Got a tough decision to make?

4 Ways to Leverage Analytics to Smart Decision Making

Decisions come up from time to time. What to eat? Where to go? What to do now? Other than those trivial ones, key decisions come during the course of everyone’s career in terms of what to focus on and where to take the company from here.

Just recently,  Amazon’s Jeff Bezos made one of the toughest decisions of his career. His way of approaching this truly tough call can help anyone make life-altering decisions.

Unsurprisingly given his many later accomplishments, Jeff Bezos was a pretty successful guy even before he founded Amazon. As a Princeton-educated computer scientist, Bezos spent the early part of his career working in banking and presumably making a bundle in the process. As Bezos explained in a 2001 interview, this reality complicated his decision to leave his successful career in banking to pursue his wild dream of building an online everything store. Was he making a mistake to leave a well paid, secure gig for a highly uncertain foray into entrepreneurship?
“I went to my boss and said to him, ‘You know, I’m going to go do this crazy thing and I’m going to start this company selling books online.’ This was something that I had already been talking to him about in a sort of more general context, but then he said, ‘Let’s go on a walk,'” Bezos relates. After two hours strolling Central Park and talking, Bezos’s boss impressed upon him that, even though his business idea was solid, he had a lot to lose. “He convinced me to think about it for 48 hours before making a final decision,” Bezos reports. “So, I went away and was trying to find the right framework in which to make that kind of big decision.” His wife said she was happy to support him either way, so she couldn’t be the deciding factor. What could be? Bezos settled on the idea of “regret minimization.”

Bezos adopts this regret minimization framework to fast forward into his 80s and look backwards at this point of his life. If he didn’t do it, would he regret it then? He went for it and the rest is, as they say, history. “If you can project yourself out to age 80 and sort of think, ‘What will I think at that time?’ it gets you away from some of the daily pieces of confusion,” he claims.

He probably took the same approach in the recent purchase of Whole Foods that undoubtedly will bring on a dawn of a new era for amazon and strengthen their position in the retail world. But Bezos isn’t just saying you should always dive into every risky but promising new venture. Instead, he believes that his regret minimization framework can help anyone sift through their own personal goals and values to make a weighty call.

I stumbled on a past article that presents 7 mental models for better decision making. One of them is the regret minimization framework (perhaps we should call it something positive like joy maximisation framework!).

1. 10/10/10 Rule

Short term vs Long term

Most of us have been guilty of making decisions without thinking about the long term consequences, and the 10/10/10/ rule can used to reflect on the long-term by asking yourself:

  • How will we feel about it 10 minutes from now?
  • How about 10 months from now?
  • How about 10 years from now?

It’s easy to make short-term decisions that may be beneficial 10 minutes or 10 months from now, but these types of decisions usually don’t benefit us in the long-term. What’s harder is to make decisions that may not appear attractive or impactful in the short-term, but over time can have a positive impact in your life.

2. True Fans
“A True Fan is defined as someone who will purchase anything and everything you produce. They will drive 200 miles to see you sing. They will buy the super deluxe re-issued hi-res box set of your stuff even though they have the low-res version. They have a Google Alert set for your name. They are true fans.”
Kevin Kelly, Founder of Wired Magazine

The point here is that instead of trying to please the mass, most of us will be far better off by making a few love us. While this mental model may be targeted at artists or entrepreneurs, it can be applied to pretty much anything that involves relationships.

Applying the model of True Fans to your current personal and professional relationships will help you rethink and optimize how you’re approaching these relationships effectively. Having the right person love you is often far more beneficial than having a hundred who’ve just heard about you.

3. Pareto’s Law
The origin of Pareto’s Law came from an Italian Economist, Vilfredo Pareto, who noticed that 80% of wealth and land were controlled by only 20% of the people. Today, this concept has been applied to business, health, expenditures, etc.

 

4. Regret Minimization Framework
See above

5. Eisenhower Matrix
Dwight Eisenhower lived one of the most productive lives you can imagine. It’s no wonder why his methods for time management, decision making, and increasing productivity has been studied by many people. Out of the mental models Eisenhower used for smarter decision making, his most productive one was the Eisenhower Matrix.

The way it works is simple.

Whenever he was faced with a decision, activity, or task, he categorized it into one of four categories:

  1. Urgent and important (tasks you will do immediately)
  2. Important, but not urgent (tasks you will schedule to do later).
  3. Urgent, but not important (tasks you will delegate to someone else).
  4. Neither urgent nor important (tasks that you will eliminate).

 

6. Parkinson’s Law
“Work expands so as to fill the time available for its completion.”

Willpower is finite. Some of us may have more than others, but it will always plateau over time. This is Parkinson’s law.

This is a mental model that only you can apply yourself. It’s unlikely that your boss or organization will ask you to work less hours, which means you need to place artificial time limitations when you’re working.

Instead of giving yourself a week to complete a project, break it into smaller activities, and set multiple deadlines during the week to finish them.

7. Circle of Competence
Throughout our lives, we’ve been told to fix our weaknesses instead of focusing on our strengths. But when you study the most successful athletes, business leaders, and influencers, there’s a consistent mantra that’s preached — stick to your circle of competency.

Adopt the different mental models for different situations and see how your life changes. It might take a bit of getting used to but it will certainly make a difference.

This post was inspired by LLX. Do what you think works!

Go over to my blog for more posts at www.abetterman.xyz

Interesting reads:

https://www.wired.com/2007/02/yahoo-3/?mbid=nl_61717_p1&CNDID=31103238

https://www.inc.com/jessica-stillman/jeff-bezos-this-is-how-to-avoid-regret.html
http://awealthofcommonsense.com/2016/10/the-jeff-bezos-regret-minimization-framework/
https://www.techgig.com/tech-news/7-mental-models-you-should-know-for-smarter-decision-making-56860?parm=editors-pick/7-mental-models-you-should-know-for-smarter-decision-making-56860

https://www.washingtonpost.com/news/business/wp/2017/06/16/amazon-to-buy-whole-foods-market-in-deal-valued-at-13-7-billion-2/?utm_term=.280cd1af6ea6

https://medium.com/@yegg/mental-models-i-find-repeatedly-useful-936f1cc405d

https://www.hrdqu.com/webinars/mental-models-key-making-reality-based-decisions/

Image Source:

http://verix.com/4-ways-leverage-analytics-smart-decision-making/

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