How to Make Good Decisions

Decisions. They bombard us daily. Some are easy, instinctive. Others leave us paralyzed. The question is: how do you decide? And how can you be sure?

Perhaps you’ve heard of decision fatigue, that overwhelming feeling when choices pile up, each one more complex than the last, that results in mental and physical exhaustion. Procrastination sets in. We’re paralyzed by analysis. And the decisions we do make? Often, they're not our best. An effective strategy to counter decision fatigue is following a structured approach.

I recently discovered a simple, but effective five-step framework for making good decisions in the book Clear Thinking by Shane Parrish, who spent years working for an intelligence agency and runs the Farnham Street blog. 

Steps for Decision Making

Define: Identify Your Goal

In order to make a good decision, you first need to get clear on what you’re trying to achieve. What’s your goal, or the problem you are trying to solve? If you skip this step, you could miscalculate your options and end up with a great solution for the wrong problem, so it’s important to separate defining the problem from solving it. 

For example, a common career-related question is whether to stay in your current job or seek something else. But the answer depends on why you are thinking of leaving, and what you hope to get with a new job – in other words, what is the root cause? It could be anything from not being able to meet your career goals in the current role, wanting to explore an entirely different career, or having a bad manager. Clearly identifying the root of the problem avoids the trap of fixing a symptom, which might only be a short-term fix.

Sometimes, the answer is clear right from the start. Other times, this first step reveals key criteria to guide your exploration. And don't forget obstacles. Start anticipating them now.

Explore: Brainstorm Alternatives

Once you know your goal, think about your options. It’s common to pick between two choices, but try to come up with at least three. This might mean some combination of the two options you’ve already thought of. For example, instead of stay vs go, another option if your current job isn’t meeting your needs could be to stay while also exploring options for the long term, or learning a new skill, or taking on a new responsibility. 

Consider at this stage what negative outcomes may occur if things go wrong, and what your contingency plan would be. If one of the options were not possible, what then would you do?

Second-level thinking is key. Trace each option from start to finish. What happens next? And if things go south, what new problem emerges? What information do you still need to make the best call?

Additionally, consider the opportunity costs – the hidden trade-offs – associated with choosing one option over another.

Evaluate: Weigh Your Options

Now that you understand the problem and have your possible solutions identified, identify the specific criteria for the problem at hand. They should be clear, support your goal, and be decisive enough to favor exactly one option. List out all the criteria that are important to you and then determine what on that list that matters most to you. 

If you need to gather information about your options in order to apply your criteria, it’s best to get this from the person closest to the problem. That way you get what Parrish calls high-fidelity information – facts without biases and opinions. Get information from experts and people who have solved a similar problem recently, asking them for their reasons and how they thought about the problem.

Decide and Execute: Pick The Best Option and Take Action

This is where you synthesize all your options and information to arrive at a decision. Once committed, take action - this is the final, crucial step. Fear of consequences or making the wrong choice can often hold us back. Assess your decision along two dimensions: consequentiality and reversibility.

In scenarios where the stakes are low, not taking action hurts you more than speed. So when the cost of making a mistake is low and your action is easy to reverse, you’re best off making a swift decision. Avoid wasting precious time and mental energy deliberating – simply choose and move froward. 

Conversely, when the stakes are high – when a mistake would be highly consequential and irreversible – take the time to gather as much information as possible and delay your decision until the last possible moment. You’ll know it’s time to execute your decision once you’ve exhausted all avenues for gathering useful information, encounter the first missed opportunity, or gain new insights that clearly indicate the optimal choice. 

You can minimize the cost of failure by adding a margin of safety, a buffer between what you expect to happen and what could happen. The key is preparation and maintaining flexibility. Take small, low-risk steps toward as many options as possible before you commit to one, preserving your optionality.

Parrish offers a valuable tip: sleep on a decision before you tell anyone. Once you have made a decision, you start to see things in a new light, allowing you to reassess and connect with your feelings about the choice.

Decision-making doesn’t have to be a struggle. With a little structure, you can simplify the process and gain confidence in making choices that truly align with your goals. Remember, the goal isn’t to eliminate uncertainty entirely – that's part of life! It’s about equipping yourself with tools and strategies to make informed and effective decisions of all kinds.

Are You A Maximizer Or Satisficer?

How do you make decisions?

We recently booked a trip this summer to a country we’ve never visited before, and I felt overwhelmed by all the choices. I decided to work with a local travel agent who came highly recommended, and it was such a great experience, saving us hours and hours of research time and money. More importantly, we were spared the difficult task of having to make choices across a multitude of possible cities, hotels, tours, and flights. When our travel agent sent a proposed itinerary, we read through it, thought it sounded fine, and told her to go ahead and book it. Easy peasy, right? But maybe some of you reading this are not comfortable with this approach; how do I know I really made the best possible choices? If that sounds like you, you may be a maximizer.

The concept of maximizers and satisficers is often attributed to psychologist Barry Schwartz’s 2004 book The Paradox of Choice, where he argues that an abundance of choice can actually lead to anxiety and psychological stress. The term satisficer, a combination of satisfy and suffice, was actually coined by political scientist Herman A. Simon, who did research in decision-making and won a Nobel Prize in 1978. Satisficers make decisions by choosing what is good enough to satisfy minimum requirements, while maximizers seek the best possible outcome by considering all possible alternatives. I will note up front that one approach is not inherently different than the other, but there are trade-offs to each approach.

Since the goal is to make the best possible choice, the maximizing approach can result in more benefits and minimal costs or risks. Maximizers explore all available options and evaluate them based on various criteria. However, taking such a thorough approach takes planning and preparation and, ultimately, more time and effort. And because of the perfectionist tendency, it can lead to greater potential for delay, regret at the final decision, and revisiting of decisions.

On the other hand, satisficing saves time and effort because once an acceptable option is found, you are done. This approach is usually more relaxed and efficient, so there is less stress and anxiety. Satisficers tend to be more content and confident with their decisions and less likely to second-guess themselves. However, there is also potential for making suboptimal decisions.

So which approach is best for you? You may have a preference for one or the other based on your personality and values, but keep in mind that it really depends on the context. For example, if a decision is irreversible, it may be worth taking a maximizer approach. However, if the stakes are low or the decision is easily reversible, you can save yourself both time and angst by being a satisficer. Some examples of this are creating a capsule wardrobe or wearing a uniform, shopping at Trader Joe’s instead of a large supermarket, or leaving your travel planning to an agent (though in a way that is outsourcing the maximization to an expert). The important thing is to be conscious of what your natural preference is, and also to intentionally choose your approach based on the nature of the decision to be made.