Decision Making

"Good consequences don't necessarily mean we made a good decision, and bad consequences don't necessarily mean we made a bad decision."

Rational decision making

  1. define purpose and principles (your why)
  2. envision the outcome and how it will play out
  3. brainstorm methods to achieve the vision
  4. organize actionable ideas and make a plan
  5. identify next actions to be taken
  • when we are under pressure, we begin thinking in a sub-optimal and ineffective way. As a direct consequence, we flip this model on its head. As unexpected things happen, we react impatiently (5), leading us to make bad decisions. So we try to get organized (4). After making no progress (because our idea is bad), we decide to pivot focus and move attention elsewhere (3,2). Finally, we realize that the underlying problem is that we never had a clear purpose to begin with (1).

While there are millions of factors that go into decisions, there will always be a few variables and factors that will carry the bulk of the weight.

  • If you’re operating within your circle of competence, it should be relatively easy to figure out the relevant variables and forces at play.

According to James March, there are 2 types of logic that can be used to make choices (source):

  1. Logic of consequence

    • use cost benefit analysis to make decisions. Assess probabilities etc
    • Questions are “what are the benefits? Costs? Probabilities?”
  2. Logic of appropriateness

    • “what does a person like me do”?
    • questions are “what situation is this?”, “who am I?”, “what does someone like me do in a situation like this?”

Decision Journal

Keep a “decision journal” to record the major decisions you make each week, why you made them, and what you expect the outcome to be.

Review the choices at the end of each month or year to see where you were correct and where you went wrong.