Pre-Mortem Decision Exercise

How to use this tool. This playbook is for owners and leadership teams about to commit time, money or reputation to a significant decision, such as a hire, a new service, a lease, a large contract or an acquisition. Set aside 60 to 90 minutes and work through the six stages in order. By the end you will have a ranked list of the ways the decision could fail, early warning signs, owners and actions, and a clear go, change or pause call.

Why it matters

Most business decisions are made in a mood of optimism. You have done the sums, the opportunity looks good, and everyone wants it to work. The trouble is that planning meetings reward enthusiasm, and people who spot problems often stay quiet to avoid being the negative one.

A pre-mortem reverses the question. Instead of asking "what could go wrong?", you assume the decision has already failed, twelve months from now, and ask "what happened?". That small shift gives people permission to name risks they would otherwise keep to themselves. It is cheap, it takes an hour or so, and it is far less painful than finding out the hard way.

A pre-mortem is not a reason to avoid risk. Its purpose is to make a good decision better, or to stop a poor one early.

The method at a glance

Run it with the people who will carry out the decision, and include at least one person who is not emotionally invested in it. If you work alone, do Stage 3 in two separate sittings, a day apart, and compare.

Stage 1: Frame the decision

Vague decisions produce vague risks. Write down exactly what you are about to commit to, what it will cost, and how you will know it worked.

Prompts:

• What exactly are we deciding, and by when?
• What are we committing in dollars, hours and reputation?
• What does success look like in 12 months, in a number?
• What would we do instead if we said no?

Tool 1: Decision frame

Stage 2: Imagine the failure

Read the following to the group, slowly, then stop talking.

Imagine it is twelve months from today. We went ahead with this decision and it has failed badly. It cost us money, time and goodwill, and we wish we had not done it. It is a fact, not a possibility. Take a few minutes of silence and think about what happened.

The wording matters. "It has failed" is more productive than "it might fail", because it moves the mind from defending the plan to explaining the outcome.

Stage 3: Write the failure stories

Give everyone five to ten minutes to write down every reason the decision failed, working alone and in silence. One reason per note or line. Aim for at least five each.

Prompts to unlock ideas:

• People: Who left, did not perform, or was not available when needed?
• Customers: Who did not buy, did not pay, or went elsewhere?
• Cash: Where did money arrive later or cost more than expected?
• Delivery: What took longer or broke when we tried to scale it?
• Assumptions: What did we believe that turned out to be wrong?
• Outside forces: What changed in the market, with suppliers, or in regulation?
• Ourselves: What did we ignore, avoid or delay?

Silence matters. If people talk first, the most senior voice tends to shape everyone else's thinking.

Stage 4: Cluster and score

Collect all the notes, read them aloud without discussion, and group similar ones. Then score each group.

• Likelihood (1 to 5): 1 is very unlikely, 5 is very likely.
• Impact (1 to 5): 1 is a nuisance, 5 would seriously damage the business.
• Warning time (1 to 3): 1 means we would see it coming early, 3 means we would only find out when it is too late.

Multiply all three. The highest scores are your priorities. Be honest about warning time, as risks that arrive without notice deserve extra attention.

Tool 2: Failure risk scoring

Circle the top three to five. Do not try to defend against everything.

Stage 5: Build the defences

For each top risk, decide what you will do about it. There are only four useful responses:

1. Prevent it: change the plan so the risk is removed or reduced.
2. Prepare for it: set aside cash, backup capacity or a ready-made response.
3. Watch for it: pick a measurable warning sign and check it on a schedule.
4. Accept it: consciously decide the risk is tolerable and write down why.

Every risk needs a named owner and a date. Without these, the exercise is just conversation.

Tool 3: Defence plan

A trigger point is a pre-agreed line, such as "if fewer than two signed jobs by the end of month three, we pause further spending". Agreeing it now, while calm, removes the temptation to rationalise later.

Stage 6: Make the call

With the risks and defences in front of you, choose one of three outcomes:

• Go: the risks are manageable and defences are in place.
• Go with changes: adjust the scope, staging, price or timing, then proceed.
• Pause or stop: a top risk is too severe, too likely or too hard to defend.

Staging is often the best change. Can you test the idea smaller, for a shorter time or with one customer before committing in full?

Closing script. "Having heard all of this, here is where I land: we are going ahead / going ahead with these changes / pausing until these items are resolved. The three things I need from the group are the actions in the defence plan, the trigger points we agreed, and a check-in on [date]. If anyone sees a risk we have missed, tell me directly before then."

Facilitation checklist

Before the session:

• Decision frame (Tool 1) is complete and shared
• The right people are invited, including one outside voice
• 90 minutes booked, phones away
• Pens and notes or a shared spreadsheet ready

During the session:

• Stage 2 script read aloud, and silence allowed
• Everyone wrote their own failure reasons before any discussion
• No one was criticised for naming a risk
• Top risks scored, not just discussed
• Every top risk has an owner, a date and a warning sign

After the session:

• Decision recorded as go, change or pause, with reasons
• Trigger points written into the project plan or calendar
• Review date booked

Worked example (fictional)

Banksia Ridge Mechanical Services is an imaginary Perth business with eight staff. The owner, Dana, is deciding whether to lease a larger workshop and hire a second service crew, with an estimated extra commitment of about $180,000 over the first year.

Success measure: an extra $400,000 in annual revenue by month twelve, at the current margin.

The team wrote their failure stories. Grouped and scored, the top risks were:

Defences agreed:

• Idle crew: secure at least $15,000 per month in new signed work before hiring. Trigger: if not reached by the end of month two, delay the hire.
• Cash: negotiate a shorter lease commitment or a staged fit-out, and hold three months of lease and wages in reserve.
• Quality: appoint a working supervisor and document the standard job checklist.

Dana's decision was go with changes: lease the space, but stage the hire behind signed work. The pre-mortem did not kill the idea. It showed which assumption, demand for the second crew, carried the most risk and what to do about it.

How to read the results

A good pre-mortem produces:

• Three to five risks that are specific, not generic like "bad economy".
• At least one risk that surprised you or made someone uncomfortable.
• Warning signs you can actually measure, with a date to check them.
• Changes to the plan itself, not just a list of worries.

If every risk scores low, you probably were not candid. If every risk scores high, the decision may need to be smaller or staged. If one risk dominates, build the whole plan around defending it.

Common mistakes

• Running it after the decision is made. If the money is already committed, people will not challenge it.
• Letting the boss speak first. Silent writing protects honest input.
• Treating it as a negativity session. The goal is a stronger decision, not a reason to say no.
• Listing risks without owners. A risk with no name next to it will not be managed.
• Using vague warning signs. "Things feel slow" is not a trigger. "Fewer than two quotes accepted this month" is.
• Doing it once and filing it. Review the defence plan at the agreed date.
• Avoiding people issues. Where a risk involves a staff member's performance or employment, keep it factual and get professional advice on Fair Work obligations before acting.

Put it to work this week

1. Pick the one decision you are most likely to make in the next 90 days and complete Tool 1 today.
2. Book 90 minutes with two or three people who would carry out the decision, and ask them to arrive with nothing prepared.
3. Run Stages 2 to 4 silently first, then score the risks in Tool 2.
4. Complete Tool 3 with a named owner and due date on every top risk, and write the trigger points into your calendar.
5. Record your go, change or pause call and book the review date before you leave the room.

Where Lotus helps

Lotus Strategic Services helps owners test major decisions with fresh eyes, from facilitating a pre-mortem to building the numbers, scenarios and warning-sign dashboards that sit behind the call. An outside facilitator is often the quickest way to surface the risks your team is reluctant to say aloud. Book a free 30-minute discovery call at lotusstrategic.com.au.