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How to Get Better at Making Life-Changing Decisions

When I quit my job in February 2020 to go full time into my start-up, it seemed like a really good decision. The market had been flourishing for over a decade, our business was just picking up, we were building our customer base and getting more and more traction and it generally was the best time to be in the business of connecting people in their office. Until three weeks later, when the first lockdown hit Germany. Offices were completely empty, every single customer had other things to worry about than us and our business was 100% obsolete. This status would technically only last until May, but effectively for us, the change was permanent.

I am surprised that even today friends, former colleagues and business partners ask if I am regretting the decision to quit because, as they perceive it, it obviously was a really bad one. In fact, the opposite is true - it was a great decision. And this fact will never change (unless we at some point invent time travel which, at the time of writing, seems unlikely).

This is not because things are going well today in the business, it's because the quality of a decision can never change in retrospect.

To understand this statement, let's take a step back and look at what makes decisions hard in the first place:

The Green Zone

You know exactly what you're doing, you know which decision will lead down which path and it really doesn't even feel like you need to think about it. Not much to worry about up here. You did your homework.

The Orange Zone

With little information to judge and a situation where it seems as if it matters not whether you go with A or B, typically these are all the small, seemingly insignificant decisions you take through the course of a day.

The only question is if the many small decisions you take in quadrant Orange won't, after all, stack up and you could actually get a significant long-term improvement by collecting general information.

The Danger Zone - Quadrant Red

This quadrant is where your judgement is orders of magnitude off - and you don't even know it. It's where you make the by far biggest mistakes of your life, and you may never realize you did.

It's when you have two half-hour meeting with some local banker, sign a loan for a house that will take you 30 years to pay off and - if you are lucky - half-way through the repayment you realize that actually it was a really crappy deal and you should have asked for an outside opinion 15 years ago.

Actually, this segment should probably be called the blue zone. Because this is exactly how it makes you feel every time you feel like you've done your homework, but actually the amount of work you have put into getting to a conclusion are completely disproportional in regards to the gravity of your decision.

The key to learning to make better choices in these life-altering situations is to understand just how big of a blind spot you are facing and how many unknown unknowns you are dealing with.

In case of the loan: If you don't have the first clue about finances it's probably worth spending 30 hours to have you bases covered, rather than 30 years of paying debt that could have been 15.

The Headache Zone - Quadrant Yellow

You have two job offers. The pay is similar, the teams are both great - but the roles are very different. You know what each role will entail, but you can't really say where each will lead after you settle in. You did all the homework and research and yet, the decision seems incredibly hard. The complexity of possible future outcomes is just too great and it seems that making a mistake here may haunt you for the rest of your life.

Wait, doesn't the chart above say that there is hardly any difference in the outcomes of the yellow quadrant? Will there not be a huge impact on the trajectory of your entire life whether you take one job or the other?

Yes, there will be!

And yes, it matters a lot which one you pick.

But also, it won't matter much which one you picked.

If you have to choose between an entry level role as a programmer or as a graphics designer - of course each path will shape you in a unique way.

However, while this is true, it is also mostly unpredictable where each will lead you. In either case you could, after a couple of years on the job, decide to pursue another career in HR, become a consultant or make a complete shift and become a ski instructor.

So for the decision today you can do your research on the role, get to know the team and decide for yourself if the salary meets your expectations. You can look at the industry trajectory and a few other facts. You can play through different scenarios for the future and check if your requirements still hold up. But if you have done all your homework and the decisions still seems as if you could as well flip a coin, then chances are a coin is your best friend.

To sum up the quadrants and in order to get better at moving forward with less regret, you must understand the following:

1 - Your biggest decisions in life, the ones where the only real decision criteria are potential future scenarios for which you cannot determine their respective likelihoods, matter the least.

2- The decisions where the outcome in terms of your own personal value vary the most, matter the most. So do an appropriate amount of homework!

3 - The decisions for which you evaluated all the facts, figures and scenarios based on the available information and made a judgement call, will always be good decisions.

The quality of a decision can and will never change in retrospect. Really all you can revise and refine is the process of how you got to the point of going "A or B". The reason is, that for some decisions the complexity of all the future possibilities is too great - and if they are all equally likely, there is no difference between them. In Math, specifically in Game Theory, this is the concept of "Expected Value". It is essentially a formalized, mathematical way of calculating the likelihood of different outcomes, multiplying each likelihood with the value of the outcome and then comparing the results. If they are all the same or very close to one another, the choice matters not.

When have you come across an incredibly hard decision that seemed impossible to make? Please leave it in the comments, I'd love to hear about it!


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