When to Decide

From Shane Parrish’s Decision Making Course

When to Decide?

The Automatic Behavior: Decide as soon as possible or as late as possible but never in between.

Bad decisions are the result of information we wish we knew at the time of the decision so it makes sense that we’d want to wait and gather information.

If we act too soon on the information we gather- we miss out on vital information that could change our decision.

If we act too late, we miss out on opportunities.

So how do we know when to keep gathering information and when to act?

As a leader you really want to think about the pace of decision making. The more irreversible and consequential a decision is, the more we want to wait and gather information until the last possible moment before making a decision. Bad decisions are the result of information we wish we knew at the time of the decision so it makes sense that we’d want to wait and gather information.

We can think of this as as soon as possible or as late as possible. What we want to avoid is spinning out in the middle.

When decisions are easily reversible or inconsequential — moving slow and letting them linger and occupy mental space is the biggest risk.

If you can take something back, or it doesn’t really matter, gathering too much information becomes a drain on resources.

For example:

If you’ve ever bought a mattress, you’ll know exactly what I mean. You spend hours — if not days looking at matresses, reviews, prices, and considering if you’re a hot or cold sleeper. You think about it ad nauseum. You finally pick a mattress and get it delivered, only to find that it isn’t what you dreamed of. So, you exchange it for your next option anyways. You could have saved hours or days picking one within an hour, just making sure it had a flexible return policy, and moving on.

If the decision is reversible and inconsequential, make it as soon as possible. You’ll save time, energy, and resources that you can use for the decisions that really matter.

This works in a team too. When you delegate these decisions to the right person it allows them to build up their judgment and motivates them. When you slow down reversible and inconsequential decisions, it’s demotivating

If the decision is irreversible and consequential — you want to gather as much information as possible before deciding. The biggest risk here is moving too fast and missing something.

When the stakes are high and you can’t take it back, you want to decide as LATE as possible. That is, decide at the very last minute. Keep as many choices on the table as possible while learning more as you wait.

You want to give yourself as many options as possible in the future so that if something changes, you have space to move and position yourself in the path of greatest opportunity.

How do you know when it’s time to finally act?

Anyone who has held onto a job, relationship, or investment too long knows that there’s a point of diminishing returns on information gathering.

When it comes to decision making, we reach a point when we find ourselves pouring over the same information over and over again, or having the same argument, or paying to fix the same problem. In this case, we’re suffering in the moment and since unable to gather more useful information. But like all things, waiting as long as possible has diminishing returns.

A quick shorthand for when it’s time to stop deliberating or gathering more information, and when it’s time to act is “Stop, Flop, or Know.”

When you — STOP gathering useful information.
When you- First Lose an Opportunity (or FLOP)
Or when you – Have gathered a critical piece of information that makes the choice clear.

First, act when you’ve stopped gathering useful information.

Beyond a certain minimum amount, additional information only feeds what psychologists call “confirmation bias.”

The information we gain that conflicts with our original assessment or conclusion, we conveniently or ignore or dismiss, while the information that confirms our original decision makes us increasingly certain that our conclusion was correct.

Here are some signs you’ve hit the limit of useful information you can gather:

You’re googling things in a panic to learn more.
You’re asking people for advice who are more than one step removed or don’t have experience solving these problems.
You’re going over the same information (or same argument) more than once.
When you’ve hit any of these points, you’ve got all the information you’re going to get. It’s time to decide.
That’s “stop”. You’ve “stopped gathering useful information”.

Now, let’s talk about “FLOP” your “First Lost Opportunity”.

If you’re facing an irreversible and consequential decision- and your goal is to hold out on deciding as long as possible-your red flag for when you have to decide with the information you have is when you’re losing opportunities.

Remember, the goal of “As Long As Possible” is to preserve optionality. When options start diminishing you know it’s time to act.

When selling a house, maybe you want to wait as long as possible to actually sell. You can go so far as to list it, put a price on it, and get offers. But if buyers start walking away, or you’re about to break a legal contract, then you’re losing options, it’s time to act.

If you’re having that conversation with your partner about taking your relationship to the next level- be it going steady, living together, or getting engaged and married, those are big defining moments. If your partner wants to live together and you’re not sure and want to spend some more time with them first eventually they’re going to get fed up and walk away. Right before they do, you’re about to lose options and you know it’s time to decide.

That’s FLOP. You wait as long as possible to decide, until your first material lost opportunity.

Finally, when you “know”.

Know is about identifying the critical piece of information. When it comes to the decision you are currently trying to make, what is the piece of information that, if you had it, you would immediately know what to do?

If you’ve waited as long as possible, and you’ve hit “Stop, Flop, or Know” prepare to commit 100%.

Three Techniques to Preserve your Optionality:

Keeping extra distance between cars allows you to keep options open for whatever might happen.

This is the same reason for waiting as long as possible when making an important decision. You want to give yourself as many options as possible in the future so that if something changes, you have space to move and position yourself in the path of greatest opportunity.

You can preserve your optionality using three techniques:

Avoiding the worst-case scenario
Shooting bullets not cannonballs
Living with the decision before executing

The first way to preserve optionality while gathering information, is to invert the situation and avoid the worst outcome.

Launching a rocket is a consequential and irreversible decision. In decision making— especially in high consequence decisions — you might not know the route to the best outcome. But if you can avoid the worst outcome, you get to maintain the option to keep playing the game — to keep deciding. By avoiding the worst possible scenario, you preserve optionality.

When you don’t know how to achieve something and you’re gathering more information, eliminate the options that lead to what you don’t want to have happen or do what allows you to avoid the very worst outcome.

In order to avoid the worst-case scenario, ask yourself these questions:

What’s the worst outcome for the decision you’re making?

Think about the Challenger mission. The worst case scenario they planned for was not being able to launch on time. The true worst outcome was that the space shuttle exploded on live TV.
What options must you take to avoid the worst outcomes?
Which options are left over when you don’t do what leads to the worst outcomes?

Shoot Bullets Before Cannonballs:

One of the biggest risks of deciding before we gather all of the information we need, is being overly invested in one option.

If our business depends on the success of one project, if it fails, the consequences are higher.

We can keep our future options open by taking as many small, low risk steps towards as many options as possible — before committing all of our energy to one option.

“Picture yourself at sea, a hostile ship bearing down on you. You have a limited amount of gunpowder. You take all your gunpowder and use it to fire a big cannonball. The cannonball flies out over the ocean…and misses the target, off by 40 degrees. You turn to your stockpile and discover that you’re out of gunpowder. You die. But suppose instead that when you see the ship bearing down, you take a little bit of gunpowder and fire a bullet. It misses by 40 degrees. You load another bullet and fire. It misses by 30 degrees. You load a third bullet and fire, missing by only 10 degrees. The next bullet hits—ping!—the hull of the oncoming ship. Now, you take all the remaining gunpowder and fire a big cannonball along the same line of sight, which sinks the enemy ship. You live.”

At the beginning of the decision-making process, when you have multiple options to pursue, the best bet is to pursue as many as possible without investing too much time, money, or energy in any particular option.

Shooting bullets over cannonballs is about keeping our future options open by taking as many small, low risk steps towards as many options as possible before committing all of our energy to one option. What are some way you could test your solution to your big decision before committing to it completely?

Examples:

Instead of trying the same sequence again of investing heavily in one CEO and turning down other qualified candidates, I asked him if there were any small test projects we could run to try 2-3 of his tip candidates at the same time, to see how they performed in real life.

I know that seeing the CEO’s in action and being able to evaluate the work they delivered, would be multitudes more insightful than their resumes or interviews.

By doing small simultaneous tests up front, you give yourself as much optionality in the future without having to commit entirely to one option now.

Thinking about medical school? Shadow a doctor or a resident for a day.
Thinking about a new career? Try doing it a few night per week first.
Thinking about launching a new product? See if people are willing to pay for it before you build it.

See if you can try a tiny test of the solution- in other words shoot a bullet and calibrate- to see if it truly holds up to your assumptions before fully committing and shooting a cannonball.

Doing so will give you the most information while you’re deciding and help you keep the bulk of your resources open and when you’re ready to act.

Live with the Decision Before you Announce it.

That’s why I created a rule that I’d sleep on almost all major decisions before telling anyone. This works particularly well for who — that is people—decisions. Living with a decision before announcing it allows us to do a few things:

First, we can check in with our rational brain and verify our assumptions.

Maybe we’re promoting someone and we’re worried about their ability to lead a meeting and organize a team. Living the decision allows us to ask them to organize a meeting and see what happens so we can calibrate if we need to..
Second, we start to see information in a new light. Once we’ve mentally made the decision—even if we haven’t communicated it—we start to see things in a new light. All the incoming information gets filtered as if the decision is already made. This can often help us see nuances we might have missed that may impact how we implement the decision.
Finally, if we live with the decision on our own for a day or even two, we can check in with our emotional selves.

Does this decision feel good in our bodies? Do our brains and our heart and our guts agree? Most decisions will feel fine. But a handful won’t. If it doesn’t feel right, it’s a sign that something is off and you need to dig deeper before announcing your decision.

By keeping the decision to yourself before executing, you gain time to have an undo moment, check in with our emotional brian, and gather information in a new light right up to the last possible moment- instead of after.

When you’re waiting as long as possible to gather information and decide because no clear choice has arisen — put yourself in the position that gives you the most options in the future by using these techniques: Avoid the worst-case scenario, shoot bullets before cannonballs, and live with the decision a bit before announcing it.

If you don’t know if quitting your job is the right decision, gather more info. Maybe all you know is you don’t like your current job. If you quit before you have a new job lined up, you lose the option to make this one work. Instead, you can start applying for new jobs so you have real choice and something to compare your current opportunity to.

In the meantime If you have to make a decision, make the smallest decision possible — and choose what continues to give you the most options, while preparing for the widest possible range of reasonable outcomes.

This skill of keeping the future open is going to give you a strategic advantage while you move through this program. You now see why we’re going slow, why we’re evaluating all of our options, and how to keep your options open while getting the best information to decide with.

How can I apply this Professionally?

Consider the pace of decisions. Most decisions should be made in less than 48 hours.
Delegate inconsequential and reversible decisions to the lowest level possible in order to develop judgment.
Delegate consequential and reversible decisions to high judgement people on your team.
For Decisions that you can’t make in under 48 hours, you want to determine what information you need to make the decision and what variables you need to monitor to make sure you’re not losing out on opportunities. These decisions should be make as late as possible.
When you catch yourself thinking “I just need to make a decision” ask yourself if you’re spinning and feel like you have to make a decision to make yourself feel good, or if you really need to make a decision.
Live with all “who” decisions for at least a day or two before announcing them to the team.
Avoid the worst case outcomes while you’re waiting.
Find ways to try things before you commit resources.
Give job candidates on the job simulations or tests.
Sell a product before you write it.

How Can I apply this Personally?

Determine a framework for how quickly you’ll make decisions, say if its impact is under $500 you’ll make it in less than 48 hours.
Decisions that take more than 48 hours to make, use STOP, FLOP, or Know as an indication of when to make them.
Live with all “who” decisions for at least a day or two before telling anyone.
When you catch yourself thinking “I just need to make a decision,” ask yourself if you’re spinning and feel like you have to make a decision to make yourself feel good, or if you really need to make a decision.
Find ways to try things. For example, go away with your partner for a week before moving in with them so you can see what they’re like when you’re with them 24/7. Rent in a neighborhood for a year before you buy there.

You’re Ready to Move On To the Next Lesson When the Following are Complete:

I’ve committed to making this decision either ASAP or ALAP.
I know what the worst possible outcome is, and how to avoid it.
I understand small tests (bullets) are the best way to conserve resources until I have clarity and can invest fully (cannonballs).
I’ve listed signs that are common for me that I’m reviewing the same information over and over again, and it’s no longer helpful.
I’ve listed the opportunities I might lose if I wait too long to act, so I can watch out for those and know when it’s time to act if I lose one of them.
I’ve listed my critical piece of information that would make the decision clear immediately.

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