Smart Choices

1. Define the problem and objectives clearly to make smart choices

A good solution to a well-posed decision problem is almost always a smarter choice than an excellent solution to a poorly posed one.

Frame the problem correctly. Start by clearly articulating what you're trying to decide and why it matters. Ask yourself what triggered this decision and what constraints you're facing. Challenge any assumptions that may be limiting your thinking.

Identify your objectives. Dig deep to uncover your fundamental goals, not just surface-level wants. Ask "why" repeatedly to get to the core of what you're truly trying to achieve. Consider both tangible and intangible factors, short-term and long-term impacts.

Refine your understanding. As you work through the decision process, be open to redefining the problem and objectives if new insights emerge. A well-defined problem is half-solved, so invest time upfront to ensure you're addressing the right issues.

2. Generate creative alternatives to expand your options

You can never choose an alternative you haven't considered.

Think beyond the obvious. Don't limit yourself to the first options that come to mind. Challenge constraints and assumptions to open up new possibilities. Set high aspirations to force creative thinking.

Use multiple techniques:

• Ask "How?" for each objective to generate ideas
• Learn from others' experiences in similar situations
• Seek input from diverse perspectives
• Give your subconscious time to work by starting early
• Create alternatives first, evaluate later to avoid premature judgment

Consider special types of alternatives:

• Process alternatives (e.g., voting, arbitration) for fairness
• Win-win alternatives that benefit multiple parties
• Information-gathering alternatives to reduce uncertainty
• Time-buying alternatives to defer decisions when appropriate

3. Evaluate consequences thoroughly to understand potential outcomes

Consequences are the raw material of decision making.

Describe consequences systematically. For each alternative, outline how it would impact each of your objectives. Use a consistent format, whether qualitative descriptions or quantitative measures, to enable clear comparisons.

Be comprehensive and precise. Consider both immediate and long-term consequences. Don't overlook intangible impacts. Strive for an appropriate level of detail - enough to make an informed choice without getting bogged down in unnecessary complexity.

Use tools to aid analysis:

• Consequences tables to organize information visually
• Common scales or representative values for easier comparison
• Expert input to supplement your own knowledge
• "Try before you buy" experiences when possible

4. Make tradeoffs systematically to balance competing objectives

The essence of the PrOACT approach is to divide and conquer.

Recognize the need for tradeoffs. Most complex decisions involve conflicting objectives - you can't have it all. Acknowledge this reality and prepare to make difficult choices.

Apply the even swap method:

1. Identify two alternatives and an objective where they differ
2. Adjust one alternative to match the other on that objective
3. Make a compensating adjustment on another objective
4. Repeat until dominance emerges or the decision becomes clear

Think carefully about relative values. Consider how much you're willing to give up in one area to gain in another. Be consistent in your tradeoffs across different objectives and alternatives.

5. Address uncertainty by developing risk profiles

Uncertainty makes choosing far more difficult. But effective decision making demands that you confront uncertainty, judging the likelihood of different outcomes and assessing their possible impacts.

Identify key uncertainties. Focus on the unknowns that could significantly impact your decision's outcomes. Prioritize the most critical uncertainties for deeper analysis.

Construct risk profiles:

• Define possible outcomes for each uncertainty
• Estimate the probability of each outcome occurring
• Describe the consequences associated with each outcome

Use decision trees to visualize. Map out the sequence of decisions, uncertainties, and potential outcomes to clarify the structure of complex problems involving multiple uncertainties.

6. Incorporate risk tolerance into your decision-making process

A smart choice doesn't guarantee a good outcome, and a good outcome doesn't prove it was a smart choice.

Understand your risk attitude. Recognize whether you tend to be risk-averse, risk-neutral, or risk-seeking in different contexts. Consider how significant potential losses feel compared to potential gains.

Quantify preferences when needed. For tough decisions, use techniques like desirability scoring or utility curves to explicitly account for your risk tolerance in evaluating alternatives.

Balance probabilities and preferences. Weigh both the likelihood of outcomes and how desirable (or undesirable) those outcomes are to you personally. Don't let fear of unlikely worst-case scenarios or unrealistic optimism skew your judgment.

7. Plan ahead for linked decisions to optimize long-term outcomes

The essence of making smart linked decisions is planning ahead.

Identify connections between decisions. Recognize when current choices will impact future options or when gathering information now could improve later decisions.

Map out decision sequences. Use tools like timelines and decision trees to visualize how choices and uncertainties unfold over time. Consider both information-gathering decisions and future implementation decisions.

Think ahead, work backward. Start by envisioning desired end states, then work backwards to determine what choices now will best position you for future success. Be prepared to adapt as new information becomes available.

Develop flexible strategies. In highly uncertain environments, create plans that allow you to adjust course as circumstances change. Consider options that keep multiple paths open rather than committing irrevocably to a single approach.

8. Avoid common psychological traps that hinder good decisions

The best protection against all psychological traps is awareness. Forewarned is forearmed.

Recognize common biases:

• Anchoring: Over-relying on first thoughts or initial data
• Status quo bias: Favoring the current situation unnecessarily
• Sunk cost fallacy: Letting past investments unduly influence choices
• Confirming evidence trap: Seeking information that supports existing views
• Framing effects: Being swayed by how a problem is presented
• Overconfidence: Underestimating uncertainty in estimates

Implement safeguards:

• Actively seek diverse perspectives and conflicting information
• Challenge your own assumptions and initial reactions
• Use objective data and structured analysis to counter gut feelings
• Reframe problems in multiple ways to gain new insights
• Be honest about probabilities and uncertainties

9. Apply a structured approach to complex decisions for better results

The PrOACT approach meets the six criteria: It focuses on what's important. It is logical and consistent. It acknowledges both subjective and objective factors and blends analytical with intuitive thinking.

Follow a systematic process:

1. Problem: Define the issue clearly
2. Objectives: Identify what you're truly trying to achieve
3. Alternatives: Generate a range of creative options
4. Consequences: Evaluate potential outcomes thoroughly
5. Tradeoffs: Balance competing objectives systematically
6. Uncertainty: Address unknowns explicitly
7. Risk Tolerance: Account for your comfort with risk
8. Linked Decisions: Plan for interconnected choices

Tailor the approach. While following a structured method, remain flexible. Adapt the level of detail and emphasis on different elements based on the specific decision context and your needs.

Combine analysis and intuition. Use analytical tools to provide structure and overcome biases, but don't ignore your gut feelings entirely. Intuition based on experience can offer valuable insights when applied thoughtfully.

10. Cultivate wise decision-making habits for lifelong success

Making smart choices a way of life.

Embrace proactive decision-making. Don't wait for problems to arise; actively seek out decision opportunities that can improve your life and work. Take control of your choices rather than letting circumstances dictate them.

Develop your skills continuously:

• Practice applying decision-making techniques to both small and large choices
• Reflect on past decisions to learn from both successes and mistakes
• Seek feedback from others on your decision-making process
• Stay curious and open to new approaches and information

Create a supportive environment:

• Surround yourself with people who value thoughtful decision-making
• Build time for reflection and analysis into your routines
• Cultivate a growth mindset that sees challenges as opportunities to improve

Last updated: January 23, 2025