DECISIONS + Luck = ?
- Marty Schad
- Sep 19, 2019
- 3 min read
EVERYTHING…that’s all! By everything, I mean all the outcomes that we experience, good or bad, positive or negative. All outcomes are the sum of the decisions we make and luck. That is really all there is. Our decisions are in our control, more or less, depending on the situation. Luck, by definition, is not in our control. Since we can only impact what we control, we need to focus carefully on our decisions. Luck will take care of itself, automatically. How can we focus on our decisions and try to make good ones? A “first cut” is the principle/mental model of “Non-Stupidity”, which has been discussed in previous newsletters. Charlie Munger, Warren Buffet’s investing partner, has spoken about the power of this approach, as simple as it seems. Another approach is to use a Decision Journal. This can help us significantly improve our decisions over time. Fortunately for us, a very useful Decision Journal framework has been developed and outlined by Shane Parrish at Farnam Street. Much more information on his approach is at: https://www.fs.blog/dj. To give you an idea of how the journal works, some key sections of the Farnam Street Decision Journal include:
The Decision being made.
Mental/physical state.
Situation/context.
The problem statement or frame.
The variables that govern the situation.
Complications/complexities.
Explain the range of expected outcomes.
What I expect to happen and actual probabilities.
The Outcome.
What happened and what I learned (to be completed 6 months after the decision is made).
A comment: A Decision Journal is for important decisions that have big implications; it is not for selection of a restaurant for dinner. This is obvious, but still worth mentioning.
Thinking about this from the Process Perspective, the kinds of decisions that might merit the use of a Decision Journal include:
A decision to launch a new effort to scale-up a new research process.
A decision/recommendation to STOP working on a current high-priority project.
A decision to launch a program to improve manufacturing yields.
A decision to significantly change the approach on an existing process-centric project.
A Decision Journal is really a way for us have some Quality Control on our important decisions. It can help learn to deal with “hindsight bias”, our tendency to overestimate our ability to predict outcomes that in actuality cannot be predicted. Other benefits of using a Decision Journal:
The decision is documented for future reference and learning. This can be very helpful!
The range of outcomes can be communicated to stakeholders so they are familiar with the full spectrum of outcomes.
Separate versions of a Decision Journal can be completed and compared by different individual key stakeholders, then compared together in a group setting. This can be a very effective way to get a small group focused and collaboration on an important decision.
My main learning from this line of thinking is the power of being clear and disciplined with our decision-making. The Decision Journal is a simple system, but it can help us improve our decision making over time. If we improve the quality of our decisions, it will help us improve our outcomes. This kind of applied learning can provide tremendous leverage and compounding over time.
CHALLENGE TO READERS
Please think about an important upcoming Process Engineering decision you have to make…
Can you “test-drive” using a Decision Journal for the decision of interest? Try filling out the Decision Journal (very quickly) to get an idea of how it might be helpful.
Can a Decision Journal be made an integral part of your Innovation Process? Use of Decision Journal as part of the gate-passage process could be very helpful.
What are your methods for making good decisions, and for improving your decision making ability over time? I’d love to chat about it with you (508-410-8081) and learn what your insights and experiences are.
If you email me I’ll get back to you promptly, thanks.
All the Best,
Marty
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