How To Make Smart Decisions

Some moments in our life matter more than others. The choices we make at such pivotal moments have far reaching consequences.

We have different ways of coping with the pressing need to make the right decisions. Some revert to relying on gut feelings, some look to the advice of people they trust such as mentors, some leave it to fate and not take a conscious decision at all.

Jim Collins the author of the book “Great By Choice” list empirical validation and the speed of decision making as the critical factors in decision making.

The ‘fire bullets and cannonball’ approach

This is the empirical validation approach. Firing bullets refers to initiatives taken on a small scale. They involve less effort and cost us less in money and resources should they fail. It is about testing the waters before you take the plunge. When you fire bullets you set various events in motion that go on to produce results. We study the results to see if this is what we want. When we like what we see, we fire more bullets and validate the results further.

Finally when we have substantial evidence that these work we amass all our resources into firing a cannonball.

Firing a cannonball this way means we reduce the risk of losing our shirt on a speculative bet.

When Intel was upstaged by cheap Japanese imports of memory chips it made a dramatic move into microprocessors and out of the memory chip business. What seemed a risky move was actually based on the proven results of a decade long experiment in microprocessors.

They had fired a bullet (microprocessors) long before they fired the cannonball (quitting the memory chip business and committing all their resources to microprocessors).

Regarding the speed of decision making. Take decisions slowly when you can and fast when you have to and develop the wisdom to understand the difference.

Take away

Try something without expending much effort. Check the results.Go full throttle only after you like what you get.

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