Chinese or Indian for dinner, buy or Short Tesla, Tiger King or Narcos? Decisions, decisions, and more decisions! We’re always making decisions both significant and mundane whether you realize it or not. Some have a long-lasting impact and some with little or no impact other than leaving us with a monster stomach ache and costing us a few fun trips to the bathroom. And for the record I wouldn’t bet for against Tesla but just enjoy watching the roller-coaster ride!
We stand a lot to gain from optimizing and getting better at decision making. Having been historically not great at this, I’ve been constantly on the lookout for ways to improve my decision-making skills. When I came across this simple yet effective technique while reading Ray Dalio’s book — Principles, I was excited and eager to add this to my repertoire. In his book, Ray Dalio shares the tools and principles he’s used to achieve success in various aspects of his life and business.
While the book was filled with a lot of valuable knowledge and learnings, I wanted to highlight a simple but powerful technique of maintaining a Decision Journal that stuck with me. I’ve been wanting to make it a regular habit for the important decisions I make.
Put simply, whenever you make a decision, record the objectives, your rationale, options considered and information that you used and your predictions of the outcomes when you make a decision in the decision journal. There are a lot more things you could add to make it even more insightful like recording the mood and your feelings at the time of the decision.
This powerful habit has two main benefits:
Mental Clarity and a smoke test — The act of writing things down will help serve as an additional review. It helps crystallize your thoughts and clearly think about the decision-making process giving you another chance to find out anything you might have missed or overlooked before making the decision.
Learn and Optimize — After the decision has been made and you observe the results and consequences of that decision, you can learn from the mistakes by studying the decision-making process, information considered and do a cause-effect analysis to see what caused the failure. You can use this to optimize and calibrate your process and build your decision making muscles! This also gives you a chance to learn what you did well and build on it when the results of the decision were positive.
Clearly it’s an amazing habit all of us would benefit from. While I have used this from time time, I’ve been struggling to incorporate on a consistent basis into my work and personal life while making decisions. But having a bit more time on my hands now, I’m excited to explore ways to build this habit!
To get into a habit, you don’t have to wait for the perfect decision to come along where you can try this out. Aim to start with small decisions. This can be anything from your decision to order from a specific restaurant to a stock you are planning to invest in. Here’s an example of how I used it while considering to invest in Spotify stock (also don’t buy or sell stocks based solely on what you read here!).
Why I’m thinking of investing in Spotify-
→ Market leader in the music streaming industry
→ Made key acquisitions in the Podcasts space
→ Huge MAU (~250M) and almost 125M paid subscribers. Strong business model with the app serving as a powerful platform to monetize the free base.
→ Long term potential in terms of expanding to new markets and capturing the booming podcasts industry
→ Expecting the stock price to hit $200 in the next 2 -3 years
This was not all the information but you get the idea. This gives me a record to go back and see what I might have missed. Here when I revisit it, I realize I have no idea about their cost structure and I can tweak the information I gather next time I consider companies.
A third benefit, more of a tertiary one that I thought of later on is around just giving you assurance or record to view similar decisions in the past when you are stuck unable to decide. As someone who suffers from a chronic indecisiveness problem from time to time for things even as mundane as what to order for dinner spending hours on the decisions without getting anywhere. I think a lot of it stems from the fear of missing out or fear of the consequences. While this method can’t help control that, the decision journal itself can also be used as a reminder for similar decisions and how they played out to make it easier to decide between the options.
There are a lot of fancy templates you can use and questions and information you can record your decisions out there. But start small and go with something that helps you build the habit and then build it out as you progress.
Tell me about a decision you made recently and what you captured in your decision journal!
