5 Tips for Better Decision Making

Whether we are buying a new laptop, booking a trip on AibBnb or investing in a new startup, we face every day dozens of decisions which may have a big or small impact on our life.

Over the last few decades, following the evolution of the internet and social media, the quality and the speed of our communication changed drastically. After Facebook was founded in 2004, 7 top social media networks were born subsequently. Just to share some stats: 95 million photos and videos are shared on Instagram per day. 7.5 million new blog posts are published every day containing fresh news like this article.

We live in a culture of abundance, hyper-communication, and hyperstimulation.

So what?

The Paradox of Choice. Why More is Less. By Barry Schwartz

The reason why I decided to write this blog post titled “5 tips for decision making” as a review of the book written by Barry Schwartz, is because I was recently stuck in making an important decision in my life. The book “The Paradox of Choice. Why More is Less” by Barry Schwartz helped me a lot in the decision process by providing a framework. 

However, I believe the principles shown in the book may be applied by entrepreneurs and professionals to make managerial decisions in startups and businesses.

Ref: If you are interested in the book, click here. 

In this blog post, I’ve picked up 5 top tips: 

• Define your goal(s)
• Gathering objective information
• Reduce options
• Be a Chooser, not a Picker
• Be Satisfacer, No Maximizer
• Control expectations

Are you ready to get started? 😉

5 tips for decision making

1. Define your goal(s)

The process of goal-setting and decision-making begins with the question: “What do I want?”. Since our life and energy are limited, is extremely important to have a strong focus on one (few) goals. I know It isn’t easy to pass up opportunities to choose. But it is essential to achieve something in life. I personally believe that one of the most important ingredients to have success in business are goals clarity + focus + consistency.  

“The secret of change is to focus all of your energy, not on fighting the old, but on building the new.” — Socrates.

Knowing what we want helps us to anticipate accurately how our choices will make us feel. In other words, as Barry Schwartz mentions in the book being able to anticipate how our choice will make us feel, is not a simple task. The author explains in the book an interesting concept, as follows :

• Experienced utility: if for example, you hire a new employee it is the feeling you have while you have that experience.  
• Expected utility: However, before you actually had that experience (new hiring) you had to make this decision based on how you expect the experience to make you feel. 
• Remembered utility: once you have had this hiring experience in the past, future choices will be based upon what you remember about these past experiences. 

However, the issue is that the remembered utility hardly ever corresponds with the actual real experience (experienced utility). Daniel Kahneman has shown that human beings remember two things about past experiences more:

1. Peak: the best or the worst moments, forgetting what we’ve lived in the middle. 
2. End: we remember how we felt when the experience ended. 

This causes bias in making decisions based on past experience because our memories are not objective and can lead us to make wrong choices. For this reason, is crucial analysing data in order to define our goals and choices. 

2. Gathering objective information

When we consider whether we like or not an option we are asking ourselves “Compared to what?”.  The advent of the internet increased the number of options available for each choice. Also, anyone can express their opinion online which can influence our decision. A good tactic for decreasing anxiety and improving the quality of decisions is gathering and analysing objective information.

See and analyse quantitative and qualitative reports. Then compare them with other similar data set, over time. Don’t be influenced by a single-person interview which may provide you with vivid but not objective information. For more about data analysis, I recommend reading an interesting book, analytical and captivating, named. “Factfulness: Ten Reasons We’re Wrong About the World” by Hans Rosling

3. Reduce options 

We probably like to think that the more options we will have on the table, the best for our decision-making. But this way of thinking is totally wrong for a number of reasons. See below why:

• The fewer options we have fewer the opportunity costs will be
• Lower opportunity costs mean fewer regrets 
• Fewer options available lead us to make decisions quicker

That said, in the decision-making process each option should be evaluated objectively. Can be a good idea to split up each option into small parts. Then assigns features to each of them from 0 to 10 and finally ranks the options. 

4. Be a Chooser, not a Picker

The choosers are people who reflect on what makes a decision important and if none of them should be chosen, they create a new one. A picker, contrarily, is a more impulsive, passive selector from whatever is available. 

Following the increasing number of interactions, information available and hyper-communication, most of the choosers can become pickers. Having the focus to choose less and better is the key to better decision-making. 

5. Be a Satisfacer, not a Maximizer

One of the most important aspects of decision-making is how we approach to the choice. Clearly, the same investment can be “good” for somebody and “the worst” for others. How we subjectively look at the outcome of the decision taken can be even more important than the final objective result. 

The author shows in the book two classes of people of decision-makers, which are: 

• Maximizer: he is a perfectionist who has the highest expectations in terms of buying purchases/expectations that can’t be met. Because of his highest expectations, he is constantly looking for new and better options. As a result, he often regrets about missing opportunities (opportunity costs). 
• Satisfacer: people who learn to accept good enough will simplify decision-making and increase satisfaction. He will find one option that meets his standards more easily than the maximizer. Adding options to the list doesn’t necessarily add much work for the satisfacer because he feels no compulsion to check all the alternatives. 

Regret and expectations play a big role in all our decision, particularly in a world made of an overabundance of choices. So opportunity costs will raise if we don’t control our expectations after we make a decision, let’s see about a startup investment or a simple purchase. 

Conclusions

When considering a decision involving complex possibilities, for example, investing in startups, big budgets, hiring new people, buying houses or moving to new countries, it’s crucial for entrepreneurs and growth marketing managers to make use of the framework and logic behind it. Our contemporary culture produces more options available. However, an overwhelming abundance of information and products on the market can cause stress, anxiety and paralysis in our emotional state in decision-making. As a solution, the author proposes to focus on 1 goal, limiting choices to a manageable number of options ignoring the rest and lowering our expectations about the outcomes. 

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