In this post you’ll learn a few answers for the questions: how to improve decision-making skills?
How to improve decision-making skills
The ability to make decisions is not just about the mere act of choosing something or some way over others, but also about making the right choice. In life and business, both one right decision or one wrong decision can be game changing. Below are three things that you can do today to improve your decision-making skills.
1. Be more decisive
One of the things one can do in order to become a better decision maker is as counter-intuitive as it might be: to be more decisive. This means accepting the fact that once in a while we are likely to make the wrong decisions. But through the reinforcement or punishment of the outcome, our brains will get better at finding the nuances that are responsible for positive or negative outcomes. This is true even if one doesn’t know it explicitly. It will be as if the mind has created her own model of decision-making. An example of this is of police officers who have been around for a while, and by a simple glance are able to tell whether a person is a criminal or not. When asked how they know who is the criminal and who isn’t some might have a hard time putting their experience to words. This is what is know as implicit learning.
We learn something, but we are not able to put it into words. We just know we know. So a part of better decision-making skills is experience. The same idea applies to walking. We know we know how to walk, but it can be difficult to explain all the intricacies involved in the act of walking. Parents after a few years, are able to tell whether their children are telling the truth or not, and love mates know each other so well that they are able to tell if their partner likes someone or not in matter of seconds.
2. Avoid deadly decisions
We now know that experience is important in order to learn how to make better decisions, but something even more important is to be able to stay around for long enough for the mind to make its own “theory”/model of decision-making. This is the reason why it’s important to avoid decisions/choices that can wipe you out on the advent that everything goes wrong.
For our personal finances this means not placing all the money in one investment. On the advent that everything goes wrong and the investment goes bust, you can go broke. If you go broke, you won’t have enough time to learn how things work and as a result you won’t learn how to make better investing decisions in the first place. This idea comes from the book “The black swan” by Nicolas Taleb, which teaches us to minimize our exposure to negative black swans events, while increasing our exposure to the positive ones .
For the ones who don’t know what a black swan is read: The black swan in business.
3. Learn from the best
Just like anything in life, decision-making is also about learning from the best. The nuances involved in making decisions on one field A, can be totally different than the ones required for a field B. Learning from trial and error as suggested on tip #1 can be effective, but it has the downside of either causing a wipe out if the error is too costly, or it can take a long time for the mind to come up with the right predictive model/”Theory” of what’s going on. So, learning from the best on the field might be both a shortcut on your learning curve, as well as a preventive measure against negative black swans. As the legendary investor Warren Buffet once said:
“We only learn through mistakes but it’s a hell of a lot easier to learn through other peoples mistakes”
This means to while we try our own methods for decision-making, we also look for and learn from mentors.
The important thing here is to learn from the best. The world is full of people with lots of theories on virtually any existing field. Listening to what everybody has to say is an ineffective strategy because most people don’t know what they are talking about in the first place. How can you know who to listen to and who to ignore?
How to know who to listen to?
Well, you can’t. The only thing you can do is to judge each person not by how smart she seems to be, but for her accomplishments on the field. As the old saying goes: “Don’t ask the barber about stocks and don’t ask the portfolio manager about hair cuts”. The ones you should listen to are the ones you did more than talking. There might be a chance that even their success is due to luck, but the assumption that they are wiser than the ones who just talk but never accomplish anything is certainly the safest bet.
As the investor Tai Lopez teaches us, sometimes the best are no longer alive or are simply unreachable. The best way to have access to their wisdom is through books. Famous people such as Plato and Sam Walton who are no longer alive, have left us with books that can at the very least give us a glimpse to the inner workings of their minds. So, if the mentor you’re looking for is either no longer alive or happens to be unreachable, books about them and their work are certainly a good replacement.
In summary, the art of making the right decisions is one of those things that can only be perfected over time through continuous learning and trial and error. Two Good books to start are: “The black swan” by Nicolas Taleb and “The one thing” by Gary Keller.
It is all about knowledge and experience 😉
Leave a comment below