As an entrepreneur, most days consist of making lots of complex decisions. But just like any other skill, making good decisions quickly takes a long time to master. Luckily, we’ve found some frameworks to help us think through situations more efficiently. Here are two of the most effective frameworks that we’ve found to help you make choices with the best possible outcome:
FRAMEWORK 1: WRAP
In Chip Heath and Dan Heath’s book Decisive, the brothers explain how there are “villains” in the decision-making process that get in the way of us making good decisions. These cause us to make errors due to cognitive biases. These “villains” are:
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Narrow framing
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Confirmation bias
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Short-term emotions
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Overconfidence
Here’s what we can do to avoid making decisions based on any of these villains:
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(W)iden the frame. Sometimes, we look at our options as A and B. But the best solution could be something else that we haven’t thought of. One way to recognize we’re falling into this trap is to listen to our thoughts. If we hear ourselves say “Should do x or y?” — then we’re falling into the trap. Instead, we should ask ourselves the question “What would I do if x or y was not an option?” This will help widen our frame.
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(R)eality test our assumptions. Because of confirmation bias, we tend to look for information that supports our preconceived assumptions. This can lead us to make wrong decisions, as we’re pushing a narrative that isn’t realistic. While it may be difficult, the remedy here is to actively search for disconfirming information that would make our assumptions incorrect. This way, we’re protecting ourselves from making a wrong decision.
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(A)ttain distance. Notice how much easier it is to give someone else advice about a decision they’re struggling with? We must try to give ourselves that same distance and outsider point of view. We can do this by asking ourselves what we would tell our best friend or partner to do if they were in the same position as we are right now.
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(P)repare to be wrong. We often make decisions based on what we know right now and what we think is best at this very moment. Whether it is a few days or a few months after making the decision, we sometimes realize we took the wrong one. In this case, it’s important to understand — sometimes that is totally fine. The reality is that most decisions are reversible or at least have ways for us to get out of them, and sometimes our life circumstances change. Entrepreneurs like Jeff Bezos and Elon Musk talk about this all the time — mistakes happen and they can often be fixed.
FRAMEWORK 2: REDUCE DIMENSIONALITY
This may be a technique we often hear in Artificial Intelligence and data science, but it’s also very effective when applied to decision-making. Most of us are paralyzed by indecision when we are faced with way too many dimensions to consider in complex problems. Therefore, we should aim to reduce dimensionality. Here are 3 ways we can do that:
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Completely ignore dimensions that we don’t care about. For example, if we’re shopping for a new laptop, not all features interest us. Identify those features that we don’t care about, and ignore them completely.
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Create “threshold” dimensions. Sometimes you only care about a certain factor within a limit. For example, storage on a laptop is important, but beyond x amount of gigabytes, I have sufficient storage, and I don’t need to look for better.
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Put trade budgets in place. This is helpful to help us understand the relationships between different dimensions we have. For example, if we care more about speed than aesthetics, then getting high-speed software is worth way more than having a sleek-looking laptop. This gives us a way to calculate and prioritize the dimensions we care about — and make compromises where we’re willing to sacrifice.
Once we’ve filtered down our choices, we end up with a few real choices that we know all satisfy our constraints. In other words, all the possible options are considered to be “good decisions.”
Sometimes, all you need to do is follow your gut and it works out. But other times, making a decision is a lot more complicated. Using one or both of these frameworks to better analyze complex situations will allow us to make choices more quickly — and increase our chances of the decision being a good one.