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5 Techniques To Make Better Decisions
How can I make better decisions?
I browsed the web and ended up on Qoura reading the most popular answers. People often suggested, “just do it,” “ignore fear of failure,” and “never turn back.”
I thought it over and really considered it. If I simply ignored the “fear of failure” and just “did it”, would that really be making a decision? Absolutely not!
“Just doing it” results in even more failures and even more regrets. Imagine if general George Patton just ignored his “fear of failure” and recklessly charged straight into enemy lines without a plan! Image if you, or your family and loved ones ignored all risk and “just did it” instead of taking the time to make a well informed decision.
Imagine if we applied those same results for:
– Buying a house
– Quitting your job
– Having kids
– Investing in a new business venture
– Getting Married
– Having a vasectomy
– Plastic surgery
It probably wouldn’t end up so well!
Instead of flipping a coin, using your magic 8 ball, or “just doing it”, here are 5 techniques to make better decisions.
1. “I cannot decide on what I do not know!”
Hal wanted to quit his job. After his workday was over, he sat down with a pen and paper and came up with a massive list of pros and cons. He wrote out everything he wanted to do and how he was going to make money. He imagined over and over the freedom and excitement that he would gain after leaving. The next day Hal walked into work and quit.
This may sound great to some but, the problem with Hal was that he did not know enough to make a good decision yet! He rushed what he actually had plenty of time to do.
Everything that he imagined and dreamed about was blurry. All the “facts” that Hal used to make his decision were NOT verified facts, but rather bits and pieces that he heard from his friends or picked up on from the far corners of the internet. Hal is extremely jaded.
Hal then replayed the same facts over and over in his head (thinking they were real). No new information was being added to the equation to allow him to make a better decision.
We often jump to conclusions when making difficult decisions that require serious thought and planning. We must first gather more information because:
- You do not know what you do not know!
- You cannot decide on what you do not know!
If I asked you to solve the following equation A + B + 2Z – 10X = P could you do it?
Not right away because there are too many unknowns! You could guess or use trial and error but that takes too much time and a great deal of effort in real life. We need to go out and collect more information to make a better decision.
We do not have all the answers
2. “Maybe you can help me?”
The quickest way to gathering more information to make that tough decision is to go out and ask other people. However, there is a trick. Ask the people who have already done it! Stay away from the people that don’t have any experience but seem to know everything.
This year, while I complete graduate school, I wanted to participate in applied clinical research. More specifically, I wanted to design and develop medical devices from a clinical need.
Instead of “just doing it,” I decided to reach out to a respected faculty member to see if it was a good idea. I went to him and poured my heart out. He looked at me like I had 2 heads and shunned me away!
I took the advice to heart and sulked a bit. Instead of just quitting, I decide to gather even more information! But this time, I reached out to other schools including MIT, Stanford, UMN, and Johns Hopkins. The information and feedback I got was amazing.
Why? Because all these schools were actually DOING IT! That had already developed over a hundred medical devices in the same fashion I wanted to do. Not only that, they had specific programs to help people like me who wanted to do that kind of research and design.
On the other hand, my school was not doing it and the professor I reached out to wasn’t either.
-Ask the people who are doing it or have already done it to get more information.
3. Seek the Devil’s Advocate.
As human beings, we are self-confirming. We naturally seek out information that we already agree with and tend to ignore information that we disagree with. Skepticism and denial can be good in some instances, but these characteristics must not be confused with being hard-headed.
Imagine 2 documents sitting right in front of you, one with information you agree with, and the second with information you disagree with. Whether you are right or wrong, or whether the information is right or wrong, you will pick the document that you agree with first and consider that information more seriously. Obviously, whether you are right or wrong, you will pick the document containing information you agree with first and take that more seriously.
Let’s go back to the “should I quit my job” example. You probably already REALLY want to quit your job and have already made up your mind. Now, instead of making a decision, you are just confirming your existing desire to quit, by collected confirming evidence. This confirmation bias blinds us from the obvious and has lead to some of the worst business decision ever made (for example, Quaker Oats‘ aquisition of Snapple).
To counteract this, reach out and collect information that opposes your existing viewpoints.
Good businesses use this process all the time. When Fortune 500 companies make big time investments (like acquiring another company, investing in new ventures, downsizing, re-sizing, etc.), they hire a completely separate team to investigate the opposing viewpoint, and then seriously consider the opposite.
Remember, “De-Nile isn’t just a river in Egypt.”
4. Beware of the sham options.
Everything seems great in comparison with something crappy.
The other day I was watching HGTV’s Home Hunters Abroad. A couple was shopping for a beautiful island home in Caruso. They required two things: it had to be less than $400,000, and it had to be rent-able.
The couple contacted a real estate, who I now realized was skilled in the art of sales. He lined up 3 beautiful houses. House number 1 cost $399,000 and was perched on top of a hill overlooking a magnificent clear blue bay. The couple fell in love with the view and was seriously considering buying the house until they found out the new construction would get in the way of their ocean view.
After seeing how the couple reacted to the ocean view, the real estate agent quickly changed his sales tactics. He showed them house #2, which had a stunning ocean view and a white sand beach a few steps from their back door.
The only problem was the house was $489,000 – a full $89,000 over budget. The couple was so angry at the real estate agent that they considered replacing him.
Finally the last on the list, house #3, had no view, was not rent-able and was $10,000 under budget.
Which house did they chose?
The couple went with house #2 that was $89,000 over budget! They made a poor decision and broke the bank because they were not aware of the sales trap the real estate agent set.
House #2 seemed like the best option in that context, compared to the shame option of house #3. In a different context, going an extra $89,000 over budget is a bad idea.
What they should have done was not buy anything and waited until something else showed up. However, when you are in the middle of a difficult decision, sometimes it’s hard to gain that kind of perspective.
5. Factor in the opportunity cost
How could the previous couple in the home buying example snap out of the mental trap set by the real estate agent?
The couple needed a change in perspective. When dealing with big number numbers like $400,000 and $486,000 the difference might not seem that much, but let’s take another look and consider the opportunity costs.
What is another to $89,000 to you? Well it’s another 2 years of saving every single cent of your paycheck (assuming you make ~$60,000 before taxes). Which means you cannot eat, buy gas, go out, or do anything for 2 entire years. You must save every single penny of your paycheck to afford the difference!
Here are more examples of what they could have bought with the amount the went over budget by:
- A Porche 911 special edition
- 400 pairs of Air Jordan retro edition shoes ($215 each)
- 4,000 hours of work, assuming you make $60,000 before taxes
- 22,879 gallons of milk ($3.89 per gallon)
- 89 pounds of gold ($1,124.75 per oz)
Next time instead of jumping to conclusions and “just doing it”:
- Take some time to gather more information. You don’t know what you don’t know.
- Get more information people who have already done it, not the people who are trying to sell it.
- Seek the devils advocate and seriously consider what they have to say. You might be just confirming yourself!
- Beware of the shame option. All other options seem great in context to a crappy one.
- Gain a greater perspective by considering the opportunity costs.
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