We've all made our fair share of poor decisions (I know I have), so I want to talk about improving our decision-making.
I had the chance to interview Annie Duke (🎧Ep 81) at the end of 2022 about changing how you approach your choices. Annie is the author of bestsellers Thinking in Bets: Making Smarter Decisions When You Don't Have All the Facts and Quit: The Power of Knowing When to Walk Away.
Today, we’ll get actionable and uncover 10 ways to improve decisions and understand why quitting might be a good option in some scenarios.
Let's dive in!
Chris
🧠 10 Ways to Improve Decision-Making
The outcomes of your decisions are shaped by luck and beliefs.
Luck may be out of your control, but that doesn’t mean you can't do anything about it. To increase luck, get better at forecasting how luck influences outcomes – and then put yourself in better positions for luck to happen.
Beliefs are essential in making decisions because much of your needed information is hidden. That's why a choice might seem different in hindsight – because that hindsight is the hidden information you didn't have when deciding. To make better decisions, focus energy on improving the quality of your beliefs.
Let’s talk about 10 ways to improve your luck and beliefs to increase the quality of your decisions.
1. Get Independent Perspectives
Improve the quality of information you are getting by gathering independent viewpoints.
Find a team of people that would add value to a decision and offer a variety of perspectives. This can be in a professional context (e.g., hiring a position) and even a personal one (e.g., buying a house). Your goal is to construct a well-rounded view of the decision.
The key here is to facilitate an independent perspective – that means two things:
- Share just the facts, not your opinion, to avoid a biased viewpoint
- Ask individually, not in a group setting, to prevent an echo chamber
How many people do you ask? It depends.
Everyone’s desire for independent advice is different; however, I’ll say this – if the goal is to get a variety of perspectives, ask enough people until you’ve accomplished it. That said, factor in the importance of the decision. Asking 5-7 people for their advice on your new job opportunity may be perfectly reasonable.
2. Document Thoughts for Clarity
A straightforward yet powerful decision-making tool is writing things down.
By transferring information from your mind to paper, you remove mental clutter. This process enables a comprehensive understanding of options. Whether outlining pros and cons or crafting possible outcomes, putting pen to paper facilitates a visualized decision-making landscape.
It will lead to a more thoughtful and informed choice.
3. Think in Advance
Decision quality often falters in the heat of the moment.
Thinking through the decision in advance can add objectivity to the process. This proactive approach minimizes the risk of making emotional choices and ensures more accurate forecasts.
Doing so can create a buffer against the influences of immediate desires. One way I love to implement this is by deciding what to order at a restaurant in advance. I'm much more likely to pick a salad or something healthier than a burger if I decide on the spot.
4. Establish Kill Criteria
Proactive decision-making involves setting clear kill criteria – observable signals indicating when killing is necessary.
For example, when considering leaving your job or selling a stock, ask yourself, “What would need to happen over the next three months to indicate I shouldn’t leave (or sell)?”
Committing to specific actions if predetermined criteria are met removes the emotion and propensity to make last-second changes.
5. Use Base Rates (To Forecast)
A base rate provides a starting point to estimate the likelihood of an outcome of a specific event.
It’s an anchor used to counter the biases of our perspectives. Base rates can be applied to a variety of factors, from widespread to local (and even personal):
- Rate of divorce
- Likelihood of a small business failing
- The probability you’ll beat the stock market
- Typical high-traffic times in your local area
- Average time it takes you to get the kids ready for school
According to Annie's research, understanding base rates is essential for improving decision quality because you start with the correct objective anchor and modify it with your internal view of the world.
Base rates will prevent you from starting your forecast on a poor foundation.
6. Judge A Decision On Inputs, Not Outputs
Not every decision turns out how you wanted, but that doesn’t necessarily mean you made a poor decision. Anytime I’m evaluating my past decisions, I have to remind myself to focus on judging the quality of my decisions by the information I had at the time, not by the outcome.
I use this approach every time I have regrets about making a poorly-timed investment and try to think whether I would have done anything differently if I only had the information I had at the time of the decision (and usually, I wouldn’t have).
This approach allows us to appreciate the complexity of decision-making and prevents us from misattributing post-decision emotions. After all, there are so many other external factors that affect a decision, including luck.
7. Segment and Simplify
While we like having more choices, we can get overwhelmed with the decision (i.e., the paradox of choice). Breaking it down into segments can reduce feeling overwhelmed.
Take something as small as a restaurant menu or determining which movie to watch on Netflix. Instead of deciding what you want, cut out the options you don’t. Ultimately, if the decision is insignificant, you can simplify the final decision-making process by flipping a coin or delegating it to someone else.
This can apply to more impactful decisions like which fund to invest in your 401k retirement account. The key is to be willing to abandon a choice if it doesn't meet expectations, making decision-making more efficient and freeing individuals from unnecessary overthinking.
8. Let Quitting Be An Option
Our ability to make decisions in the face of uncertainty hinges on the option to quit.
Even though quitting contradicts common opinion, sometimes it is the best option.
- Exiting a job with a toxic boss
- Ending a harmful relationship
- Recognizing the impracticality of a dangerous hike
Quitting at the right time can propel you forward faster – it liberates you from investing time and resources in pursuits that hinder your goals, opening avenues for more promising opportunities.
9. Hire a “Quitting Coach”
Consider a quitting coach for decisions about changing the status quo.
They should be a trusted ally who prioritizes your success over short-term discomfort. It’s their job to provide honest feedback and prevent individuals from veering off course. People often avoid sharing truths for fear of hurting others' feelings – but withholding this honest feedback may cause more harm.
Uncomfortable truths pave the way for necessary course corrections, ensuring decisions align with broader goals.
10. Prioritize Challenging Tasks Over Easy Ones
The Monkeys and Pedestals mental model serves as a powerful guide for decision-makers, urging you to assess the value and impact of your pursuits.
Imagine training a monkey to juggle flaming torches on a pedestal in a town square, a potentially lucrative venture.
Should one invest resources in building the pedestal first or attempt to train the monkey?
- Pedestals symbolize easy tasks – achievable but not necessarily transformative
- Monkeys represent challenging tasks – uncertain but pivotal for project success
The critical bottleneck lies in training the monkey, not constructing the pedestal.
By prioritizing the challenging aspects of a project over easily achievable tasks, you can swiftly assess feasibility, reduce sunk costs, and make better decisions.
🎙️ Podcast: Fitness and Mental Strength
Yesterday, I talked with renowned fitness instructor Robin Arzón about ways to achieve your fitness goals, master your motivation, and live the life you want.
We cover the fundamentals of fitness training, recovery, the role of nutrition, and the importance of building mental strength to stay motivated and committed to your life goals.
💭 Parting Thoughts
I hope this blog post equips you with valuable tips for enhancing your decision-making skills. Investing time in understanding these frameworks can yield substantial benefits to work and life.
We also want to hear from you! If you have any unique tips for navigating decision-making, we encourage you to share them with us. Your insights can enrich our community's collective knowledge.
Feel free to send your thoughts to podcast@chrishutchins.com.
Editor’s Note: The content on this page is accurate as of the posting date; however, some of our partner offers may have expired. Opinions expressed here are the author's alone, not those of any bank, credit card issuer, hotel, airline, or other entity. This content has not been reviewed, approved or otherwise endorsed by any of the entities included within the post.
