The Basics of Good Decision Making

Time, more so than money, is rapidly becoming the average American’s most precious resource. Increasingly there is less time available during the average day as people rush from one event to another. Also lets face it; American’s aren’t patient people. We want what we want, and we want it now. We live in a fast paced environment where everything we do is rushed. As a direct consequence we rush our decisions. We rush from one event to another, making decisions along the way with little thought; we just react and do whatever is on our schedule to do next.

As a result of how busy we are we pressure ourselves, or are pressured by others, into making snap decisions. How many times have you found yourself saying, if I don’t buy this now while its on sale, I’ll miss the chance to save $20 or $50? Many people just respond by purchasing the item and move on. They get home and realize several days (or weeks) later that they didn’t really need the item at all, or could have bought the item even cheaper at another store.

A few decisions must be made immediately, but the vast majority of decisions we make do not need to be made on the spot. The first thing that needs to be done before making any decision is to determine the time available to make it. The decision to call 911 for a real emergency is something that must be made immediately. The decision to buy a new car can wait a few weeks. Most daily decisions can probably wait a few days or a week to make. Whether you have 5 seconds or 5 days to make a decision, it is important to take the time to think about the consequences or your decision!

The desired outcome of buying a new TV is to get a replacement (hopefully a much better one) for a broken or old one. On the surface this sounds very easy. That may very well be the case, but what are all the consequences, both desired and undesired of getting that new TV?

Consider this scenario? Your current TV is on the blink and would cost about $250 to replace with a similar new model. You and your wife are busy with your kids’ activities this weekend so you decide, on the spur of the moment, to stop by the local electronics store on your way home from work to check out the selection of new TVs. When you arrive you are overwhelmed with dozens of choices.

Rushed to get home from a long day, you quickly look at HDTVs, TV/VCR combos, LCDs, and flat panels. You spot a great looking HDTV (flat panel) that is on sale for $1299 right next to the sign that advertises an extra 10% off (if you sign up for a store credit card today). The salesman tells you that the store will even throw in no payments and no interest for 6 months. You can take the TV home tonight (which is great because it will save you from having to go shopping this weekend and allow you to devote more time to family activities). The salesman seals the deal when he tells you it won’t cost you a dime today.

You’re feeling really good because you’ve bought a much better TV to replace your current one, saved time while doing it, and have achieved your desired outcome . That is great, but have you considered the undesired outcome ? In a very short period of time you’ve managed to spend money that you had not planned to spend. In the above scenario you’ve spent over $1300 to replace a $250 TV. You very well may have obligated even more money if you let the money remain one your “new credit card” and have to pay interest later down the road. Did you have a higher priority, kid’s college fund etc., for that money? Something always has to give. That something is usually the undesired outcome.

In addition to being crunched for time, we are increasingly overwhelmed by the immense number of options we have to choose from. The assortment of shoes, clothes, TVs, TV programs, movies, restaurants, video games, etc. is endless. How does one make a good decision, or selection, when there are so many choices?

Logic would seem to dictate that with a larger number of options available we should be able to make a much better choice (thus a better decision). With one-hundred different models and makes to choose from most people would be able to select the one that best suits their needs (desired outcome). Is that really the case?

An overwhelming number of choices many times has the reverse affect. Instead of making it easier to make a decision, often it becomes much more complicated. The decision process is made more complex and cloudy by the increased volume of choices. The more choices, the harder the decision becomes. Reducing the volume of choices without throwing away good options is critical in decision making.

Do you know and trust anyone well enough to want them to disagree with you? You should. People telling you what you want to hear sounds like a good thing, but are they telling you what you want to hear, or what you need to hear?

Pride often prevents us from getting a good second opinion. We either don’t bother to seek a second opinion or, often when we need a good second opinion we ask someone who is like minded, someone who will reinforce our own opinion. These people tell us what we want to hear because we like them, and they like us.

Conversely we sometimes find ourselves surrounded by people more than willing to offer all the advice in the world on any given subject. Whether they are well intentioned or not, they can quickly overwhelm us with advice. Have too much input can be just as having too little.

Many people often fail to realize that the best decision is no decision at all. With so many choices and associated opinions about what we should do, we often pressure ourselves into “making a selection”.

It often helps to reanalyze your situation. Are your choices really that good? Is the timing right? Could I wait and let the problem go away? If I wait will a better option be available later? If the answer to one or more of the above questions is yes, you might want to postpone your decision. 

Make sure one of your choices is always “doing nothing at all”.

We are all influenced by the people we are around and associate with. Whether we realize it or not, many people have a direct and indirect ability to impact our decisions. It might be subtle influence over time by a family member or friend. The encouragement might be direct in the form of someone strongly advising you to make a certain decision.

It is incumbent upon the decision maker to be able to size up the people who surround you and determine how much you value their advice. Even if they are a great friend, someone who makes poor decisions themselves will probably offer poor advice.

Timing is everything. Lee Iacocca said “So what do we do? Anything. Something. So long as we just don't sit there. If we screw it up, start over. Try something else. If we wait until we've satisfied all the uncertainties, it may be too late”.

Too many people need all the facts before they will make any decision. They can make good decisions, but their ability to commit to a decision prevents them from making a good choice. In this case, no decision is a bad decision. It is important to take timing into consideration when making a decision. If you only have one opportunity, an average or above average decision could be much better than the greatest decision made too late.

The inability of people to establish, or stick to priorities amazes me. Without priorities, it becomes difficult to evaluate the relative value of your decision. Just how does this decision impact you relative to everything in your job or life? People often times make decisions, but they impact insignificant priorities. If I have a list of 100 priorities and am always accomplishing (make decisions on) priorities 90-100, am I getting anywhere?

Richard Schickel said “The law of unintended consequences pushes us ceaselessly through the years, permitting no pause for perspective.

Many people only focus on the positive aspects of their decisions. Those that have the ability to focus on negative consequences sometimes fail to think about long term impacts. The decision maker must think through as many of the consequences of their actions as possible. A great decision made today negatively impact you in one, two or even five years. The ability to project future impacts of their decisions, are the better decision makers.

Like anything else, decision making takes practice. Watch the people in your life who make good decisions and take mental notes. Watch those people who make bad decisions as well. Develop what you learn into a system that works for you. By creating your own decision making checklist, you will make fewer mistakes, and better decisions, by learning from the mistakes of others.