reasoning-counterfactual

What this skill does

# Counterfactual Reasoning

Simulate alternative realities. The logic of "what if" and decision evaluation.

## Type Signature

```
Counterfactual : Actual → Intervention → Alternative → Comparison

Where:
  Actual       : Decision × Outcome → ActualWorld
  Intervention : ActualWorld × Δ → ModifiedPremise
  Alternative  : ModifiedPremise → ProjectedOutcome
  Comparison   : (ActualWorld, ProjectedOutcome) → DifferenceAnalysis
```

## When to Use

**Use counterfactual when:**
- Evaluating past decisions ("Should we have...")
- Scenario planning ("What if X happens...")
- Comparing options not taken ("If we had chosen...")
- Strategic simulation ("If competitor does X...")
- Learning from outcomes ("Was our decision right?")

**Don't use when:**
- Executing known process → Use Causal
- Explaining observation → Use Abductive
- Resolving disagreement → Use Dialectical

## Core Principles

### Minimal Intervention

Change only what's necessary to test the hypothesis:
- Modify one variable at a time where possible
- Keep everything else constant (ceteris paribus)
- Trace downstream effects carefully

### Probability Weighting

Alternative outcomes aren't certain:
- Assign probability to each projected outcome
- Consider multiple possible alternatives per intervention
- Avoid overconfidence in projections

### Asymmetry Awareness

Counterfactual analysis has inherent biases:
- Hindsight makes alternatives seem clearer
- Survivors don't see paths that led to failure
- Confidence in projections often too high

## Four-Stage Process

### Stage 1: Actual World

**Purpose:** Document the decision made and observed outcome.

**Components:**
```yaml
actual:
  decision:
    what: "The choice that was made"
    when: ISO8601
    who: "Decision maker(s)"
    context: "Circumstances at decision time"
    alternatives_considered: [string]  # At the time
    
  outcome:
    result: "What actually happened"
    metrics:
      - metric: "Measurable outcome"
        value: number
        expected: number  # What was predicted
    timeline: "How long to outcome"
    
  assessment:
    success_level: high | medium | low | failed
    surprise_level: 0.0-1.0  # How unexpected
    
  causal_chain:
    - step: "Decision led to X"
    - step: "X led to Y"
    - step: "Y produced outcome"
```

**Example:**
```yaml
actual:
  decision:
    what: "Priced enterprise tier at $50K/year"
    when: "2024-06-01"
    who: "Founders"
    context: "First enterprise launch, no market data"
    alternatives_considered:
      - "$30K/year (lower barrier)"
      - "$75K/year (higher margin)"
      - "Usage-based pricing"
      
  outcome:
    result: "Closed 3 deals in 6 months, $150K ARR"
    metrics:
      - metric: "Deals closed"
        value: 3
        expected: 5
      - metric: "ARR"
        value: 150000
        expected: 250000
      - metric: "Sales cycle"
        value: 120  # days
        expected: 90
    timeline: "6 months"
    
  assessment:
    success_level: medium
    surprise_level: 0.4  # Somewhat below expectations
    
  causal_chain:
    - step: "$50K price point set"
    - step: "3/5 prospects required CFO approval at this level"
    - step: "CFO approval added 30 days to cycle"
    - step: "2 deals lost to budget cycle timing"
```

### Stage 2: Intervention

**Purpose:** Define the alternative decision to evaluate.

**Intervention Types:**

| Type | Description | Example |
|------|-------------|---------|
| **Price** | Different pricing decision | "$30K instead of $50K" |
| **Timing** | Earlier or later action | "Launched 3 months earlier" |
| **Strategy** | Different strategic choice | "SMB-first instead of enterprise" |
| **Resource** | Different allocation | "Hired sales earlier" |
| **Partner** | Different relationship | "Partnered with X instead of Y" |

**Components:**
```yaml
intervention:
  what: "The alternative choice"
  
  change:
    variable: "What's being changed"
    from: "Actual value"
    to: "Alternative value"
    
  rationale:
    why_consider: "Why this alternative is worth evaluating"
    was_available: bool  # Was this actually an option at the time?
    
  assumptions:
    held_constant:
      - "What we assume stays the same"
    ripple_effects:
      - "Expected downstream changes"
```

**Example:**
```yaml
intervention:
  what: "Price at $30K/year instead of $50K"
  
  change:
    variable: "Enterprise tier annual price"
    from: "$50,000"
    to: "$30,000"
    
  rationale:
    why_consider: "Test if lower price would have increased velocity"
    was_available: true  # This was considered at the time
    
  assumptions:
    held_constant:
      - "Same product features"
      - "Same sales team"
      - "Same market conditions"
      - "Same target customer profile"
    ripple_effects:
      - "Different approval threshold (manager vs CFO)"
      - "Potentially different customer expectations"
      - "Lower margin per deal"
```

### Stage 3: Alternative Projection

**Purpose:** Project what would have happened under the intervention.

**Projection Method:**

1. **Identify decision point** - Where paths diverge
2. **Trace causal chain** - What changes downstream?
3. **Estimate outcomes** - With probability weights
4. **Consider multiple scenarios** - Best/worst/expected

**Components:**
```yaml
alternative:
  scenarios:
    - name: "Expected case"
      probability: 0.6
      outcome:
        deals: 6  # vs actual 3
        arr: 180000  # vs actual 150000
        cycle: 75  # days, vs actual 120
      reasoning: "Lower price = faster approval, more deals, but lower $ each"
      
    - name: "Optimistic case"
      probability: 0.25
      outcome:
        deals: 8
        arr: 240000
        cycle: 60
      reasoning: "Volume effect stronger than expected"
      
    - name: "Pessimistic case"
      probability: 0.15
      outcome:
        deals: 4
        arr: 120000
        cycle: 90
      reasoning: "Lower price signals lower value, some prospects hesitate"
      
  weighted_outcome:
    deals: 6.0  # (6×0.6 + 8×0.25 + 4×0.15)
    arr: 178000
    cycle: 74
    
  causal_reasoning:
    - "At $30K, most prospects can approve at director level"
    - "Director approval takes ~45 days vs CFO 90+ days"
    - "Faster cycle = more deals in same period"
    - "But: lower price per deal = lower total ARR per deal"
    
  confidence: 0.65  # How confident in this projection
  
  key_uncertainties:
    - "Would lower price attract different (worse?) customers?"
    - "Would sales team close at same rate at lower price?"
    - "Would competitors have responded differently?"
```

### Stage 4: Comparison

**Purpose:** Compare actual vs alternative, extract insights.

**Components:**
```yaml
comparison:
  quantitative:
    - metric: "Deals"
      actual: 3
      alternative: 6.0
      difference: "+3 (100%)"
      direction: better
      
    - metric: "ARR"
      actual: 150000
      alternative: 178000
      difference: "+$28K (19%)"
      direction: better
      
    - metric: "Sales cycle"
      actual: 120
      alternative: 74
      difference: "-46 days (38%)"
      direction: better
      
    - metric: "ARR per deal"
      actual: 50000
      alternative: 29667
      difference: "-$20K (41%)"
      direction: worse
      
  qualitative:
    better_in_alternative:
      - "Faster sales velocity"
      - "Lower customer acquisition cost"
      - "More reference customers faster"
      
    worse_in_alternative:
      - "Lower margin per customer"
      - "Potentially lower perceived value"
      - "Less room for discounting"
      
  verdict:
    assessment: "Alternative likely better overall"
    confidence: 0.65
    caveat: "Lower price creates different customer dynamics long-term"
    
  insight:
    learning: "At this stage, velocity matters more than margin"
    applies_to: "Early enterprise sales with unproven product"
    recommendation: "Consider price reduction or tier restructuring"
    
  action_implication:
    retrospective: "Prici