World's Easiest Way to Make Better Decisions
Being a business owners means making tough decisions. Sometimes the stakes are high, sometimes the information is incomplete, and sometimes the environment is volatile—and sometimes all three—which means making the right choice for your company incredibly challenging and stressful.
Wouldn't be nice if there were simple tricks to take these complicated, insomnia-inducing decisions and boil them down to something more manageable?
That's just what former Bain & Company consultant Daniel Shapiro offered in a recent LinkedIn post. Drawing on his experience at Bain, Shapiro shares a handy trick that can help owners break down and tackle even the most complex issues. He writes:
If you’re faced with a choice of whether or not to do something, just ask yourself, “What would I need to believe for this to be the right decision?” This simple question is incredibly clarifying.
Here’s an example: I’m trying to decide whether or not to prioritize the development of a new product. In order for that to be a great idea, I would need to believe the following assertions:
- We have the team capable of building the product
- Customers will buy the product at an attractive price if we build it
- We have the distribution to reach potential customers at a reasonable cost
- None of our competitors can replicate this offering in the next 12 months
- There are no higher priority development opportunities for the R&D team
The hardest part of the process is developing the list of assertions. If you’re having a hard time, grab a colleague – two brains are better than one. Once you have your list, begin analyzing each assertion with data. If you can’t get data to help determine whether or not an assertion is true or false, simply make an educated guess. If any of the assertions are false, it’s probably the wrong decision.
By using this technique, Shapiro asserts, you are forced to break down a complicated situation into its constituent parts and also helps you construct enough structure that you can intelligently and productively discuss the issue with colleagues. Interested in more insights from Shapiro? You can follow him on LinkedIn.
But Shapiro isn't the only devotee of simple rules of thumb—also known, more formally, as heuristics—as a means to help guide us through our toughest decisions. Colin Marshal has rounded up ten useful rules of thumb you can put into use in business and in life, including:
"Can I fail at this?" It's like Raymond Chandler said: there is no success without the possibility of failure. Therefore, something I can't fail at is also something I can't succeed at. I can fail at conducting an interview, writing an essay or making a video. I can't fail at meandering around the internet in search of "neat stuff to read." In a recent tweet, I defined procrastination "the temporary displacement of tasks at which it is possible to fail with tasks at which it is not possible to fail." I suspect I'm less far off the mark than ever, especially regarding why procrastination is not a productive tendency.
"What's the hardest thing I can do?" … my hat tips to Paul Graham: "This is a good plan for life in general. If you have two choices, choose the harder. If you're trying to decide whether to go out running or sit home and watch TV, go running. Probably the reason this trick works so well is that when you have two choices and one is harder, the only reason you're even considering the other is laziness. You know in the back of your mind what's the right thing to do, and this trick merely forces you to acknowledge it."
What business rule of thumb do you find most valuable?