Decision-Making Process or Luck?

Have you ever noticed your interactions with friends, family or coworkers, that some people seem to always make the correct decision? It doesn’t matter if its career, personal life or being at the right place at the right time. These people are always coming out ahead in any situation. If all things are equal and there’s 20 different choices, these people always pick the correct option. It’s like they have the answers to life at these pivotal times and have no qualms about using this interstellar “cheat sheet” but then, who of us wouldn’t if given the opportunity.

Well guess what? All of us might be able to improve our decision-making process by simply using two simple tool’s called Bayes Theorem and percentage analysis which are discussed in Charles Duhigg’s book Smarter faster better, the secrets of being better in life and business. Many of us are using this but we’re just unaware that we are and then there’s some who simply are rolling the dice and hoping its not coming up snake eyes. It doesn’t matter what you call it, luck, intuition or magic, there is a force out there and let’s take a look how it might just improve our odds.

Correct Choice or not?

Let’s look into the process that is used by many to determine which action to take or decision-making process to use when presented with a problem. Simply put, what is the correct answer and how do you determine if your answer is correct or not? It seems that in life there are people who always make the correct decision on every question. Quite simply these people most likely have an innate sense of determining the correct decisions, are very lucky or have a large knowledge base to draw upon that leads to the answer. We will explore using percentage analysis to determine what the correct answer is along with the concept of Bayes Theorem which everyone uses but we just don’t know that we are.

(Duhigg, 2016)

Bayes Theorem

First, let’s define what Bayes Theorem is and what it’s used for. Bayes Theorem is used in probability theory and statistics. Bayes Theorem describes the probability of an event, based on prior knowledge of conditions that might be related to the event. For example, your brother tells you he’s going to dinner with someone. You know that around 90% of his friends are male, thus odds are his dinner guest is male. You then find out another piece of information that he will be meeting someone from work. You know that your brother’s co-workers are 70% female so your educated guess is that he will be going to dinner with a woman. This is Bayes Theorem in a nutshell. You have your “baseline” which in this case is your brother is going to dinner. Every factor you add upon this baseline adds to a more accurate answer. Everyone does this every day to answer questions, but some people are better than others in their analysis of a situation. Bayes Theorem can be used for any decision-making process, you just need to know what the important factors to include in your analysis for a more accurate answer.

 (Triola, 2014)

Percentage Analysis

The next item to explore is using percentage analysis for your decision-making ability. An example of this is, your boss comes up to you and tells you congratulations you just been promoted but to the Cleveland office and he’s giving you the choice on whether or not to take the promotion.

1. Your industry has been hit hard by the recession and you have heard that 20% of the offices in the company will be closed soon.
2. The Cleveland office has been struggling for years and you feel there is a 60% chance it will close in the next 3 years because of the struggling economy.
3. You know if you lose your job with the company and living in Cleveland, the ability for you to find another job paying the same in a year is 90% against you.

How it works

So…. What’s your answer? You know if you stay where you’re at there is an 80% chance of you having a job in three years. If you move to Cleveland, the odds are 75% against you. Using this simple example where all factors are balanced the same, you stay where you’re at because of your odds being better staying in place.

Pro’s vs. Pro-tender

Using percentage analysis, you will always have uncertainty in your decisions, but most people want the correct answer and thus won’t act. Not making a decision is in fact making a decision to do nothing. In life there’s never a 100% chance for success on any of your decisions. Your ability to analyze and come up with an answer quickly is what separates professionals from the amateurs. Another concept that some people have trouble with is imagining multiple futures depending on your action. If the odds are against you now for an outcome you want to happen, you can do things to help improve your overall odds for success in your final objective.

(Duhigg, 2016)

Real Life?

You can see where using this method can help you in business. By analyzing all scenarios, you can answer a lot of questions. Where to build a factory, what products should I focus on, and pricing of our product. Using the techniques listed above will certainly give us a clearer roadmap for the best decisions to hopefully put us in a profitable position.

Now Get Out There

Now its time for you to get out there and practice these principles. There will be a learning curve but then there always is in life. Don’t get bogged down in the question. Make a decision and go with it. If it doesn’t work, then pivot. Let’s not get ahead of ourselves. That is for another post at another time. For now practice, practice, practice.