Thread by @AdeshraNikunj

How to Make Smart Decisions Without Getting Lucky !

The decision-making principles in this thread are both practical and time-tested. They work in the real world.

Thread 🧵

Few things will change your trajectory in life or business as much as learning to make effective decisions.

Yet no one really teaches us what it means to make consistently high-quality decisions.

In this guide, we’ll cover

-No One Taught you How to Decide
-Your Mind is a Pattern Matching Machine
-Decision Making
-Smart People Make Terrible Decisions
-Sources of Stupidity
-Intelligent Preparation: The World Is Multidisciplinary
-How We Make Decisions

Let’s dig in,

1. No one Taught you How to Decide

There is no class called “decision making”

Making better decisions isn’t one skill but rather a series of tools & frameworks

What distinguishes consistently good decision-makers from poor ones is a series of diverse mental frameworks & tools

Most of us operate like a carpenter with only a hammer

To us, every problem looks like a nail. No matter the job, we pull out our hammer and attempt to make it work

While a hammer can often get the job done eventually, it comes with a cost

A poor decision could cost lives, impact countries, or even start wars

A hammer isn’t enough, we need more tools

2. Your Mind is a Pattern Matching Machine

You probably don’t know it but you already think in mental models.

Mental models are mental chunks of knowledge that represent a concept.

Gravity is a model. So are probabilistic thinking, inversion, and entropy.

Mental models shape how you think, how you approach problems, and how you identify the information that matters and ignore what doesn’t.

The mental models in your head are your cognitive skillset.

3. Decision Making

Think about the state of your life, your career, your business, your major relationships — anything consequential to you

How many important decisions have you already had to make?

With the benefit of hindsight, how well did you make them?

How many decisions did you make today? How did you make these decisions? Is there a better way?

Not all decisions matter. Most decisions, like where to grab a sandwich, are unimportant

Yet some decisions are critical, they change our lives. Whether its who to trust, where to live, or whom to marry,these decisions reverberate for years

Yet most of us often fall back to the pro-con list which has blind spots, where we list the +ve and -ve things of the decision

4. SMART People Make Terrible Decisions

Think about these decisions

-Imposing emergency rule in India in 1975 by government
-Napoleon decided to invade Russia(and Hitler did it again 130 years later)
-NASA’s decision to ignore the O-ring issues on the Challenger & many more..

These were catastrophic decisions made by people who were, in some sense, professional decision-makers.

They had impeccable credentials & judgment, & yet they made poor decisions due to poor judgment, a too-limited mental representations of the world, or just plain stupidity.

5. Sources of Stupidity

These are top 5 reasons we fail to make effective decisions

a. We’re unintentionally stupid:

We like to think that we are rational & capable of interpreting all information in a non-biased way but that’s a dream.

Cognitive biases are gr8 at explaining how our evolutionary programming leads us astray

There are many easily recognizable situation that increase the odds we’re about to do something stupid

When we’re tired,rushing, distracted,operating in a group,we’re more prone to stupidity

b) We have the wrong information

Making decisions with the wrong assumptions or facts is likely to lead to disaster

c) We use the wrong model

We use mental models to make decisions

The quality of those models determines the quality of our thinking

There are a variety of reasons that we use false, incomplete, or incorrect models

Novices are prone to using models that the expert knows are incomplete or irrelevant

The odds of employing the wrong models increase as the pace of environmental change increases

d) We fail to learn

We all know the person that has 20 years of experience but it’s really the same year over and over.

Well, that person is sometimes us.

If we don’t understand how we learn, we’re likely to make the same mistakes over and over.

e) Looking over doing good

Our evolutionary programming conditions us to do what’s easy over what’s right.We hate criticism & seek the validation of our peers

We want to feel good about ourselves 1st & have the outcome we desire 2nd

Luckily,we can reduce the odds of stupidity

6. Intelligent Preparation: The World is Multidisciplinary

We live in a society that demands specialization

In one sense there is nothing wrong with this but a byproduct of this niche focus is that it narrows the ways we think we can apply our knowledge w/o being called a fraud

So we think,

-physicists can’t teach us about love
-mathematicians can’t instruct us on how to run a business
-bloggers can’t contribute to philosophy

This is not true. Knowledge is hard to come by.

7. How We Make Decisions

When was the last time you thought about how you make decisions?

If you’re like most people, you’ve never been explicitly taught how to make effective decisions

You make decisions like a golfer who never took any lessons: miserable with the state of your game & yet not seeking to learn a better swing,

& instead hoping for the best every time you lift the club.

Hoping that this time your choice will finally work out.

In the 1980s,Charlie Munger & Warren Buffett saved their Savings & Loan operation by dramatically changing their course when the S&L industry collapsed

They saved themselves a great deal of stress & financial pain by applying a uniquely effective system of organized common sense

The lesson for us is that the people making consistently good decisions take advantage of how the world works. That’s wisdom

While everyone else is guessing, falling into old patterns, blindly following cognitive biases, we can be clear-headed and laser-focused

Bonus: General Thinking Concepts

Combining intelligent preparation - learning about the big time-tested ideas from multiple disciplines - with general thinking frameworks will dramatically improve your decision-making skills

These thinking frameworks help you look at problems through different lenses

-Inversion: Otherwise known as thinking something through in reverse or thinking “backwards,” inversion is a problem-solving technique

-Second-Order Thinking: Ask yourself, “And then what?”

Recap:

1. No One Taught you How to Decide
2. Your Mind is a Pattern Matching Machine
3. Decision Making
4. Smart People Make Terrible Decisions
5. Sources of Stupidity
6. Intelligent Preparation: The World Is Multidisciplinary
7. How We Make Decisions

And that’s it folk’s!

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Reference: fs.blog