trajectory, whether financial, operational, or reputational. These aren't decisions you can easily reverse or undo without substantial cost. The outcomes affect multiple stakeholders—your team, investors, customers, and perhaps your personal financial well-being.

Importantly, high-stakes decisions typically occur under conditions of genuine uncertainty, not just risk. Risk involves situations where you know the possible outcomes and can estimate their probabilities. Uncertainty means you don't even know all the possible outcomes, making traditional probability calculations impossible. Most entrepreneurial decisions fall into this category of true uncertainty.

Time pressure often amplifies stakes. When you must decide quickly without the luxury of gathering more information, the pressure intensifies. This is particularly true in crisis situations where every day of delay compounds problems or closes off options.

Finally, high-stakes decisions frequently involve competing goals and values. You might need to choose between preserving cash and investing in growth, between short-term profitability and long-term positioning, or between business objectives and personal values. These tradeoffs create emotional complexity that makes decisions harder.

The Three Pillars of High-Stakes Leadership

Research into crisis leadership consistently identifies three essential qualities that enable leaders to make exceptional decisions under pressure: courage, judgment, and fortitude. Understanding and developing these qualities forms the foundation of effective high-stakes decision-making.

Courage: The Willingness to Decide When It Matters Most

Courage in leadership doesn't mean absence of fear—it means acting despite fear and uncertainty. Many entrepreneurs freeze when faced with high-stakes decisions, waiting for more information or hoping circumstances will clarify themselves. But in complicated times, waiting often represents its own decision—usually the wrong one.

Courageous leaders make conscious decisions about what to do rather than defaulting to inaction. They're willing to take unpopular stands when analysis suggests it's the right move, even if it means disagreeing with advisors, disappointing investors, or making choices that won't be understood until months or years later.

This courage extends to admitting mistakes. When high-stakes decisions don't work out as planned, courageous leaders acknowledge reality quickly and adjust course rather than doubling down on failing strategies to save face. They understand that in uncertain environments, some decisions will inevitably prove wrong as new information emerges, and the key is learning and adapting rather than being paralyzed by fear of failure.

Strategic courage also means challenging conventions when circumstances demand it. The strategies that worked in stable times may fail during crises. Courageous leaders question assumptions, including their own, and are willing to pursue unconventional approaches when logic suggests they're necessary.

Judgment: Separating Signal from Noise

Judgment represents your ability to assess situations accurately and separate meaningful information from distractions. In complicated times, you're bombarded with data, opinions, predictions, and analyses. Developing sound judgment means knowing what to pay attention to and what to ignore.

Strong judgment requires grounding decisions in clear values and principles rather than just reacting to circumstances. When you establish guiding principles—protecting your team's wellbeing, maintaining product quality, treating customers fairly, preserving cash reserves—these principles serve as filters for evaluating options even when information is incomplete.

Judgment also involves bold discernment—the ability to recognize patterns others miss and make connections between seemingly unrelated information. Experienced entrepreneurs develop intuition for their markets, but this intuition only remains valuable when continuously updated against new realities. The judgment that served you well in growth mode may need recalibration during downturns.

Critical to judgment is intellectual honesty—the willingness to see situations as they truly are rather than as you wish them to be. This means confronting uncomfortable truths about your business, your market, or your own limitations. Leaders with strong judgment actively seek disconfirming evidence and invite dissenting viewpoints rather than surrounding themselves with yes-people.

Fortitude: Maintaining Resolve Through Adversity

Fortitude is the mental and emotional strength to remain true to your mission and values even when circumstances become difficult. High-stakes decisions often require sustaining commitment through extended periods of uncertainty, criticism, or apparent lack of progress.

Fortitude doesn't mean rigidity—it's not about stubbornly adhering to plans that clearly aren't working. Instead, it's about maintaining core purpose while remaining flexible about tactics. You stay true to why you started your business while adapting how you pursue that vision.

This quality becomes particularly crucial when decisions produce short-term pain for long-term gain. Cutting expenses, restructuring teams, or pivoting strategies typically creates immediate difficulties even when objectively necessary. Leaders with fortitude can absorb this discomfort and maintain team morale through difficult transitions.

Fortitude also involves managing your own emotional state so it doesn't cloud judgment. Stress, fear, and uncertainty trigger powerful emotions that can drive poor decisions. Leaders who cultivate fortitude develop practices for maintaining emotional equilibrium—whether through physical exercise, meditation, trusted advisors, or other techniques—so they can think clearly even under intense pressure.

The Framework: How to Approach High-Stakes Decisions

When facing critical decisions during complicated times, exceptional leaders follow a systematic approach that combines analytical rigor with practical wisdom. Here's the framework that consistently produces better outcomes.

Step 1: Recognize and Define the True Problem

Many bad decisions stem from solving the wrong problem. When stress is high and time is limited, it's tempting to address surface symptoms rather than root causes. Taking time to properly frame the decision—even just 30 minutes of focused thought—dramatically improves outcomes.

Start by asking what's actually at stake. What will happen if you do nothing? What opportunities exist within the crisis? Sometimes what appears to be a problem is actually an opportunity in disguise, or a necessary forcing function that pushes needed changes you've been avoiding.

Distinguish between the urgent and the important. Crises create urgency around many issues, but not all urgent issues are truly important. Some fires don't need to be fought—they need to be allowed to burn out while you focus resources on what actually matters for survival and future success.

Consider whether you're facing a true decision point or a false dilemma. Sometimes we convince ourselves we must choose between options A and B when creative thinking might reveal option C that's superior to both. Other times, what feels like a single big decision actually comprises several smaller decisions that can be approached sequentially, reducing the stakes of any single choice.

Step 2: Establish Guiding Principles for the Decision

Before diving into analysis, clarify the principles that will guide your decision. These principles serve as guardrails that keep you aligned with your values even when emotions run high or when pressures push you toward expedient but ultimately destructive choices.

Your guiding principles might include commitments like protecting your team's wellbeing and job security to the extent possible, delivering on promises to customers even when it's difficult, maintaining ethical standards regardless of short-term costs, preserving cash reserves for survival, or staying true to your company's mission and values.

Share these principles with your team and stakeholders. When people understand the values driving your decisions, they're more likely to support even difficult choices. Transparency about your decision-making framework builds trust and helps others understand the logic behind outcomes they might not initially like.

Importantly, these principles help you make decisions faster when time is limited. Rather than analyzing every choice from scratch, you can quickly eliminate options that violate your principles and focus analysis on alternatives that align with your values.

Step 3: Gather the Right Information (But Don't Wait for Perfect Data)

One of the most challenging aspects of high-stakes decision-making is determining how much information you need before deciding. Wait too long and opportunities close or problems metastasize. Decide too quickly and you miss crucial insights.

Research suggests effective leaders typically make crisis decisions with only 50 to 60 percent of the information they'd like to have, compared to 75 to 80 percent in routine situations. Some follow Colin Powell's guideline: make gut decisions once you have between 40 and 70 percent of the information. Below 40 percent, you're guessing. Above 70 percent, you're overthinking and probably missing opportunities.

Focus on gathering information that actually matters for the decision at hand. What are the critical uncertainties? What would you need to know to feel substantially more confident? Who has relevant expertise or experience? Sometimes a single conversation with the right person provides more insight than hours of data analysis.

Be particularly attentive to weak signals—subtle indicators that might predict major changes. In complicated times, the obvious metrics everyone watches often lag reality. Look for leading indicators: changes in customer behavior, shifts in competitor positioning, emerging technologies, or policy changes that haven't yet impacted your business but likely will.

Set concrete deadlines for information gathering. Decide upfront: "I'll gather input until Thursday at 5 PM, then make a decision." This prevents endless information-seeking that serves as procrastination rather than genuine analysis.

Step 4: Consult Trusted Advisors (But Own the Decision)

No leader should make high-stakes decisions in isolation, yet the final accountability rests squarely on your shoulders. The key is involving the right people in the right way.

Create a personal board of advisors—people whose judgment you trust and who have relevant expertise or experience. This might include other entrepreneurs who've navigated similar challenges, industry experts, financial advisors, or simply wise friends who know you well and will tell you hard truths.

When consulting advisors, be specific about what you need. Are you seeking information, perspectives on how to think about the problem, validation of your analysis, or help identifying blind spots? Different needs require different conversations.

Actively seek diverse perspectives, including voices that will disagree with your initial thinking. Surround yourself with people who think differently than you do. Homogeneous advisory groups create dangerous echo chambers where bad ideas never get challenged.

However, resist the temptation to make decisions by committee or to seek consensus before acting. When you have competing advice—which you almost certainly will on truly difficult decisions—you must synthesize inputs and make your own judgment call. Leaders who try to please everyone often end up with watered-down compromises that satisfy no one and solve nothing.

After deciding, clearly communicate that the decision is yours. Don't hide behind advisors or claim you're just following recommendations. This ownership builds credibility and protects your advisors from unfair criticism if things don't work out as planned.

Step 5: Analyze Multiple Scenarios and Their Implications

Rather than trying to predict the future, exceptional leaders think in terms of scenarios—plausible alternative futures that might unfold. This approach acknowledges uncertainty while still enabling strategic planning.

Develop at least three scenarios: an optimistic case where things go better than expected, a pessimistic case where conditions deteriorate, and a realistic middle case. For each scenario, trace through the implications of different decision options.

For major decisions, consider using a simple three-R framework: Repeal (how difficult would it be to reverse this decision?), Repercussions (what's the broader impact on stakeholders?), and Resilience (how does this affect organizational and personal resilience?). This method helps prioritize options that minimize unintended consequences and maintain flexibility.

Pay special attention to asymmetric outcomes—decisions where the downside risk is limited but upside potential is substantial, or vice versa. In uncertain times, favoring options with capped downside but uncapped upside often makes sense even if the most likely outcome seems modest.

Consider not just first-order consequences but second and third-order effects. How will customers react? How might competitors respond? What will this mean for your team's morale? What precedent does this set? Complex systems often produce non-obvious ripple effects, and thinking through these chains of causation helps avoid unintended consequences.

Step 6: Make the Decision and Commit Fully

Analysis can continue indefinitely, but at some point, you must decide. When you've followed the previous steps—defined the problem, established principles, gathered sufficient information, consulted advisors, and analyzed scenarios—trust the process and commit.

Make the decision decisively. Ambiguity about what you've chosen or hedging your bets often produces the worst outcomes. If you decide to pivot, pivot fully rather than half-committing. If you decide to stay the course, lean in rather than keeping one foot out the door.

That said, condition your commitment on the assumptions underlying your decision. Explicitly articulate what would need to be true for this decision to prove correct, and establish trigger points where you'll reassess. This isn't hedging—it's smart risk management. You're committing fully while remaining intellectually honest about uncertainty.

Communicate the decision clearly to all stakeholders. Explain not just what you've decided but why, including the principles and analysis that led to this conclusion. People can handle difficult decisions much better when they understand the reasoning behind them.

Step 7: Monitor, Learn, and Adjust

High-stakes decisions in uncertain environments require ongoing attention. The decision isn't finished when you announce it—that's when the real work of implementation and adaptation begins.

Establish clear metrics and milestones for tracking whether your decision is producing expected outcomes. What would success look like one week, one month, and three months from now? What early indicators would suggest you're on the right track or need to adjust?

Create feedback loops that provide rapid information about how your decision is playing out in reality. Talk to customers, team members, and other stakeholders. Monitor both quantitative metrics and qualitative signals. Sometimes the data lags behind what people are sensing on the ground.

Be willing to modify your approach as you learn more. Some entrepreneurs fear that changing course makes them look indecisive or weak. In reality, the opposite is true. Leaders who adapt based on new information demonstrate strength and pragmatism. The key is distinguishing between productive adaptation and panicked flip-flopping.

When you need to reverse or significantly modify a decision, do so clearly and transparently. Explain what you've learned and why it changes your approach. This honesty actually builds credibility rather than undermining it, provided you're not constantly changing direction.

Common Decision-Making Traps to Avoid

Even with a solid framework, certain psychological traps consistently undermine decision-making under pressure. Being aware of these patterns helps you avoid them.

Analysis Paralysis

The desire for perfect information before deciding is natural but dangerous. In complicated times, waiting for certainty often means missing crucial windows of opportunity. Set firm deadlines for decisions and stick to them, even when you wish you had more data.

Confirmation Bias

We naturally seek information that confirms what we already believe while dismissing contradictory evidence. Combat this by actively looking for reasons your preferred option might be wrong. Assign someone the role of devil's advocate to challenge your assumptions.

Sunk Cost Fallacy

Past investments—of time, money, or emotion—shouldn't drive future decisions, yet they often do. Judge decisions based on future implications, not past commitments. The question isn't "How much have we invested?" but rather "Given what we know now, what's the best path forward?"

Recency Bias

Recent events loom larger in our minds than they should. A recent market success might make you overconfident. A recent failure might make you overly cautious. Try to maintain longer-term perspective rather than over-indexing on the latest data points.

Emotional Reasoning

Stress, fear, anger, or euphoria can hijack rational thinking. When emotions are running high, take a deliberate pause before major decisions. Sleep on it. Discuss it with someone who isn't emotionally invested. Return to your guiding principles as anchors when emotions threaten to drive poor choices.

Groupthink

When everyone around you agrees, be suspicious rather than reassured. Either you've surrounded yourself with people who think too much like you, or people are afraid to voice dissenting views. Actively invite criticism and reward those who challenge you.

Building Your Decision-Making Capacity Over Time

While frameworks and awareness of traps help immediately, the best leaders treat decision-making as a skill to develop systematically over time.

Develop Pattern Recognition Through Experience

Every high-stakes decision you make builds your database of experience. After major decisions, conduct post-mortems regardless of outcome. What did you get right? What would you do differently? What surprised you? This reflective practice accelerates learning.

Study how other leaders have handled similar situations. Read business history and case studies. Talk to other entrepreneurs about their hardest decisions. You're building mental models that will help you recognize patterns and make better intuitive judgments in future crises.

Cultivate Emotional Resilience

Your decision-making quality correlates directly with your mental and emotional state. Invest in practices that build resilience: regular exercise, adequate sleep, meditation, time with family, hobbies that restore you. These aren't luxuries—they're essential infrastructure for clear thinking under pressure.

Develop healthy coping strategies for stress. Identify what helps you regain equilibrium when anxiety is high. For some it's running. For others it's talking through situations with a trusted friend. For others it's working with their hands on something completely unrelated to business. Know what works for you and use it deliberately during stressful periods.

Build Your Advisory Network Before You Need It

Don't wait until crisis hits to assemble your board of advisors. Cultivate relationships with potential mentors, fellow entrepreneurs, and domain experts during calmer times. These relationships take time to develop, and the trust required for candid conversations doesn't materialize overnight.

Reciprocate by being helpful to others. The best advisory relationships are mutual, where you're contributing value even as you seek counsel. This creates a network of people genuinely invested in your success rather than obligated consultants.

Practice with Smaller Stakes

Use lower-stakes decisions as training ground for developing your process. Apply the same framework to modest decisions that you'll use for major ones. This builds habits and reveals where your natural tendencies might lead you astray, without the cost of getting major decisions wrong.

Invest in Self-Awareness

Understand your personal decision-making tendencies, biases, and blind spots. Are you naturally risk-averse or risk-seeking? Do you overweight certain types of information? Do you decide too quickly or too slowly? Honest self-assessment helps you compensate for your natural inclinations.

Consider working with an executive coach or peer group that provides candid feedback on your leadership and decision-making. Outside perspectives often see patterns you can't see in yourself.

When to Trust Your Gut (And When Not To)

Intuition plays a crucial but often misunderstood role in high-stakes decision-making. The key is knowing when to trust gut feelings and when to override them with more deliberate analysis.

Trust intuition when you have deep domain expertise. Experienced entrepreneurs develop pattern recognition that manifests as gut feelings. These intuitions represent your brain rapidly processing vast amounts of information based on years of experience. When facing situations similar to ones you've encountered before, your gut often provides valuable signals.

Trust intuition for complex decisions with many variables where systematic analysis becomes unwieldy. Your unconscious mind can sometimes integrate information in ways that conscious analysis cannot.

However, be skeptical of intuition in novel situations unlike anything you've previously experienced. Gut feelings in unfamiliar territory often reflect biases or emotions rather than genuine insight. They're your brain's attempt to find patterns even when patterns don't exist.

Also override intuition when it conflicts with clear evidence. If your gut says one thing but data consistently points elsewhere, investigate why. Perhaps your intuition is picking up on something subtle the data misses. Or perhaps you're letting wishful thinking or fear override rational analysis.

The best approach integrates both intuition and analysis. Use intuition to generate options and hypotheses quickly, then test those hypotheses with analysis and evidence. Let analysis inform your judgment, but don't ignore persistent intuitive concerns even if you can't immediately articulate why something feels off.

Leading Your Team Through High-Stakes Decisions

Your decisions don't just affect outcomes—they affect people. How you lead your team through high-stakes decisions in complicated times profoundly impacts morale, trust, and organizational effectiveness.

Communicate Clearly and Consistently

During uncertain times, people crave information. Even when you don't have all the answers, communicate what you know, what you don't know, and what you're doing to figure things out. Establish regular communication rhythms so people know when to expect updates.

Be honest about the stakes and the challenges you face. Teams handle difficult truths better than they handle uncertainty or suspicion that they're being kept in the dark. Treat your team as adults who deserve to understand the context in which you're making decisions.

Walk the Talk

In crisis, stakeholders watch what leaders do more than what they say. If you're asking your team to make sacrifices, demonstrate that you're making sacrifices too. If you're preaching transparency, actually be transparent. If you claim to value input, genuinely incorporate feedback rather than just going through the motions.

This values-driven leadership builds trust that carries you through difficult decisions. When your team sees consistent alignment between your stated principles and your actions, they're more likely to support even decisions they don't fully agree with.

Take Responsibility Clearly

When decisions work out, share credit broadly. When they don't, take responsibility publicly without deflecting blame. This isn't about self-flagellation—it's about demonstrating that you own the outcomes of your leadership.

Clear accountability actually makes teams more willing to support bold decisions. When people know their leader won't throw them under the bus if things go wrong, they're more likely to take calculated risks and support unconventional approaches.

Maintain Focus on Mission

Remind your team regularly why you're doing this work. High-stakes decisions become more bearable when people connect them to meaningful purpose. Even difficult choices like layoffs or pivots can be framed in the context of preserving the mission and creating future opportunity.

This mission-focused communication helps people see beyond immediate difficulties to longer-term possibilities. It provides the "why" that makes the "what" more acceptable.

Conclusion: From Decision-Making to Decision-Living

Exceptional leadership during complicated times isn't ultimately about making perfect decisions—it's about making sound decisions with incomplete information, committing fully to those decisions, learning from their outcomes, and using those lessons to make progressively better choices.

The entrepreneurs who build enduring companies aren't those who avoided all mistakes or always predicted the future correctly. They're those who developed the courage to decide when decisions mattered, the judgment to analyze situations accurately despite uncertainty, and the fortitude to maintain resolve even when the path was difficult.

These qualities—courage, judgment, and fortitude—can be developed. The frameworks and practices outlined in this guide provide the structure for improving your decision-making systematically rather than hoping intuition alone will carry you through.

Remember that high-stakes decision-making is ultimately a practice, not a destination. Each difficult decision you navigate builds capacity for the next one. Each mistake you learn from becomes wisdom that guides future choices. Each crisis you survive makes you more resilient for inevitable future challenges.

The complicated times that demand high-stakes decisions will keep coming. Market disruptions, economic downturns, competitive threats, technological changes, and unexpected crises are constants of entrepreneurial life. What changes is your capacity to navigate them effectively.

Start by applying these principles to your next difficult decision. Define the problem clearly. Establish your guiding principles. Gather sufficient but not perfect information. Consult trusted advisors while owning the final choice. Analyze scenarios thoughtfully. Decide decisively. Monitor results and adapt based on learning.

Most importantly, be kind to yourself throughout the process. High-stakes decisions in uncertain times are genuinely difficult. You won't always get them right. What matters is approaching them thoughtfully, learning from outcomes, and continuously improving your decision-making capability.

The best leaders aren't those who never struggle with difficult decisions—they're those who lean into those struggles, make the best choices they can with available information, and maintain the courage and fortitude to lead their teams through whatever comes next.

Your next high-stakes decision awaits. You now have the framework, the awareness of traps to avoid, and the understanding of qualities to cultivate. Trust your preparation, follow your principles, and lead with the conviction that comes from knowing you've done the work to make the best decision possible in complicated times.