How do you know if you’ve made a good decision? It’s easy to focus solely on the outcome. Did we get the job we wanted? Did we achieve our goal? But what about the process that led us there?
A good decision doesn’t depend on the outcome. It bears repeating: A good decision doesn’t depend on the outcome. It depends on how you made the decision. If you followed the process I outlined in the last episode, then you made a good decision regardless of the result, because you chose the best possible outcome. To recap, you used the information you had to figure out (a good) likelihood of achieving the potential reward and had adequate resources (time, money, etc.) to take the steps needed for that reward. Your analysis was sound about a positive expected value.
The decision-making process I’ve outlined works for all sorts of decisions. You can use it for a trivial decision, although I might suggest that you can just as easily flip a coin, as for a decision with high stakes.
Learning from your Decisions
After making a decision and implementing it, it’s important to reflect and learn from it. This will help you understand why you got the specific outcomes, and how that relates to your process. Since thoughts affect emotions and emotions affect actions, examining your thought processes, emotions, and actions can identify patterns and help you gain insights into what worked well and what didn’t.
Whether you achieved your desired outcome or not, you did some things right and you could have done some things better. Here are some questions to help you:
- Was your analysis sufficient and accurate?
- Were you right about the expected reward and its likelihood?
- What factors impacted the final result? (Consider the ones that you thought of ahead of time and the new ones.)
How does this analysis compare to other decision-making analyses that you’ve done? You may want to keep a decision journal to help you find patterns in your decisions so that you can use your strengths more.
You may need to consult with others. This could mean asking colleagues, friends, or family members who were involved in the decision or who are knowledgeable on the topic about their perspective. Do they have the same reaction to the decision as you do? Do they have any suggestions on what you might have done differently? There are many ways of achieving the same goal, but this could be interesting information for you on different decision-making processes.
Whether your decision had the desired outcome or not, it provides an opportunity to learn. Reframe failure as a learning opportunity and use it to identify areas for improvement and make better decisions in the future.
Let’s look at a simple example. You made a decision to go running every morning, but you only managed twice a week. When you made your decision, did you consider that you routinely sleep in on mornings? Maybe the potential reward is to be fit, but you didn’t consider the contingencies and dependencies. Maybe you needed to build some strategies into your plan, such as having a workout buddy or running in the evening instead.
Remember to celebrate successes all along the way, action by action. This is helpful for wiring your brain for more action. Also, acknowledge what you have accomplished and where you were lucky. There is an element of good luck in taking bets, and that also translates to making a decision where you don’t have 100% certainty of the desired outcome. And sometimes, things go wrong for us because of bad luck, incidents completely out of our control.
Changing Your Mind
Making decisions is not always easy, and sometimes we may find ourselves second-guessing a decision we’ve already made. It’s important to recognize when it may be appropriate to change our minds, and how to do so effectively.
You might change your mind for several reasons:
- You learned new information that you didn’t have earlier and it changes the potential or relative reward, the likelihood of that reward, or the costs to achieve it.
- Circumstances changed: Maybe that decision is no longer relevant or not what you want to prioritize because something has changed in your life.
- Intuition: I’ll be talking more on intuition later but your intuition may let you know a decision is not right. The challenge here is to distinguish intuition from fear.
For example, if you only have a year before you have to move, then it doesn’t make sense to work on a decision that will take 2 years to realize. It’s really tricky to know when to give up or change your mind. This is because sometimes when things are hard, you may be tempted to give up. Always go back to first principles and see if you have new information that changes the three elements of the reward: quantity, likelihood, or costs.
Changing your mind can be difficult. Here are some tips:
- Be flexible and open to new learning and information. Don’t be afraid of it.
- Communicate clearly. If your change of mind will affect others, make sure that you communicate clearly to address concerns and confusion.
- Take responsibility for your change of mind and realise there may be consequences.
Sunk Costs Fallacy
This is a good place to mention sunk costs fallacy because it’s a decision-making pitfall that can keep you stuck. It’s a common reason why people struggle to change their minds.
Sunk cost fallacy is the tendency to continue investing time, money, or effort into a decision or project because you’ve already put time, money or effort into it, even though it no longer serves you. This can lead to poor decision-making. The goal is to not waste what we’ve already spent, but the result is that we get further away from our goals.
Remember that future outcomes are often more important than past investments. In other words, the decision should be based on whether you’re going to get more of what you want by continuing with the decision or not.
To avoid getting trapped by sunk cost fallacy:
- Consider the future costs and benefits of a decision, rather than just focusing on the past investment.
- Ask yourself if you would still make the same decision if you hadn’t already invested resources in it.
- Be willing to cut your losses and move on if it becomes clear that continuing to invest is not worth it.
Seth Godin talks about the fact that decisions you made in the past were a gift you gave yourself then. They served you then. You don’t have to keep those gifts if they are no longer serving you. You can make a new choice (give a new gift) to your current self.
Adam Grant has a whole book on this topic called Think Again. He advocates for flexible thinking which incorporates the ideas we already looked at in this episode. The key idea is that it’s important to get comfortable with rethinking. Be curious and open to the possibility that you may be wrong. That way, you’ll consider new information rather than ignoring it.
Your invitation this episode is to admit two mistakes you made to a friend or family member. This is helpful for focusing not just on results but also process.
- Decision-Making Techniques: Pros and Cons” by SkillsYouNeed
- How to Make Better Decisions: The Pros and Cons List
- Decision Matrix Analysis
- Decision Matrix Tutorial
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