Five Rules For Effective Decision-Making

It’s difficult to have consistent success without a high-level decision-making skill set. To an extent, success is simply making the right decisions in the right moments over an extended period. So it would be a poor decision to ignore decision-making as a skill set. Lucky for you, this article contains the five crucial rules for making great decisions.

Rule #1: Be Proactive

The antithesis to effective decision-making is often mistaken to be bad decisions, but indecision is the true culprit. Letting life passively flow past you takes little energy and appears low risk, but in reality, it poses the most significant one — the risk of becoming a victim to circumstance. At least bad decisions allow you to learn. Wrong turns tell you where not to go. Bad relationships tell you who not to date.

When posed with a critical decision in life or business, the worst thing you can do is not make one. Yet, the average person’s most impactful life decisions happen by default. The job they fell into and never quit, the spouse they married or took for granted, the loss of vital clients to their business, and health deterioration — All results that stem from avoiding decisive actions. Indecision gives away the power you in any situation. Don’t let this be your case!

What’s worst is the reason why we’re indecisive. Not because we genuinely don’t care but because we don’t want to deal with consequences. Avoiding decisions defers problems and also leaves a little wiggle room for us to shift blame (either consciously or subconsciously) down the line. It’s no way to develop character. Character requires shouldering responsibility and embracing consequences.

This first rule is critical. If you are highly indecisive, it’s time to take control of the decisions in your life. Exercise your free will and accept the responsibilities that accompany it. If you struggle to embrace the consequences of making bad decisions, here are a few characteristics embedded in every decision that should help:

• Very few decisions will ever produce high-impact results — most of the decisions you make result in short-lived or unimportant consequences (see Rule#2)
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• Most effort after a decision will not achieve the intended results — Very few outcomes end up exactly as planned.
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• You’ll never be able to predict every single variable — There will always be unknown forces at work.
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• The information you obtain will rarely represent a reality of the situation — You’ll always be working with less than perfect information.
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• It’s never worthwhile to attempt to investigate every unknown — Take what’s visible and make a move.

Being a great decision-maker is just having confidence in the information you do have and committing to it. As long as you’re doing your best, nobody can earnestly fault you because of the uncertain nature present in every decision. As you accept these uncertainties and continue to make decisions to the best of your ability, you will get better and gain confidence in yourself.

Rule #2: Not Many Decisions are That Important

The majority of decisions will not impact our lives in meaningful ways on their own. Maybe 5% of all the decisions we make will have a more significant impact, but beyond that, consequences are minimal. In most circumstances, the anxiety we experience leading up to a decision far outweighs any outcome. So don’t agonize over the unimportant.

Each time a decision is in front of you, ask, “Is this important or unimportant?” If it’s the latter, waste as little time as possible on making your choice. Don’t overanalyze. Just commit to one and move forward.

Rule #3: 80/20/100/100

I discovered this process by the author Richard Koch, in The 80/20 Principle. When faced with an important decision, he states:

“Gather 80% of the data and perform 80% of the relevant analysis in the first 20% of the time available, then make a decision 100% of the time and act decisively as if you were 100% confident that the decision is right.”

This rule is fantastic for overcoming analysis paralysis, a form of avoidance behavior that comes from the feeling like there is never enough information. The tricky part is setting a time limit. Some important choices are open-ended, so there isn’t a clear deadline. In such cases, create an artificial deadline to increase the sense of urgency.

Rule #4: Accept Losses and Be Quick to Fold

Simple but not easy. If what you choose isn’t working, pivot. Change directions as quickly as possible with the lessons learned. Unfortunately, two things keep most people from pivoting. Avoid them:

• The sunken cost fallacy — feeling like the time already invested should impact your decision. It shouldn’t. Especially if the direction you’re going is wrong, then the more time you add leads only to a heftier cost, not a gain.
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• Ego — Not wanting to admit that you’re wrong. Most people see changing directions in life as a weakness, but it’s far from it. It’s a character strength to admit wrongdoing and shift to a new frontier. It’s never easy, but it’s even harder to live and progress, knowing there’s a better way out there.

There’s nothing wrong with accepting losses and shifting your progression. The faster you make the pivot, the fewer consequences there will be. And when your decision affects others, it’s essential to mitigate their losses. In order to maintain integrity and trust, you have to be honest and forthright.

Rule #5: Double Down on Wins

On the other side, don’t be shy about doubling energy and efforts when things are going well. Exploit positive outcomes by reflecting on the variables that led to the result and investing heavily to enhance the winning strategy.

Stay humble and vigilant. Big wins fuel the ego and camouflage deficiencies. Two ingredients that inevitably lead back to poor decisions. Remain critical of your outcomes no matter what and challenge the idea that you’re doing everything right.

Final Notes

Whenever we have the power to choose, we have to accept that consequences follow every choice. Whenever you pick up one end of the stick, you inevitably pick up the other as well. Mistakes will occur when we don’t like the other end of the stick we’ve picked, but they rarely last forever and usually offer good insights.

In business, results are measurable and transparent. In life, they’re a little more complicated. Still, if we have effective feedback loops and accountability checks in place, we gain a more honest perspective on what’s actually happening. The advice here is not to shy away from decisions and instead embrace the lessons they offer. Effective decision-making is the art of knowing what the desire is and having the courage to commit to the best path towards it.

Start committing and follow these rules to enhance your commitments.