The economics of decision-making
Glossary of the economics of decision-making
The concepts that underpin the analysis published by Exelvys, each defined in a few sentences. Every definition is signed by Peter Guillon and refers to the article that develops it.
- The correction window
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The gap between the moment a signal is received and the moment a decision is taken. The longer the window remains open, the higher the cost of correction. The Meadows model (1972) measures this dynamic on a global scale; it applies in the same way to an individual organisation.
- Confidential sparring partner
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A partner for rehearsing decisions: a peer who tests decisions before reality does. Distinct from a coach (who works on the person) and from a consultant (who delivers a recommendation): this kind of sounding board works on the decision itself, in confidence.
- The process floor
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The threshold below which an organisation can no longer reduce its processes without losing its capacity for control. Above the floor, each additional process slows things down; below it, removing a process creates a blind spot. Most organisations operate above the floor without realising it, because removing a process requires a courage that the quarterly calendar does not reward.
- Decision speed as a factor of production
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In classical economics, the factors of production are labour, capital and technology. Decision speed appears in no model. Yet two organisations with the same resources diverge according to how quickly a signal becomes action. Decision speed is the invisible factor of production, and the one that artificial intelligence transforms most directly.
- Decision architecture
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The formal and informal structure through which an organisation turns a signal into action. Decision architecture includes approval procedures, the allocation of mandates, the format of management dashboards and governance routines. It is not the organisation chart: two companies with the same organisation chart can have entirely different decision architectures.
- The cost of delay
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The sum of the losses, direct and indirect, caused by the delay between detecting a signal and implementing a decision. The cost of delay appears on no budget line: it shows up as lost market share, departed talent and options that have disappeared. The classic example remains La Redoute (a French mail-order retailer): a signal that could be read for ten years, and a sale for a symbolic one euro.
- The Flash Read
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The trial format for decision sparring at Exelvys. Thirty minutes on a decision in progress, three signals and one blind spot, with no slides and no obligation to continue. The format rests on a simple principle: if a peer’s view is useful to you, you will know within half an hour.
