By Nicolas Zimmerman, Editor-in-Chief, SAMA
Is there any single skill that has a bigger impact on our personal AND professional lives than decision making? I would argue no. And yet, how much time do we actually spend thinking about how we go about making decisions (large and small)?
As someone working with your company’s largest and most important accounts, you are responsible for making decisions that affect your company’s bottom line, your colleagues’ livelihoods, and your own personal and professional reputation.
While you wouldn’t have gotten to where you are today without some inborn decision-making acuity, there isn’t a person alive who wouldn’t benefit from examining how they go about making decisions and then seeing where they can tinker with their process.
“Making better decisions isn’t one skill but rather a series of tools and frameworks,” writes Shane Parrish, a former intelligence analyst and the founder of the consistently brilliant Farnam Street blog. “What distinguishes consistently good decision makers from poor ones is a series of diverse mental frameworks and tools (as well as relevant specific information).”
This post is about decision making, but if you are interested in consistently amazing, enlightening and thought-provoking articles on everything from learning more quickly to being more creative. Parrish has a voracious, omnivorous mind, so it’s no wonder why 261,000 people (including coaches, athletes and CEOs) subscribe to his newsletter.
In his “Decision-making: A guide to making smarter decisions and fewer errors,” Parrish offers a comprehensive guide for — you guessed it — making consistently smarter decisions and fewer blunders. You should read the whole thing, but here are a few of Parrish’s choicest nuggets.
First, the most common sources of BAD decisions:
- Unintentional stupidity. Writes Parrish: “Whether we’re tired, overly focused on a goal, rushing, distracted, operating in a group, or under the influence of a group, we’re more prone to stupidity.”
- We have the wrong information. “Making decisions with the wrong assumptions or facts is likely to lead to disaster.”
- We use the wrong model. Mental models — things like second-order thinking, probabilistic thinking or Occam’s Razor — help us make sense of the world. Relying on false, incomplete or irrelevant models can easily lead to poor decisions.
- We fail to learn. “We all know the person that has 20 years of experience but it’s really the same year over and over,” Parrish writes. “If we don’t understand how we learn, we’re likely to make the same mistakes over and over.”
- Looking good, not doing good. We are programmed to do what is easy over what is right. Writes Parrish: “We unconsciously make choices based on optics, politics, and defendability. We hate criticism and seek the validation of our peers and superiors.”
When approaching any decision, Parrish recommends a simple formula: intelligent preparation (which, if you work in strategic accounts, is probably second-nature) paired with looking at your decision through any number of time-tested, multidisciplinary frameworks. He goes on to list five of his favorite:
- The map is not the territory. “The map of reality is not reality. Even the best maps…are reductions of what they represent.”
- Circle of competence. “If you know what you understand, you know where you have an edge over others. When you are honest about where your knowledge is lacking you know where you are vulnerable and where you can improve.”
- First principles thinking. “Reasoning from first principles…is a tool to help clarify complicated problems by separating the underlying ideas or facts from any assumptions based on them. What remains are the essentials. If you know the first principles of something, you can build the rest of your knowledge around them to produce something new.”
- Thought experiment. “Thought experiments can be defined as ‘devices of the imagination used to investigate the nature of things.’ They let us take on the impossible, evaluate the potential consequences of our actions, and re-examine history to make better decisions.”
- Second-order thinking. “Second-order thinking is thinking farther ahead and thinking holistically. It requires us to not only consider our actions and their immediate consequences, but the subsequent effects of those actions as well. Failing to consider the second and third order effects can unleash disaster.
Spend a few distraction-free minutes digesting Parrish’s guide here: https://fs.blog/smart-decisions/.