Over the last 10 years, I’ve made decisions that have had big impact on my career and life. While I don’t ponder much on “what if?”, I have given some thought around how I make these decisions, or simply, “what is my decision making framework?”
I recently came across this video where Jeff Bezos talks about his decision making framework – his optimization function is “minimization of regret”. Watch the video below:
This led to me looking up online on what are some of the common decision functions, to see if I am of a particular type, at least with respect to career, business, etc. There are the usual suspects in there – maximizing upside, minimizing downside, maximizing potential upside (probabilities factored in), and so on. Good place to start: wiki.
I couldn’t slot myself in one of these directly. I am a risk averse person (yes, I don’t think entrepreneurship is “risky” for me – because I can always get a job again if I need to, and because of the strings).
My decision making framework is something like this – “What’s the worst that can happen from here? If I am OK with the worst outcome, I’ll go ahead for whatever has better upside.”
I mostly don’t look at the probability of the outcomes at making these decisions – if the chance for success is low, and chance for failure is high, that’s fine as long as the failure is one I can handle. However, I don’t consider the very very low probability (in my mind) outcomes (for the downside or upside).
So what’s your decision making framework like?
[cross posted from my personal blog]
asha chaudhry
sri… when i first looked at this post the first thing that came to my mind was “jargon” (i’m allergic to jargon!)
but then i read on – watched the vid – loved the vid!!! and realised this is such a neat topic that’s gonna make people introspect today…!
ps: i’m still thinking about that 2 hour walk in central park… i love ‘the story behind the story’ – thanks for sharing the vid!
Srikrishnan Ganesan
Thanks Asha! Glad you enjoyed the post!
I like looking inward and thinking about these things (why I made a decision, why I enjoy doing some kinds of work, why A thinks they can’t live/work with B, etc).
In addition to understanding yourself, being able to understand why others behave the way they do is great to figure out the right way to work with them. Perhaps that makes a good idea for a new post!
asha chaudhry
sri – you might like this post on Decision Fatigue 🙂
https://www.therodinhoods.com/forum/topics/why-obama-wears-only-blue-suits-or-gray-suits
Why Obama Wears Only Blue Suits or Gray Suits?
Awarded the
“Rodinstar” Post
of the week!!
Do you know why Obama wears only Blue suits or Gray suits? That he does not Decide what to eat for lunch, his staff Decides it for him. It is because he has to make too many Decisions in a day & therefore cannot afford to waste his Energy Deciding on less important things such as what to wear or what to eat.
The phenomena of Weakening quality of decisions after a long session of Decision making is called “Decision Fatigue”. For Example, judges have been known to take poor Decisions later in the day. Studies show that a prisoner’s chance of getting bail in the afternoon decreases.
Being President, he has to make hundreds of Decisions a day that can have profound impact on Millions of people Globally. Being a Master Administrator, he conserves his energy. Entrepreneurs are like Presidents, they have to make too many decisions a day.
Forget Entrepreneurs for a second, just think how many decisions a Stay at Home Mom has to make in the morning…
What should I make for breakfast?
Should I go for a morning walk?
Who will drop the kids to school?
What to pack for the kids lunch?
Who will attend the parent teachers meeting?
etc etc etc…
Courtesy to our Web, which has a lot of information on this topic. The article on how the President overcomes Decision Fatigue first appeared on Vanity fair and NewYorker.
As an Entrepreneur, few things to consider:
1) Prioritize Decision Making – As the CEO or Manager, you cannot always Decide everything for everyone. Delegate work. Fcous on the Important things
2) Stop Shuffling Priorities – We tend to shuffle our priorities a lot. This may lead to Decision Fatigue
3) Mornings are Productive – Easier said than done, but try to make the most Important decisions earlier in the day
4) Exercise / Meditate – We are all busy beings. But take some time off for Exercise and Meditation. This will calm you and help you make better Decisions
5) Keep Everything Organized – Clutter can irritate you and drain your mind. Be it your car or your house, keep it organized and clean
So the next time someone at your home asks you what you need packed for lunch, just tell them sweetly they can DECIDE it for you!
Aneja
Srikrishnan Ganesan
Yup. Thanks for sharing.
I always try to delegate ordering food at restaurants :). Not worth spending energy deciding what to eat most often!
Pawan Deokule
Hey Srikrishnan,
This post reminded me of a study I did as a personal learning on consumer behavior, the framework of decision making was however based on ‘archetypes’ a term popularized by Carl Jung in the Freudian era – a little before its time was due.
I love the example of Jeff Bezos, after all who better than the man who showed what a 7 year horizon can do to a business when you disregard the three year horizon that VCs generally work with.
Albeit, the wiki link pertains more to tradeoffs and not decision making framework and hence there was no slot for human decisions! This is like comparing your decisions with that of a computer program!
Entrepreneurial decisions are usually life changing and can alter the success or stature of current life. These will always show up as a downside in a computer program.
What you are looking for is how do people make decisions, this is usually based on what we call “frame of reference” in marketing. A number of experiences and exposures that we have in our lives create a frame of reference. For instance if I say ‘apple’ on this forum 90% of the audience would recall Steve Jobs and not the discovery of gravity by Sir Newton!
A fair assumption is that your mind calculates probabilities faster than you think and sabotages your decision with emotional bias and past knowledge and experience even before you could weigh at all the facts! Hence you need to constantly ask yourself questions like the one you did- “what is the worst that can happen?” These question help your mind remove the emotional bias from your decision. Most of us have similar decision making framework, just different experiences and exposures. Hence our frame of reference would deem us as rational or irrational in our decision behavior. However, in an average life span our decision making ability changes but the pattern once formed around the age of 20-25 remains the same for the rest of our lives!
Your post helped me refresh my experience of this study so I should thank you for posting. 🙂 Thank you.
Srikrishnan Ganesan
Thanks for sharing from your study Pavan! Agree that the wiki link doesn’t do justice to human decision making.
Very true that our own experiences and exposures play a huge role in how we live our lives.
Do you have any insights on consumer behavior from your study that you have documented on a blog or somewhere?
Pawan Deokule
Hey Srikrishanan,
I have not documented it in any public forum as this was a personal study and I was in the marketing consulting business at the time. However, now that you mention it I will document it soon on my blog and share the link soon.
Rajat
Nice post Sri and a very valid one 🙂 But broadly I think regret is the only decision making framework everyone uses, dont you think? Because ultimately if you are in a position where you want to go ahead and do something knowing it will lead to a failure (which you can handle) it is that ‘regret’ (which you dont want to feel at having not tried) which makes you take that decision 🙂 People who are in their comfort zones will not for a second undergo this decision making process.