Decision-Making – Art or Science?

Have we ever thought about how many decisions we make every day? Hundreds! Starting from what to wear in the morning and finishing with what to cook for dinner. Every day we make a choice. The choice between taking an umbrella or not, join the colleagues at lunch or eat alone, finally, change the country and way of life or to keep it that way. Hundreds of decisions are made in our heads every day, significant and not, small and decisive. How does it work? Information in our brain is transmitted with the speed of up to 120 m/sec. How is it enough to make a decision? One choice can be made in a second, while another requires weeks or even month to make a final decision. We evaluate lots of factors influencing our choices and unconsciously divide them for pros and cons. Whether there is a “magic formula” of making the right decision or it is an intuitive thing? What techniques can we use to be sure that our decision is correct for 100{3fbfd6f1e6b19884051837dbbbebf333964dd5fac151615ffbd47b80e5ecc87a}? Decision-making is neither art nor science- it is balancing on a fine line between them. Let’s see how can we learn to make the right choices and how many processes are hidden under one simple phrase – “I made a decision.”

Lessons From Our Ancestors. Looking Back a Couple Centuries Ago.

Charles Darwin, Benjamin Franklin, Lev Tolstoy, and … ancient Persians. The first question is “what is the connection between all of these people?” All of them are representatives of the different eras and different areas of life, but there is one thing that unites them – all of these world-famous personalities had methods of decision-making. And each of these methods was different.

Charles Darwin in 1838 had faced a life-changing choice – he was deciding about proposing to his beloved cousin Emma Wedgwood. The choice was uneasy, from the one side it was the love of his life, but from another such decision could become a severe obstruction to his scientific career. Darwin decided to weigh all the pros and cons by writing them in two separate lists. The first one consisted of “loss of time,” “quarreling,” “responsibility,” and similar facts that could act as cons to make this decision. At the same time, another list included “children,” “companion for the whole life,” “care of the house” – possible pros of the decision. Only after careful analysis of all these statements, Charles was able to make the final choice. The deliberate choice which was right. Right for him.

Benjamin Franklin used the more advanced technique, although it was also based on the pros-and-cons structure. He called it “Prudential Algebra.” The idea of this technique lied in assigning a numerical weight to each item in the list, after that the counterbalancing items were eliminated. For example, if he found a reason pro that was equal to two reasons con, he struck out the three of them. Finally, he reached the length where the balance lies. Franklin also stated that we under-appreciate decisions whose consequences last for years and choices that can change our whole life. Even nowadays, such “important” from the first view choice as purchasing a smartphone may take weeks of information researches on the Internet, while the life-changing decision such as breakup can be rashly made after a bottle of wine.

Ideally, we had to be sober and clear-headed to make the only right decision. Because of this, ancient Persians discussed big decisions twice – once being drunk and once being sober. Maybe it is the main secret of the art of decision-making?

For Lev Tolstoy, the tendency of making big decisions was one of the greatest mysteries of our existence. That’s true. Are we really in charge of the ways we change our lives? We ideally have to be all-knowing and clear-headed, but in reality, we make decisions in far from perfect conditions. Our choices are influenced by earlier decisions, groupthink, and ignored factors. It is a central problem of the “bounded” reality we live.

Professional Deciders. From Theory to Practice.

Life is a set of choices, and it can’t be understood on a single scale. It would have been much better if we had had one “golden” rule or equation, solving which we get the 100{3fbfd6f1e6b19884051837dbbbebf333964dd5fac151615ffbd47b80e5ecc87a} right decision. But it’s life and all its beauty is in the absence of such “rules.” We choose, decide, make mistakes, learn from this, and continue to live. Unfortunately, the decision-making is not algebra- we can’t take things as an axiom and use it regularly. However, we can borrow some tips from the professional “deciders” or rather people, that have to take important decisions every day. How do they cope with this problem?

There is a particular type of meetings allowing all people involved in a specific project resolve to the existing conflicts and make a map of possible solutions. This type is called “design charette.” The central concept of these meetings is that one massive problem is divided into smaller (less critical) subproblems, all of that are assigned to different groups of people. After finding a possible solution to the problem, groups present it to the whole team and get the feedback. After this, they regroup and revise it. This cycle loops until the moment when a decision has been made, and in the majority of cases helps to make the right choice. Charrette-type meetings are useful not only because they break up one massive task, but also because they involve groups with different priorities and sensibilities. Real-estate developers, coders, architects, and designers may all work together on one task. It allows looking at the problem from different angles.

Among other methods that large firms and companies use is “scenario-planning.” It especially refers to companies whose growth depends on making the right investment. Due to the “scenario-planning” method, deciders can imagine how a particular investment may play out. In fact, there are three possible scenarios when using this methodic:

  1. things may get better;
  2. things may get worse;
  3. things may get weird.

All ingenious is simple. Basing on these assumptions, the probability of making the right decision rises significantly.

Military planners also use similar methodic. They use immersive war games that are carried out around a table (or in the field). When playing such games, enemies may discover possibilities that can’t be even foreseen, thus improving the imagination of planners. Such games can be played again and again, allowing the decision-makers to explore as many branches of “decision-tree” as possible.

Aspiration and Decision-making

People state that one decision can change our lives forever. Is it so or we are already programmed to such changes when making this decision? One professor from the Chicago University affirms that “sudden transformation” after making a certain decision is not more than our aspiration to self-transformation. We just try on the values that we hope to possess one day. For example, you have never listened to classical music. You don’t like it and think that it’s boring. But one day you want to want to start listening to it. You go to the class and fall asleep right after the first symphony. Why? You programme yourself to “like it.” According to the professor, aspiring is a widespread human activity- nowadays there are lots of aspiring art appreciators, wine lovers, sports fans, religious believers, and parents. All of them are planning to start to value new things. Many decisions in our life also touch on the question of who we aspire to become one day.

In most cases, aspiration takes time. Long time to their fruition. Although, even with the significant risk of interruption, the aspiration one day may result in opening the pottery studio after only a casual stroll near the art museum. Things take time, and everything that happens in the meanwhile is life. Life with unique moments and endlessly significant days that will never repeat.

Conclusions and Highlights

So, it’s time for the final question: what is the secret of this mysterious “art of decision-making?” There isn’t any secret at all. Even taking into account the methods of professional deciders and philosophers, only you and no one else will have the last word and the last decision. Whether it will be choice-aspiration or just the spontaneous decision, it will be yours, and it will be right for you. Summing up everything reviewed in our article:

  • decision-making is neither art nor science- it is balancing between them;
  • regardless of how significant your decision is, try to weigh all its pros and cons;
  • to soberly measure the problem and make the right decision, divide it into subproblems and evaluate them separately;
  • aspiration takes a long time to come to fruition, don’t forget to live a life in the meanwhile.

Our life consists of choices. Small and large, life-changing and insignificant. Whatever they were, all together they assemble in our life, plans for the future, and memories. To make the right choice is half the battle, but wrong decisions also are good lessons for us and may in a flash turn into a much better result than we expected.

Author: Alexej Pikovsky

Passionate about investing in private and public companies and a successful track record across different industries and geographies. German Academic Foundation Scholar and Research Affiliate at the Centre for Global Finance and Technology at Imperial College London. Addicted to reading and sharing industry deep dives. Enjoy!