Decisions: Clear Thinking in Action
Good decision-making is the result of a clear thought process, not just luck or instinct. In this section, we'll dive into the key stages of effective decision-making - from defining the problem to executing the best solution. By mastering this skill, you'll be able to consistently make sound choices that put you in increasingly better positions to achieve your goals.
The decision-making process is different from simply making a choice. A decision involves conscious thought and evaluation of options, not just a reactionary selection. Going through the full decision-making process takes more time and energy than quick choices, but the payoff is immense. Thoughtful decisions lead to better outcomes, while rushed choices driven by defaults often make situations worse.
The core stages of the decision-making process are:
- Define the Problem: Take responsibility for clearly identifying the root issue, not just the symptoms.
- Explore Possible Solutions: Imagine different possible futures and anticipate potential obstacles.
- Evaluate the Options: Assess the alternatives based on well-defined criteria and accurate, high-quality information.
- Do it!: Execute the best choice based on the decision's degree of consequence and reversibility.
- Margin of Safety: Build in buffers and fail-safes to absorb unexpected outcomes.
- Learn from Your Decisions: Evaluate your process, not just the results, to continuously improve.
Each of these steps plays a crucial role in reaching sound judgments. Shortcutting the process by relying on defaults or impulses is a recipe for poor choices and regret. Let's dive deeper into the decision-making framework.
Define the Problem
The first and most important step is to clearly define the problem you're trying to solve. This may seem obvious, but it's a common pitfall. Many people rush to find a solution without first ensuring they understand the real issue at hand.
If you're not the one making the decision, you can suggest the problem that needs to be solved, but you don't get to define it. Only the person responsible for the outcome gets to define the problem.
Defining the problem starts by identifying two things: 1) what you want to achieve, and 2) what obstacles are standing in your way. It's crucial to dig deep and identify the root cause, not just the symptoms. Otherwise, you'll end up solving the wrong problem.
A handy tool for getting to the root cause is to ask yourself, "What would have to be true for this problem not to exist in the first place?" This shifts your perspective and helps uncover the underlying issues.
The way you define a problem changes what you see. Spending time to truly understand the issue is the key to finding the right solution.
Explore Possible Solutions
With the problem clearly defined, you can now start imagining different possible futures and anticipating potential obstacles. This is where many people fall short - they don't want to confront the brutal realities and instead engage in magical thinking, hoping the problem will just go away.
The antidote is the bad outcome principle: Don't just imagine the ideal future outcome, also imagine the things that could go wrong and how you'll overcome them. Leave nothing out of consideration. Nothing should surprise you.
Step 1
Stretch your imagination to explore and anticipate what could potentially go wrong. Use the three-lens principle to view opportunity costs:
- Compared with what?
- And then what?
- At the expense of what?
Step 2
Apply the second-level thinking principle: Ask yourself, "And then what?" Consider not just the immediate effects of a decision, but also the downstream consequences.
Exploring possible solutions in this way helps you prepare for a wide range of outcomes, not just the best-case scenario. It's a critical step in making informed, resilient decisions.
Evaluate the Options
Now that you've defined the problem and explored possible solutions, it's time to evaluate the options. This involves two key components: your criteria for evaluating the options, and how you apply those criteria.
Effective criteria are:
- Clear: Simple and easy to explain, free of jargon.
- Goal-promoting: Favor options that achieve the desired outcome.
- Decisive: Point to one clear best choice, not a tie.
If you find yourself struggling to determine clear criteria, it's a sign that you don't fully understand the problem or the general features that good criteria should have.
It's also important to identify the most important thing you're optimizing for. When you don't communicate this, people are left guessing about your priorities. Be clear on what matters most.
Step 1
Write out each of your evaluation criteria on separate sticky notes.
Step 2
"Battle" the criteria against each other to determine their priority order. This process of comparison will help you calibrate and find the true most important factor.
Step 3
Consider assigning quantitative values to your criteria. This can reveal hidden costs and trade-offs you may have overlooked.
Evaluating options rigorously, with well-defined criteria and accurate information, is key to making sound judgments.
Decisions in Action
With the problem defined, solutions explored, and options evaluated, it's time to execute the best choice. But how do you know when to take action?
The degree of consequence and reversibility of the decision determines the appropriate approach:
- Inconsequential, Reversible Decisions: Use the ASAP principle - decide as soon as possible. The cost of mistakes is low, so speed is more important than perfection.
- Consequential, Irreversible Decisions: Use the ALAP principle - decide as late as possible. The high stakes require gathering as much information as you can before committing.
When the stakes are high, defaults like analysis paralysis can transform caution into an excuse not to act. The stop, flop, know principle can help you recognize when you have enough information to execute.
Regardless of the decision's magnitude, it's important to implement fail-safes to ensure execution goes as planned. This can include setting trip wires, empowering others through "commander's intent", or tying your own hands to prevent backsliding.
Margin of Safety
Even the best decision-makers can't predict the future with certainty. That's why it's crucial to build in a margin of safety - a buffer between your expectations and the worst-case scenario. This provides protection when surprises inevitably occur.
As a general rule, a sufficient margin of safety can absorb double the worst-case outcome you can foresee. The more consequential and irreversible the decision, the larger the margin of safety you'll want to build.
A good way to assess your margin of safety is to imagine the "bullets before cannonballs" approach - taking small, low-risk steps to test multiple options before committing fully to one.
Learn from Your Decisions
The final step in the decision-making process is to reflect on and learn from your choices, both good and bad. This is crucial for continuous improvement, as it allows you to distinguish the quality of your process from the luck of your outcomes.
The key principles here are:
- The Process Principle: Focus on evaluating the reasoning and decision-making process, not just the results.
- The Transparency Principle: Make your thought process as visible and open to scrutiny as possible, through tools like written records.
Writing down your thought process as you make a decision helps counteract the distorting effects of hindsight and the ego. It makes the invisible visible for later review.
Mastering this decision-making framework takes time and practice, but the payoff is immense. By defining problems clearly, exploring solutions rigorously, evaluating options systematically, and executing decisively with appropriate safeguards, you'll make consistently better choices that compound into greater success over time.