Three Rules for Better Decision Making
I love some of the Amazon thinking on decisions, especially this: make reversible decisions quickly, it’s okay to get some of them wrong if you go faster in return. I’m not sure if they invented this concept but they were the ones I learnt it from.
How does this work?
1. Make Reversible Decisions Quickly
For instance, if I choose to terminate a personal relationship, there’s no going back. That relationship is changed forever, no CTRL-Z, no “undo.” So take your time.
But when I choose the wrong paint, I can paint over it. It’s easily undone. A waste of time and money perhaps, yet still totally undoable. Don’t spend more time and money getting the decision right than it might cost to reverse.
The point of this thinking is to speed up decisions by not aiming for a 100% success rate when the decision is reversible, leaving more time for thinking about the irreversible decisions and trusting that things will usually turn out ok for the reversible ones.
2. Make Reversible Decisions with 80% of the Available Data
Another helpful rule of good decision making is to ask “What am I waiting for? What additional data might be available?”
It’s too easy to put off making a decision when it’s not perfectly clear what to do. Analysis paralysis or procrastination, whatever you call it, it’s one of the leading causes of sluggish decision making.
In the real world, we rarely have the time or resources to compile a complete and accurate data set in support of a decision. Part of the skill of decision making is dealing with this reality. In fact, studies show that once we have roughly 80% of the available data that’s typically enough to make a decent decision. Waiting for more data doesn’t greatly improve our hit rate.
Which gives us our second rule of better decision making: make reversible decisions as soon as you have 80% of the available data. It’s like the 80/20 rule, there’s usually not much to gain by waiting for 100%. (Thanks to Peter A. for this great tip he shared with me many years ago.)
3. Get Used to Errors, Avoid Mistakes
And yet…. it’s one thing making reversible decisions with 80% of the data, but what if I’m still worried about getting the decision wrong? What will others think when it all goes off the rails?
This brings us to the other big cause of slow decision making: the fear of getting it wrong, and the impact to our reputation in the eyes of others, such as your spouse/boss/team/customer/board member/secret inner critic (delete as appropriate).
This is where the critical distinction between an error and a mistake comes into play.
An error is a decision which led to a sub-optimal outcome, due to a lack of something: data, time, resources, luck, experience, etc. At the time it was taken, the decision was compellingly a good one, but later something happened, or we got new data, which showed us that in fact it was not the best decision, and another path would have yielded a better result.
There’s nothing wrong with making what seemed like the right decision at the time given the available data. For instance, if you’ve never done something before, it’s unreasonable to expect to benefit from the wisdom of years of getting it wrong. And actually, analyzing errors are a primary way to learn, it’s called ‘experience’.
Doing the math, if we assume there’s a 50/50 chance that some new data will change our decision, and we’re applying the second rule (go forward with 8/10ths of the data), then we can expect a measurable error rate, maybe a much as 10% of our decisions could have been better in hindsight.
We’re taught as children to strive for perfection, yet for reversible decisions 10% is a perfectly adequate error rate, especially when what you get in return is much faster decision making, and more time for irreversible decisions.
Mistakes are a very different beast however. A mistake is an error repeated, or sometimes an error that is continued after it became clear it was actually an error. We should strive to avoid mistakes and study them very carefully whenever we commit them.
This is because a mistake means we did not learn from prior errors, or worse, that we are actively ignoring errors for some reason. Whether it’s ego, fear, willful ignorance, or anything else, when something is preventing us from recognizing an error we will be doomed continue to repeat that mistake until we do take notice of it.
In fact, getting comfortable with errors will reduce our overall decision failure rate, and make decision based setbacks much less serious when they do occur.
This is the third rule of good decision making: get comfortable with errors, try to avoid mistakes.
As you get more and more practice with this, you will gradually lose the urge to make ‘perfect’ decisions, which in turn speeds up both the quality (via learning) and velocity (via rule 2) of your decisions overall. You will make better decisions, more quickly, and have more time to spend on the irreversible ones.
In addition to sleeping better at night, you will grow wiser from studying your errors, thereby deepening your experience and confidence, leading to improved decision making and fewer sleepless nights when things do go wrong.
And who doesn’t want that?