How to Decide

Introduction

You make thousands of decisions every day—some big, some small. Some clearly of great consequence, like what job to take. And some clearly of little consequence, like what to eat for breakfast.

No matter what type of decision you’re facing, it’s imperative to develop a decision process that not only improves your decision quality, but also helps sort your decisions so you can identify which ones are bigger and which ones are smaller.

Why is it so important to have a high-quality decision process?

Because there are only two things that determine how your life turns out: luck and the quality of your decisions. You have control over only one of those two things.

Luck, by definition, it out of your control. Where and when you were born, whether your boss comes into work in a bad mood, which admissions officer happens to see your college application—these are all things that are out of your hands.

What you do have some control over, what you can improve, is the quality of your decisions. And when you make better-quality decisions, you increase the chances that good things will happen to you.

The only thing you have control over that can influence the way your life turns out is the quality of your decisions.

I believe this is a pretty noncontroversial thing to say: It’s important to improve your decision process, because it’s the one thing you have control over in determining the quality of your life.

Even though the importance of making quality decisions seems obvious, it’s surprising how few people can actually articulate what a good decision process looks like.

This is something that I’ve been thinking about all my adult life. First, as a PhD student in cognitive science. Then, as a professional poker player, where I had to constantly make rapid, high-stakes decisions with real money on the line, in an environment where luck has an obvious and significant influence on your short-term results. And for the past eighteen years, as a business consultant on decision strategy, helping executives, teams, and employees make better decisions. (Not to mention as a parent, trying to raise four healthy and happy children.)

What I’ve experienced in all these different contexts is that people are generally quite poor at explaining how one might go about making a high-quality decision.

This difficulty isn’t just confined to novice poker players or college students or entry-level employees. Even when I ask C-level executives—who are literally full-time decision-makers—what a high-quality decision process looks like the answers I get are all over the map: “Ultimately, I trust my gut”; “Ideally, I follow the consensus of a committee”; “I weigh the alternatives by making a pros and cons list.”

This is actually not that surprising. Outside of vague directives about encouraging critical-thinking skills, decision-making is not explicitly taught in K–12 education. If you want to learn about making great decisions, you’re unlikely to run into a class on the subject until college or beyond, and even then, only as an elective.

No wonder we don’t have a common approach. We don’t even have a common language for talking about decision-making.

The consequences of being unable to articulate what makes a decision good can be disastrous. After all, your decision-making is the single most important thing you have control over that will help you achieve your goals.

That is why I wrote this book.

How to Decide is going to offer you a framework for thinking about how to improve your decisions, as well as a set of tools for executing on that framework.

So what makes for a good decision tool?

A tool is a device or implement used to carry out a particular function. A hammer is a tool used for driving nails. A screwdriver is a tool used for turning screws. There is an elegant simplicity to performing tasks if you have the right tool for the right job.

·   A good tool has a use that can be reliably repeated. In other words, if you use the same tool in the same way, you would expect to get the same results.
·   The proper way to use a tool can be taught to another person such that they could reliably use the same tool for the same purpose.
·   After you’ve used a tool, you can look back and examine whether you used it properly or not, and so can others.

That means that some of the things that even CEOs use to make decisions turn out to be pretty poor tools.

Your gut—no matter how much experience or past success you’ve had—is not really a decision tool.
It’s not that using your gut can’t get you to a great decision. It could. But you can’t know whether that is a case of a broken clock being right twice a day or whether your gut is a fine-tuned decision-maker, because your gut is a black box.

All you can see is the output of your gut. You can’t go back and examine with any fidelity how your gut arrived at a decision. You can’t peer into your gut to know how it’s operating. Your gut is unique to you. You can’t “teach” your gut to somebody else, such that they could use your gut to make decisions. You can’t be sure that you are using your gut the same way each time.

That means your gut doesn’t even qualify as a decision tool.

There are also some things, like a pros and cons list, that are technically tools but may not be the right tools. What you’ll learn from this book is that a pros and cons list is not a particularly effective decision tool if you are trying to get closer to the objectively best decision. It’s more like using a hammer meant to drive small nails and expecting it would work equally well for breaking asphalt.
For reasons that are going to become clear, a good decision tool seeks to reduce the role of cognitive bias (such as overconfidence, hindsight bias, or confirmation bias) and a pros and cons list tends to amplify the role of bias.

The ideal decision tool

Any decision is, in essence, a prediction about the future.

When you’re making a decision, your objective is to choose the option that gains you the most ground in achieving your goals, taking into account how much you’re willing to risk. (Or sometimes, if there aren’t any good options, your objective is to choose the option that will cause you to lose the least amount of ground.)

It’s rare that a decision can have only one possible result. For most decisions, there are lots of ways the future could unfold. If you’re choosing a route to work, whichever route you choose has many possible outcomes: traffic could be light or heavy, you could blow a tire, or you might get pulled over for speeding, and so on.

Because there are so many possible futures, making the best decision depends on your ability to accurately imagine what the world might look like if you were to choose any of the options you’re considering.

That means the ideal decision tool would be a crystal ball.

With a crystal ball, you would have perfect knowledge of the world, perfect knowledge of all available options, and—because you could see the future—you would know for sure how any of those choices might turn out.

There are always fortune-tellers promising an easy way to see the future. But sadly, the only working crystal balls exist in fiction. Even then, like in The Wizard of Oz, they are illusions. Building a good decision process with a robust toolbox will help you get as close as possible to what the fortune-teller is promising, but you’re doing it for yourself in a way that’s going to significantly change the potential for how your life turns out.

Of course, even the best decision process and the best tools won’t show you the future with the clarity and certainty you’d get with a crystal ball. But that doesn’t mean that improving your process isn’t a goal worth pursuing.

If your decision process becomes better than it is now—improving the accuracy of your knowledge and beliefs, improving how you compare available options, and improving your ability to forecast the futures that might result from those options—that is worth pursuing.

Determining whether a decision is good or bad means examining the quality of the beliefs informing the decision, the available options, and how the future might turn out given any choice you make.

The route to better decision-making: a brief road map of this book

Intuitively, it feels like one of the best ways to improve future decisions should be to learn from how your past decisions have turned out. That’s where this book will start, with improving your ability to learn from experience.

In the first three chapters, you’ll see some of the ways in which trying to learn from experience can go sideways and lead you to some pretty poor conclusions about how you determine whether a past decision was good or bad. In addition to pointing out the hazards of learning from experience, the book will introduce you to several tools for becoming more efficient at understanding what the past has to teach you.

Why did things turn out the way they did? Any outcome is determined in part by your choice and in part by luck. Figuring out the balance of luck and skill in how things turn out feeds back into your beliefs—beliefs that will inform your future decisions. Without a solid framework for examining your past decisions, the lessons you learn from your experience will be compromised.

Starting in chapter 4, the focus turns to new decisions, offering a framework for what a high-quality decision process looks like and a set of tools for implementing that process. This is where you’ll see the virtues of building a crystal-ball equivalent, focusing decision quality on the strength of the educated guesses you make about an uncertain future, including numerous ways to improve the quality of the beliefs and knowledge that are the foundation of your predictions and consequent decisions.

As you can imagine, a robust toolkit that allows you to execute on a high-quality decision process can take a lot more time and effort than glancing into an imaginary piece of glass that gives you perfect knowledge of the future. Taking that extra time will have a profound and positive effect on your most consequential decisions.

But not all decisions merit bringing the full force of your decision toolkit to bear.

If you’re putting together a dresser that comes with a set of screws, you could be tempted to use a hammer to save time if you don’t have a screwdriver handy. Sometimes, a hammer will do an okay job and it will be worth the time you save. But other times, you could break the dresser or build a shoddy health hazard.

The problem is that we’re just not good at recognizing when sacrificing that quality isn’t that big a deal. Knowing when the hammer is good enough is a metaskill worth developing.

Chapter 7 introduces you to a set of mental models that will help you think about when to bring a robust decision-making process to bear, and when you have the leeway to apply a skinnier, stripped-down process to speed things up. That doesn’t come until later in the book because it’s necessary to have a firm grasp on what a fully-formed decision process might look like before you can figure out when and how you might take shortcuts.

Knowing when it’s okay to save time is part of a good decision process.

The final chapters of the book offer ways to more efficiently identify obstacles that might lie in your path and tools for better leveraging the knowledge and information that other people have. This includes eliciting feedback from others and avoiding the pitfalls of team decision-making, especially groupthink.

How to use this book

You’ll see that throughout the book there are exercises, thought experiments, and templates that you can use to reinforce the mental models, frameworks, and decision tools offered in these pages.

You’ll get the most out of this book if you grab a pencil and try them out. But the exercises aren’t required. You’ll still get a lot out of the book if you don’t fully interact with all the prompts. Either way, the exercises, tools, definitions, tables, trackers, worksheets, wrap-ups, and checklists are meant to help you as ongoing references. They’re meant to be photocopied, reused, shared, and reexamined.

Likewise, you’ll get the most out of this book if you read it in the order in which the material is presented. Many ideas build on the ideas that came before them.
Nevertheless, the chapters are sufficiently self-contained that you can parachute into any chapter you find interesting if you want to start there.

“On the shoulders of giants”

This book is a synthesis, translation, and practical application of the ideas of a lot of great thinkers and scientists in psychology, economics, and other disciplines who have devoted their lives to studying decision-making and behavior. Whatever contribution this book makes to improving decision-making, to paraphrase Newton and others, depends on how much I’ve benefited by standing on the shoulders of giants.

You’ll see, scattered throughout the text, chapter notes, and acknowledgments, references to the work of particular scientists and professionals in this space. If a concept interests you, in addition to such sources, you should look at the General References and Suggested Further Reading section for ways to take a deeper dive into subjects I’ve handled in a lighter way.