Making better decisions is different from selecting choices.
If you casually select an option from a range of alternatives, you’ve made a choice.
If you react without thinking, you’ve made an unconscious choice.
However, neither of these is equivalent to a decision. A decision is a choice that involves conscious thought.
Making Better Decisions
Your decision itself represents the outcome of your decision-making process.
That process is about weighing your options to select the best one, and it’s composed of four stages:
- Define the problem,
- Explore possible solutions,
- Evaluate the options, and
- Choose and execute the best option.
If you don’t apply this process, your choice doesn’t necessarily count as a decision.
Stage 1: Define the Problem
The first principle of decision-making is to define the problem clearly.
Defining the problem starts with identifying two things:
- What do you want to achieve?
- What obstacles stand in the way of getting it?
The best decision-makers know that the way you define a problem shapes everyone’s perspective about it and determines the solutions.
The most critical step in any decision-making process is to get the problem right. This part of the process offers invaluable insight.
You can’t solve what you don’t understand.
That’s why defining the problem is so valuable: it’s your chance to absorb all the relevant information needed for a solution.
Two Principles to Apply when Defining the Problem
The best decision-maker understands the real problem by talking to experts, seeking others’ opinions, hearing different perspectives, and sorting out what’s real from what’s not.
When you really understand a problem, the solution seems obvious.
These two principles follow the example of the best decision-makers:
- The Definition Principle: Take responsibility for defining the problem. Don’t let someone define it for you. Do the work to understand it. Don’t use jargon to describe or explain it.
- The Root Cause Principle: Identify the root cause of the problem. Don’t be content with simply treating its symptoms.
A handy tool for identifying the root cause of a problem is to ask yourself, “What would have to be true for this problem not to exist in the first place?
How to Safeguard the Problem-Defining Stage
There are two ways to safeguard this stage of the decision process against our defaults: create a firewall and use time to your advantage.
SAFEGUARD 1: Build a problem-solution firewall.
Separate the problem-defining phase of the decision-making process from the problem-solving phase.
Give yourself time to get clear on what the problem is before you jump into solving it. Often, you’ll discover that your first attempt to define the underlying issue is rarely the most accurate.
TIP: Remember that writing out the problem makes the invisible visible. Write down what you think the problem is and then look at it the next day.
If you find yourself using jargon in your description, it’s a sign that you don’t fully understand the problem. And if you don’t understand it, you shouldn’t be deciding about it.
SAFEGUARD 2: Use the test of time.
Test whether you’re addressing the root cause of a problem, rather than merely treating a symptom, by asking yourself whether it will stand the test of time.
Will this solution fix the problem permanently, or will the problem return in the future? If it seems like the latter, then chances are you’re only treating a symptom.
Short-term solutions might make sense in the moment, but they never win in the long term. You feel like you’re moving forward when you’re just going in circles.
Most times, people choose short-term solutions because fixing something quickly shows others they’re doing something. That’s the social autopilot at work.
It fools people into mistaking action for progress, the loudest voice for the right one, and confidence for competence.
Time eventually reveals short-term solutions to be Band-Aids that cover deeper problems. Don’t be fooled!
Put your Energy into Long-term Solutions
You can put your energy into short-term solutions or long-term solutions, but not both.
Any energy that’s channelled toward short-term solutions depletes energy that could be put into finding a long-term fix.
Yes, sometimes short-term solutions are necessary to create space for long-term solutions. But just make sure you’re not putting out flames in the present that will reignite in the future.
When the same problem returns repeatedly, people end up exhausted and discouraged because they never seem to make real progress.
Extinguish the fire today so it can’t burn you tomorrow.
Stage 2: Explore Possible Solutions
Once you’re clear on the problem, think of possible solutions.
Develop ways to overcome the obstacles and get what you want. Imagine different possible futures to come up with possible solutions. Find out different ways the world could turn out.
Admiral James Stockdale once said, “You must never confuse faith that you will prevail in the end—which you can never afford to lose—with the discipline to confront the most brutal facts of your current reality, whatever they might be.”
Problems Don’t Disappear by Themselves
We all face difficult problems.
The autopilots narrow our perspective. They narrow our view of the world and tempt us to see things as we wish them to be, not as they are.
The Four Enemies of Clear Thinking
You can secure the outcomes you want only by dealing with reality. This is the often-brutal truth of how the world really works.
The worst thing you can do with a difficult problem is resort to magical thinking—putting your head in the sand and hoping the problem will disappear on its own or that a solution will present itself to you.
The antidote is to leave nothing out of consideration.
The Bad Outcome Principle
Don’t just imagine the ideal future outcome.
Imagine the things that could go wrong and how you’ll overcome them if they do. Leave nothing out of consideration. Nothing should surprise you.
The best decision-makers know that bad things happen, and that they’re not immune.
They don’t just wing it and react. They anticipate and make contingency plans. And because they’re ready, their confidence doesn’t crack.
It’s what the venture capitalist Josh Wolfe likes to say, “Failure comes from a failure to imagine failure.”
The bottom line is that people who think about what’s likely to go wrong and determine the actions they can take are more likely to succeed when things don’t go according to plan.
Another smart way to assess your options is by using the following principle.
The Second-Level Thinking Principle
Ask yourself, “And then what?”
When you solve a problem, you make a change in the world. That change can be either in line with your long-term objectives or not.
For example, if you’re hungry and you eat a chocolate bar, you’ve solved the immediate hunger problem, but that solution has consequences: the inevitable sugar crash an hour or two later.
If your longer-term goal is to be productive that afternoon, the chocolate bar is not the best solution to your immediate problem.
Indeed, eating a chocolate bar once won’t ruin your diet or your day.
But repeating that seemingly small error in judgment daily over the course of your lifetime will not put you in a position for success.
Tiny choices compound. That’s why second-level thinking is needed.
Practice Second-Level Thinking
Inside you, there is competition between your today self and your future self.
Your future self often wants you to make different choices than you want to make today. While you care about winning the present moment today, your future self cares about winning the generation.
Each of these personalities offers a different perspective on problems. Your future self sees the benefits or consequences of the accumulation of your seemingly insignificant choices.
Think of first-level thinking as your today self and second-level thinking as your future self.
First-level thinking looks to solve the immediate problem without regard to any future problems a solution might produce.
Second-level thinking looks at the problem from beginning to end. It looks past the immediate solution and asks, “And then what?” The chocolate bar doesn’t seem so tempting when you answer this question.
You can’t solve a problem optimally unless you consider not just whether it meets your short-term objectives but whether it meets your long-term objectives as well.
A failure to think of second-order consequences leads you unknowingly to make bad decisions.
You can’t ensure the future is easier if you only think about solving the current problem and don’t give due consideration to the problems created in the process.
How to Safeguard the Solution-Exploring Stage
Just because you’ve thought of a couple of solutions, though, doesn’t mean you’ve eliminated your blind spots. Binary thinking is when you consider only two options to solve a problem.
When you first look at the choice, it seems simple: You launch the product, or you don’t. You take the new job, or you don’t. We get married or we don’t. It’s black and white: “do” or “do not.” There isn’t any middle ground.
Most of the time, though, this type of thinking is limited.
Some decisions might seem to come down to a choice between this or that, but there’s often another option.
The best decision-makers know this and see binary thinking as a sign that they don’t fully understand a problem. They are trying to reduce the problem’s dimensions before fully understanding them.
Novices fail to see the complexities of a problem that are apparent to a master. Masters see simplicity hiding in the complexity.
When you reduce the problem to black-and-white solutions, you need to check to make sure you’re the master and not the novice.
The 3+ Principle
Force yourself to explore at least three possible solutions to a problem.
If you find yourself considering only two options, force yourself to find at least one more. Doing the work to add a third option forces you to be creative and really dig into the problem.
Even if you don’t choose the third option, forcing yourself to develop it helps you understand the problem better.
It gives you more opportunities to align your decisions with your goals, offers more optionality in the future, and increases the chances that you’ll be happier with your decision down the road.
Also note these two safeguards against binary thinking:
- Imagine that one of the options is off the table. Take each of the options you’re considering, and one at a time, ask yourself, “What would I do if that were not possible?”
- Come up with “Both-And” options. Try to find ways of combining the binary. Think not in terms of choosing either X or Y, but rather having both X and Y.
Recognise Your Opportunity Costs
The real world is full of trade-offs, some of which are obvious, and others that are hidden.
Opportunity costs are the hidden trade-offs that decision-makers often have trouble assessing. Every decision has at least one of them.
Many people focus solely on what they stand to gain by choosing an option and forget to factor in what they stand to lose by forgoing another.
But the ability to size up these costs is one of the things that separates great decision-makers from the rest.
Thinking through opportunity costs is one of the most effective things you can do in business and in life.
The optimal way of exploring your options is to take all the relevant factors into account. You can’t do this without considering opportunity costs.
There are two principles concerning opportunity costs.
- The Opportunity Cost Principle: Consider what opportunities you’re forgoing when you choose one option over another.
- The 3-Lens Principle: View opportunity costs through these three lenses: (1) Compared with what? (2) And then what? (3) At the expense of what?
TIP: If you’re having trouble assessing opportunity costs, it sometimes helps to put a price on them. For example, putting a price on those extra two to three hours a day spent commuting will make them more visible and easier to assess.
Stage 3: Evaluate the Options
You’ve worked out some potential solutions in detail. Each suggests a course of action that might work.
You now need to evaluate the options and pick the one most likely to make the future easier.
There are two components here:
- Your criteria for evaluating the options
- How do you apply them?
Each problem has its own specific criteria.
If you find yourself struggling to determine specific criteria, it’s a sign either that you don’t really understand the problem, or that you don’t understand the general features that criteria are supposed to have.
Those features include the following:
- Clarity: The criteria should be simple, clear, and free of any jargon. Ideally, you should be able to explain them to a twelve-year-old.
- Goal promotion: The criteria must favour only those options that achieve the desired goal.
- Decisiveness: The criteria must favour exactly one option; they can’t result in a tie among several.
Defining the Most Important Thing
Not all criteria are the same.
There might be a hundred variables, but they are not equally important. When you’re clear on what’s important, evaluating options becomes easier.
Many people are shy to pick out the most important thing because they don’t want to be wrong.
How to Safeguard the Evaluation Stage
There is only one most important thing in every project, goal, and company.
If you have two or more most important things, you’re not thinking clearly. Often, when we start pursuing an option, we find that we have to rank one criterion above another—even if only slightly.
Most of the time, making your criteria battle is about calibrating shades of gray. It’s a mental exercise that takes you out of reactive mode and moves you toward deliberative thinking.
Once you’ve settled on your criteria and their order of importance, it’s time to apply them to the options.
Doing so requires that you have information about those options that meets two conditions: it’s relevant, and it’s accurate.
Most Information is not Relevant
When it comes to getting information that’s relevant to the decision, remember this:
The Targeting Principle: Know what you are looking for before you start sorting through the data.
Make better decisions by filtering irrelevant information
People who can quickly distinguish what matters from what doesn’t gain a huge advantage in a world where information flows endlessly.
How to Get Accurate Information from the Source
When it comes to getting accurate information, there are two principles you should know: the HiFi Principle and the HiEx Principle.
The first will help you find the best intel possible from within any given situation, and the second will help you find the best intel possible from outside of it.
The HiFi Principle
Get high-fidelity (HiFi) information.
This is information that’s close to the source and unfiltered by other people’s biases and interests. The quality of your decisions is directly related to the quality of your thoughts. The quality of your thoughts is directly related to the quality of your information.
How do you get better information?
If you want to make better decisions, you need better information.
To get this, the person closest to the problem often has the most accurate information about it. What they tend to lack is a broader perspective.
Making Sure You Get HiFi Information
Now that you understand the importance of HiFi information, here are the safeguards for ensuring you always get it.
SAFEGUARD 1: Run an experiment. Try something out to see what kinds of results it yields. An experiment is a low-risk way of gathering important information.
SAFEGUARD 2: Evaluate the motivations and incentives of your sources. Remember that everyone sees things from a limited perspective.
To get a clearer picture of the concrete reality, consider how each person stands to benefit from the information they give you, and weave those perspectives together.
When you’re getting information from other people, you need to keep an open mind. That means withholding your own judgment as long as possible.
People often undermine the information-gathering process by subjecting others to their judgments, beliefs, and perspectives.
SAFEGUARD 3: When you get information from other people, ask questions that yield detailed answers. Don’t ask people what they think; instead, ask them how they think.
Your goal in decision-making is not just to gather information, but to gather information relevant to our decision.
That requires more than building an inventory of data points; it requires understanding the why and how behind those data points—the principles that good decision-makers use in this area.
Getting at those principles requires asking the right kinds of questions. Here are three recommended questions.
Question 1: What are the variables you’d use to make this decision if you were in my shoes? How do those variables relate to one another?
Question 2: What do you know about this problem that I (or other people) don’t? What can you see based on your experience that someone without your experience can’t? What do you know that most people miss?
Question 3: What would be your process for deciding if you were in my shoes? How would you go about doing it? (Or: How would you tell your mother/friend to go about doing it?)
The High Expertise (HiEx) Principle
The second principle for getting accurate information is getting highly expert information.
Get high-expertise (HiEx) information, which comes both from people with a lot of knowledge and/or experience in a specific area, and from people with knowledge and experience in many areas.
Experts can increase the accuracy of your information and decrease the time it takes to get it. Getting even one expert’s advice can cut through a lot of confusion and help you quickly formulate and/or eliminate options.
Even one expert’s opinion can be more helpful than the thoughts and guesses of dozens or hundreds of amateurs. But how do you recruit one to work with you?
Getting Experts on Your Side
The first thing to understand is that experts love sharing what they’ve learned when they know it’ll make a difference.
Here are five tips on how to approach an expert in a way that will set your request apart and get people excited to help you.
- Show that you have skin in the game: When you reach out to an expert, make them aware of the time, energy, and money you’ve already invested in the problem. Let them know you’ve done the work and that you’re stuck.
- Get precise on your ask: Be very clear about what you’re looking for. Are you looking for them to review your plan and provide feedback? Are you looking for them to introduce you to people who can solve the problem? Whatever it is that you want, just be clear.
- Show respect for their time and energy: Explicitly stating that the person you’re reaching out to is an expert whose time and energy you respect goes a long way to secure their goodwill. You should also demonstrate your respect for them, though. For instance, do not ask for fifteen minutes to pick their brain; instead, ask if they offer one-off consulting sessions and how much they charge for them.
- Ask for their reasons and listen: Don’t just ask experts what they think, ask them how they think. Use them as a resource to train yourself in how to evaluate things so that you can start embodying an expert way of operating. You don’t have to agree with what they’re saying, but remember: your goal is to learn from them how to think better, not to have them solve your problem for you.
- Follow up: If you want to build a network and make this more than a transactional request, follow up to report on your progress, no matter what the outcome is. Whether their advice helped you in this case or not, following up and keeping them updated on your progress primes them to help you in the future. When they see that you took their advice seriously, they’re going to want to help you again.
How to Tell the Difference Between Experts vs. Imitators
Getting HiEx information requires that you get help from real experts.
SAFEGUARD: Take time to distinguish real experts from imitators. Not everyone who claims to be an expert is. Take the time to know the difference.
Experts are usually enthusiastic about their area of expertise. That’s why they’re good at it: they spend even their spare time mastering and refining their knowledge and skills, and it shows. Imitators are less concerned with being great and more concerned with looking great. That concern makes it easy for the ego to take over.
Imitators can’t answer questions at a deeper level. Specific knowledge is earned, not learned, so imitators don’t fully understand the ideas they’re talking about.
Imitators can’t adapt their vocabulary. They can explain things using only the vocabulary they were taught, which is often full of jargon.
Imitators get frustrated when you say you don’t understand. That frustration is a result of being overly concerned with the appearance of expertise, which they might not be able to maintain if they have to really get into the weeds with an explanation.
Experts can tell you all the ways they’ve failed. They know and accept that some form of failure is often part of the learning process. Imitators, however, are less likely to own up to mistakes because they’re afraid it will tarnish the image they’re trying to project.
Imitators don’t know the limits of their expertise. Experts know what they know, and also know what they don’t know.
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