It was 1994, and Jeff Bezos was a rising corporate star working at a top hedge fund on Wall Street. As the youngest-ever senior VP at D.E. Shaw & Co, he was set for life.
Until he quit.
According to Bezos, "I needed the right framework in which to make this big decision."
Every day, we face small to big decisions to make in our personal and professional lives. Whether it's deciding to quit your job like Bezos or hire a new employee, or even which foreign language would be the most useful to learn.
The good news is, there are proven decision-making frameworks that we can model to make better-quality decisions.
1. Regret-minimization framework (think long-term)
While Bezos had the support of his wife, he was still struggling to make a decision until he came up with what he calls the "regret-minimization framework":
"If you can project yourself out to age 80 and sort of think, 'What will I think at that time?' it gets you away from some of the daily pieces of confusion. That's the kind of thing that in the short-term can confuse you, but if you think about the long-term then you can really make good life decisions that you won't regret later."
This simple question made it incredibly easier for Bezos to decide to take the leap. And it's this long-term thinking process that is used to fuel the innovation of Amazon.
2. Circle of competence (focus on what you know)
Ask Warren Buffett what differentiates him from average investors, and he'll tell you that he stays within his core circle of competence. And he never strays from it.
When everyone entered the internet gold rush in the 1990s, Buffett stayed true to his circle of competence, despite the criticism he got from the public.
Michael Jordan learned this the hard way by trying to play baseball when his competency was in the game of basketball. We even see this mistake with our students, who go from learning how to speak Spanish to French to Mandarin.
Buffett's message is that instead of trying to improve our weaknesses, we should double down on our strengths--the areas in our lives or businesses where we could be better than anyone else.
Evaluate what your core strengths are, and use that as your guiding light for deciding what project to take on, how to grow your business, or what skill to learn.
3. Eisenhower Matrix (get more done)
"What is important is seldom urgent and what is urgent is seldom important."
This former U.S. president was one of the most productive leaders who's ever lived. He led programs that fathered the highway system in the U.S., the development of the internet (Darpa), and space exploration (NASA).
How did he get so much done? He attributes his success to the Eisenhower Matrix.
Instead of reacting to requests coming his way, he used this framework to prioritize what he should spend time working on, and determine what he should delegate or eliminate.
Whenever he was faced with a decision, activity, or task, he put it into one of four categories:
- Urgent and important (tasks you will do immediately)
- Important, but not urgent (tasks you will schedule to do later)
- Urgent, but not important (tasks you will delegate to someone else)
- Neither urgent nor important (tasks that you will eliminate)
You can also use this framework to consciously make better decisions in your daily life. You may be pleasantly surprised at how effective you become once you apply it.
The purpose of this article is not to have you avoid bad decisions altogether but to increase the number of great decisions you make.
It may not affect you today, next week, or even next year. But make no mistake about it, if you can increase the number of great decisions, you can create a better life.