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Decision Memos

AI-Assisted Strategy Recommendations

The Decision Memo

A decision memo is one of the most powerful business documents — it structures a complex choice into a format that enables clear thinking. AI is an excellent thinking partner for drafting these, because it can rapidly explore options, surface risks, and organize arguments.

But the final decision is always yours. AI can help you think, not think for you.

Structure of a Decision Memo

A good decision memo has five sections:

1. Context — What is the situation? What triggered this decision? What is the timeline?

2. Options — What are the realistic choices? Include "do nothing" as an option — it is always available and often undervalued.

3. Analysis — For each option: what are the benefits, costs, risks, and dependencies? Use data where available.

4. Recommendation — Which option do you recommend and why? Be explicit about the tradeoffs you are accepting.

5. Risks & Mitigations — What could go wrong with the recommended option? What is the fallback plan?

Using AI as a Thinking Partner

AI adds the most value in the analysis phase. It can:

  • Generate options you have not considered. Prompt: "What are 5 different approaches to [problem]? Include unconventional options."
  • Stress-test your thinking. Prompt: "I am leaning toward [option]. What are the strongest arguments against it?"
  • Fill in gaps. Prompt: "What risks am I not seeing in this plan?"
  • Structure messy thinking. Prompt: "Here are my rough notes on this decision. Organize them into a formal decision memo."

    • The Anti-Pattern: AI as Decision Maker

    The biggest mistake: asking AI to make the decision for you.

    Bad prompt: "Should we expand into the European market?"

    Better prompt: "We are evaluating European expansion. List the top 5 risks and the top 5 opportunities, based on the attached market research."

    The difference: the first prompt asks AI to substitute its judgment for yours. The second uses AI to organize information so you can apply your judgment more effectively.

    Working with the Template

    The pre-seeded decision memo template in this course has placeholders for each section. The workflow:

  • Describe the decision — Tell AI the context, constraints, and stakeholders
  • Generate options — Ask AI to brainstorm approaches
  • Analyze each option — Ask AI to evaluate using your data
  • Draft the recommendation — Ask AI to write the memo, then edit heavily
  • Red-team the conclusion — Ask AI to argue against your recommendation

    • Incorporating Data

    The strongest decision memos ground their analysis in data. In this course, you have:

  • Sales data that shows product and regional performance
  • Customer feedback that reveals satisfaction and pain points
  • Competitor intelligence that shows market positioning
  • Financial summaries that show cost and revenue trends

    • A prompt like: "Given this Q3 sales data and customer feedback, draft the analysis section of a decision memo on whether to invest more in Product Alpha or Product Beta" produces much richer output than asking without data.

    Revising and Editing

    AI-generated memos are first drafts. They tend to:

  • Use generic business language — replace with your company's vocabulary
  • Hedge too much — strengthen the recommendation if you are confident
  • Miss political context — add stakeholder considerations the AI does not know about
  • Over-structure simple decisions — not every choice needs a 5-section memo

    • What You Will Build

    You will draft a decision memo using AI, grounded in the pre-seeded business data. You will practice using AI as a thinking partner — generating options, stress-testing assumptions, and structuring recommendations.

    Glossary

    TermMeaning
    Decision memoA structured document that frames a choice with context, options, and recommendation
    Red-teamingDeliberately arguing against a position to find weaknesses
    Stress-testingExamining whether a conclusion holds under different assumptions
    TradeoffAccepting a downside in order to gain a benefit
    Do-nothing optionExplicitly considering the choice to maintain the status quo

    This is chapter 4 of AI for Business Decisions.

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