How Do I Try to Make Decisions?

Ideally — which, of course, doesn’t always work out — every decision should pass through the following stages:

— Identify whether the decision belongs to something I’ve already turned into an algorithm for similar situations. Maybe there’s nothing new to invent, and no need to spend the brain’s resources at all.

— Set a deadline, and try to make the decision while pushing it as close to that deadline as possible. Sometimes the deadline is here and now; sometimes it’s a few months out. Time is always more information.

— Drop, completely, any emotional involvement in the event and the people inside it. Ideally — only the here and now, with all the information and experience I have, as if I were a fully independent observer or an outside consultant. So often, when someone isn’t coping or something has gone wrong, I’ll suggest changing the person doing the work and not giving in to pleas that they’ve already done so much and there’s just a little left to go… (a lot of money has been lost to those pleas). Or walking away from a project, an investment, a partnership — even after writing off the resources already spent — so as not to lose even more (and even more money has been lost on staying inside such commitments).

— Consult the most competent people on the question. My criteria for a competent person: theoretical and practical experience in the matter, plus a track record of success. Find such people, wherever they may be.

— Find someone with the opposite view and study, carefully, the logic of how they arrived at their arguments. If there’s no one who disagrees, that’s a reason to postpone the decision — something is off.

— The hardest part: set aside the opinions of people who may be close to me, dear to me, and supremely competent in other areas, but whose opinion on this particular question simply isn’t relevant.

— Ask myself: how will this decision look in three years?

— Ask myself: how would, say, Marcus Aurelius have acted in my place?

— Define the maximum potential upside and the maximum possible loss, and weigh the ratio between them. For example, an investment at 50% a year (which sounds like a lot) but with even a small risk of losing the capital entirely is a bad idea. Whereas a deal with a potential return of 3,000% at that same risk of total loss is already worth considering when you’re building a diversified portfolio.

— Say each decision out loud in front of the mirror and watch the body’s reaction. If the voice drops lower, the body settles, and you feel a stone roll off your shoulders — maybe intuition knows something logic doesn’t yet.

After the decision is made, if it turned out well, try to fold it into the algorithm for use in similar situations down the road (which is where we started). If it turned out badly — draw the conclusions and adjust the algorithm.

Here’s to sound decisions for us all! 😎