It has been a while since we had a new episode in "Invest in you" series. So the topic we are covering Today is "Decision Making".
Among the options and choices we have, what do we choose and how we choose is the decision making process.
Decision making starts from deciding on which shirt to wear to office.
This decision making continues till the end of the day when we browse thru the list of movies in Netflix to decide on what to watch.
We make that many decisions in a day.
That actually make us to postpone some of the important decisions without our realization.
Or we focus more on little decisions and miss out on bigger decisions.
We can follow some tips and trick to fix that.
We will dig deeper into that in this episode. Hi. My name is Vijay Mohan. You are watching "Investment Insights".
We all have the bad habit of spending too much time in researching for the "best" when we are shopping for some product.
Nothing wrong in researching a product before we buy. But spending too much time in identifying the best is questionable.
If we are in the market for a car, we will start looking for the "best" car in the market.
Depending on who we ask, the answer for "best" totally differs.
Someone who enjoys driving would say BMW is the best.
Someone else who enjoys the luxury of the car would say Benz is the best.
A person who appreciates reliability would say Toyota is the best.
So in reality, which one is best? All 3 are correct. All 3 are best. But they are best for different reasons.
That is why we should not be hunting for the best product and waste our time.
We should be focusing on the product that serves our purpose.
As long as that product is reasonably good, that should be good enough. It does not have to be the best.
We don't have to waste our time looking for the best brokerage or best mutual fund.
Each product is best in some category. We have to just compare them all and choose the one that fits our needs.
We cannot always make best decisions in our life. We do not have that much time in our hand.
As long as we are making a reasonably good decision, that should be good enough.
That will enable us to move on to solve the next problem. Else, we will stuck on this illusive "best" decision for ever.
What I am saying is, it is not worth to spend too much time over analyzing on simple decisions.
How can we differentiate between simple and important decisions? Aren't they all important? That is the next tip.
Reversible Versus Irreversible decisions.
Is it possible to revert our decision? If Yes, then it is a reversible decision.
But if it's not, then it is an irreversible decision.
Regardless of whether it is in our personal life or in office, 90% of the decisions are reversible decisions.
Are we not satisfied with our brokerage? We can change that.
Are we not happy with the mutual funds we have chosen? We can change that as well.
These are all reversible decisions and we should not spend too much time in making those reversible decisions.
That does not mean that we can decide blindly. Just that we have to settle for a reasonable option rather than hunting for illusive best option.
This is for reversible decisions. How about irreversible decisions?
It will be difficult to revert these decisions. Like a marriage. Once happened, it is done for.
So if it is an irreversible decision, we should spend as much time as possible to make the right decision.
Many mistake a reversible decision for an irreversible one and spend too much time over analyzing it without reaching a final decision.
It is called as "Analysis Paralysis".
Let's take early retirement as an example. Though many have saved enough for that, they hesitate to make that decision fearing that it is an irreversible decision.
But in fact it is a reversible decision.
After retirement, if it does not work out for whatever reason, we can always come back to work.
Who is going to stop us? But we need strong self confidence to do anything we want.
So without getting stuck in analysis paralysis, if it is a reversible decision, we should settle for a reasonable solution and move on.
If that turns out to be a bad decision, we have to just make a U turn. That is all. Who is going to question us?
That is the next tip. Regret Minimization.
If our decision turned out to be a bad one, we have to just turn around. We should not get dejected by that.
"I took a path. But it turned out to be a dead end. Now I have come back" - this is how we should see this failure.
If we have not taken that path, we would have never found out that it is a dead end.
But we would have lived a life with regret wondering how our life would have been if we have taken that path.
Instead of living with a regret like that, isn't it better to move on to other things knowing that it is a dead end?
Then Uncomfortable decisions. In our life, we will be in many situations where we have to make uncomfortable decisions.
Usually what we do is, we postpone those uncomfortable decisions as long as possible.
But that will stick and irritate our mind like a leech.
It will not let us focus on other important decisions.
We should never postpone decisions like that. We should make them as soon as possible and move on.
Let's say that one of the team member we manage is not performing up to the expectation. We should provide that feedback immediately to them.
We should not postpone on that uncomfortable discussion for long. That is not good for them and for us.
Similarly, if one of our friend is asking for a loan, we should not keep dragging on that decision without knowing how to say NO.
"I can give some money for free. But I cannot lend you money. That will lead to unhealthy friendship", saying that we should close that topic then and there.
We should not postpone the uncomfortable decisions.
If we have too many choices in our daily routines, that will take up lot of time and energy as well.
We make many small decisions everyday. Like - what shirt should I wear? Which shoe should I choose? What should I have for breakfast? Should I take the bike or car to the office?
Though these are all small decisions, without us realizing, these actually tire our mind.
This is called as "Decision Fatigue".
If we spend all our energy on small decisions like these, the quality of the important decisions will be compromised.
If we look at Mark Zuckerberg, Steve jobs, we can notice that they do not have much variety in their clothes.
They mostly prefer the same style.
Because they do not want to waste their golden time on deciding which shirt to wear for that day.
So limiting our choices in our daily routine will help us to make quality decisions everyday.
Also if we automate the routines in our life, we can reduce our decision fatigue even further.
Instead of spending time to choose between walking, running or gym, it is better to schedule them like - running on Tuesdays.
Now there wouldn't be any confusion when we have to decide. If it is Tuesday, we have to just put on the shoes and head out for running.
There is another advantage to this as well. If we have to think to decide between walking, running or gym - what do we usually decide?
TV Time. But if there is a schedule, there is nothing to decide.
Wearing the shoes and running is all left to decide.
So it is better to automate routine decisions if we can.
It is better to avoid making any important decisions when we are under emotional stress.
"Anger dulls intelligence" is not just for an anger, but it is also applicable when we are depressed/grieving or ecstatic.
Emotions do not allow us to think straight.
So it is to our advantage to avoid making important decisions when our emotions are elevated.
What other decision making tips and tricks do you know? Share them below in the comments.
We will review "Managerial Decision Making" in the next episode. Thank You.