How to make smart decisions

In this article I interview Roman Tschäppeler the co-author of The Decision Book about how to make smart decisions!

In this article:

• The too much information paradox
• Beware of the sunk costs fallacy
• Why you should have a stop-loss
• Why you should test drive your decisions
• Questions to ask before making any big decision
• Decision making mistakes to avoid

Let’s begin:

The too much information paradox

Michael Frank: Let’s get straight into it. How do we make better decisions?

Roman Tschäppeler: You need to do your homework and research before making any big decision, and generally the more information you gather the more confident you’ll be that you’ll make the right decision.

Michael Frank: Yeah that’s important. I don’t think that two options are ever equal, however they can be equally vague or mysterious. So by doing your homework and getting educated on the likely consequences of your decisions, you’re less likely to make a poor one.

Roman Tschäppeler: Yes, but there is a tipping point. It’s possible to know too much and to overthink it. We can call this the too much information paradox. Brain scans show almost identical images between someone who is confused because they don’t know enough, and someone who is confused because they know too much. So during the preparation phase you want to have enough information to make a decision, but not so much that it overwhelms you. You only need enough information to decide. So make a decision about how much time you’re going to invest in researching a topic ahead of time so you don’t go overboard.

Michael Frank: So not enough information is a problem, but so is having too much information, both can lead to analysis paralysis, not knowing what to do.

Embrace your decisions

Roman Tschäppeler: Yes exactly.

Soren Kierkegaard the Danish Philosopher famously said:

“Life can only be understood backwards; but it must be lived forwards.”

We often have to make decisions without knowing how they’re going to turn out, and often the consequences of our decisions are bigger at the beginning of a project than they are at the end.

But ultimately I think it’s not about whether or not you’ve made the right decision, it’s about how you live with that decision. I think that’s the most important part in decision making.

You have to decide and then embrace your decision and live with it in the best way possible. Be proud of the decision without doubting yourself. If you don’t you’ll be unhappy.

But beware of the sunk costs fallacy

Michael Frank: I agree that once you’ve made a decision you should back yourself, however when you make a decision there is also something called the sunk costs fallacy which is when you’ve invested so much money, time and energy into something e.g. a business, career, relationship, that you refuse to change your mind about it even though it isn’t working. Instead of changing your mind and doing something different, you double down because you don’t want to see all of your time, energy and money go to waste.

However I think it’s good to periodically review the decisions you’ve already committed to with fresh eyes. If you’ve made a decision to start a business or to change careers or to move to another country, but it just isn’t working out the way you thought it would, there is nothing wrong with saying “I was wrong” and changing your mind and making a new decision given what you know now, instead of stubbornly continuing to go down the wrong path putting good money after bad and wasting even more time and energy. It’s better to cut your losses, move on, and try something else.

What are your thoughts?

Have a stop-loss

Roman Tschäppeler: I completely agree with you. This is true. Not all decisions are permanent, many are reversible and can be changed.

I recommend you ask yourself before making any big decision: Can I reverse this decision if it doesn’t work out?

You can also incorporate a stop-loss into your decision just like you would with a stock. So if the decision isn’t working out the way you thought it would, or if the circumstances of the situation change, or if you move somewhere new but don’t like it after a year, then you can re-decide and go back to your old life.

Michael Frank: I think having a stop-loss in place for your decisions is an excellent idea. It’s best to pull out if things aren’t working out the way you thought they would.

Test drive the decision

Roman Tschäppeler: I also recommend you test drive the big decisions.

Instead of getting married, why not live together first?

Instead of buying a Tesla, why not rent one for a month first?

Instead of moving to the other side of the world, why not go and stay there for a month first?

All big decisions should be test driven if possible.

S.M.A.R.T Decisions

Michael Frank: What else do we need to know about decision making?

Roman Tschäppeler: You need to make sure that your decisions are S.M.A.R.T

Specific – You need to know specifically what it is you want to decide

Measurable – You need to be able to say at the end of the decision whether it was the right decision or not.

Attainable – Your goal needs to be attainable. There is no point in aiming for something you’ll never reach.

Relevant – Your decision needs to be relevant to your goals.

Time-based – If you have a goal to learn Spanish, by when will you learn it?

Skip pro/con lists

Roman Tschäppeler: I also think you should skip pro/con lists.

I don’t like pro/cons lists because what if you have 5 pros and 5 cons?

What if you have 3 really strong pros, but 15 really weak cons?

What do you do then?

I would replace pro/con lists with two questions which are similar:

1. What is pulling me from the status quo?
2. What is holding me in place and keeping me stuck in the status quo?

This is a little different and it shifts your perspective.

Michael Frank: I also believe that most of the time people are just kidding themselves because they already know what they’re going to do. So when they write down their pro/con list, they often just stack up the pros heavily on the side of the decision they want to make.

I think if you’re unsure as to whether or not you’ve already made up your mind try this…

Flip a coin:

Heads: Option A

Tails: Option B

As the coin is flipping, do you secretly want it to land on either heads or tails?

Will you be disappointed or relieved if it lands one way and not the other?

If the answer is “YES” – you’re not impartial and your mind is already made up.

Questions to ask before making a big decision

Michael Frank: Let’s look at some questions we should be asking ourselves before making any big decision.

Here are some questions I recommend asking before making any big decision:

• Is this the most important decision you could be making right now?
• What would a perfect decision achieve?
• What would you do if you knew you couldn’t fail?
• What would you do if you only had 6 months to live?
• What one thing, if you were to take action on it, would produce the greatest difference in your life?
• What are the likely consequences of this decision?
  • Will it take you closer to where you want to be?
  • Is it likely to pay off for the rest of your life?
• If this decision turns out to be a mistake can you live with it?
• Will you regret it if you don’t?
• What would be worse: failing or not trying?
• What does your intuition say?
• What would Jesus/Buddha/Einstein/your hero do?
• If someone put a gun to your head… what would you do? (Most of us already know what we’re going to do but we try to play dumb)
• Are you sure these are your only options? You are not limited to the options presented to you
• Are you able to look at the situation objectively or are you too close to it?
• Do you have enough information?
• Are you factoring in realistic probabilities?
  • Anything is possible – but not everything is probable
  • You don’t know what will happen if you make that decision – but what will most likely happen?
• Can you eliminate some options?
  • Remember: You’re not trying to keep as many different options on the table as possible. You’re trying to make a decision.
• Is your mind already made up?
  • If you’re unsure flip a coin

Any other questions we should be asking ourselves?

Roman Tschäppeler: Your list is perfect. You hit bull eyes with everything.

Decision making mistakes

Michael Frank: I also think people should avoid the following mistakes when making a decision:

• Don’t rush into making an important decision
• Don’t let anyone give you a false deadline to make a decision
• Don’t make decisions when you’re feeling tired or emotional because your cognitive faculties will be reduced
• Don’t make lose/lose decisions – McDonalds or KFC? How about neither
• Don’t make decisions based in fear – don’t just choose the safe option. Do what you know you should do.
• Don’t let other people make your decisions for you. You can ask for advice, but you need to take responsibility for your decisions, actions and your life.
• Don’t make decisions based on what other people want you to do
• Don’t make decisions you’re likely to regret. If you know you’re going to regret saying or doing something then don’t do it or say it in the first place and then complain about it later.
• Be very, very careful about making decisions from which there is no turning back – having children, telling your boss what you really think of them, committing a major crime, taking your own life etc.

Are there any other mistakes we should avoid when making a decision?

Roman Tschäppeler: I would say don’t be too obsessed with finding the perfect solution. Don’t overthink it and get too stressed out. Because most of our decisions are relatively inconsequential. If it’s about what kind of ice cream to eat or what to watch on Netflix, it doesn’t really matter what you choose because it’s not life changing. But if it’s starting a family or moving to another country or quitting your job, then you should definitely consider the consequences.

Also it’s good to create more options for yourself, but at the same time it’s crucial that you limit your options, otherwise you won’t be able to decide either. So create options, but then narrow it down. You want to think about it, but don’t overthink it.

Michael Frank: So if in doubt just do something, don’t let analysis paralysis hold you back, but always remember to pay attention to what reality is revealing to you about the consequences of your decision and adjust accordingly.

Roman Tschäppeler: Yes exactly

This interview has been edited and condensed for clarity.

Roman Tschäppeler is a creative producer based in Biel, Switzerland. He has been consulting and producing various projects ranging from documentary movies, ad campaigns, pop music to art installations. He is a graduate from Kaospilot School in Aarhus, Denmark and Zurich University of Arts, Switzerland.

Roman Tschäppeler is the co-author of a bestselling book series: The Decision Book, The Question Book, The Change Book, The Test Book and The Communiction Book Together with his co-author Mikael Krogerus he has been a keynote speaker at several international business, design and marketing conferences.