Whether we are buying a new laptop, booking a trip on AibBnb or investing on a new startup, we face everyday 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 the social media the quality and the speed of our communication changed drastically. After Facebook was founded in 2004, 7 top social media networks 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, hyper stimulation.
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 decisiong 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 providing a framework.
However, I believe the principles shown in the book may be applied by entreprenuers and professionals to make managerial decisions in startups and business.
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 beging with the question: “What do I want?”. Since our life and energy are limited, is extremely important to have a strong focus on one (fews) goals. I know, It isn’t easy to pass up opportunies 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 clearity + 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 upon 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 experience.
However, the issue is that the remembered utility hardly ever corresponding with the actual real experience had (experienced utility). Daniel Kahaneman have shown that human beings remember more easily two things about past experiences:
- Peak: the best or the worst moments, forgetting what we’ve lived in the middle.
- 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 making 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 ourself “Compared to what?”. The advent of the internet increased the number of options available for each choice. Also, anyone can express their opionion online and 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 from a single personal interview which may provide you a 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 probabily like to think that more options we will have on the table, the best for our decision making. But this way of thinking is totaly wrong for a number of reasons. See below why:
- Less options we have less the opportunity costs will be
- Lower opportunity costs means less regrets
- Fewer options available leads 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 ranking 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 crate 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 with is the key for better decision making.
5. Be a Satisfacer, not a Maximizer
One of the most important aspect 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 class of people of decision-makers, which are:
- Maximazer: he is a perfectionist who have the highest expectations in terms of buying purchase/expections that can’t be met. Because of his highest expectations he is constantly looking for new and better options. As a result, he has often regrets about missing opportunies (opportunity costs).
- Satisfacer: people who learning to accept good enough willl simplify decision making and increase satisfaction. He will find one option that meet his standats more easily than the maximizer. Adding options on the list, does’t necessary add much work for the satisfacer because he feels no compulsion to check all the alternatives.
Regret and expectations plays a big role in all our decision, particularly in a world made of overbundance of choices. So opportunity costs will raise if we don’t control our expecations after we make a decision, let’s see about a startup investment or a simple purchase.
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 framework and logic behind of 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 the decision making. As a solution, the author propose to focus on a 1 goal, limiting choices to a manageble number of options ignoring the rest and lowering our expectations about the outcomes.
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