Photo by Gabrielle Henderson on Unsplash

As I was rereading The 80/20 Principle by Richard Koch, I stumbled upon a critical insight. Buried in this classic, Koch shares his five rules for making effective decisions.

I’ve summarized the five rules of decision making and added my thoughts to each point. Enjoy!

1) Not many decisions are important.

The first rule is that not all decisions are important.

We have a limited amount of mental energy available to use each day. Don’t waste it on making unnecessary and trivial decisions.

Deciding what to wear or what to eat for lunch, take energy away from the crucial decisions that would be better spent on choices that contribute to your long-term goals and critical projects.

What are the top 20% of unnecessary decisions that are taking up 80% of your time and energy? Create systems and routines that take the guesswork out of deciding what to do.

A great example of this is Steve Jobs. He always wore his classic black turtle neck and jeans. His closet was full of the same thing so that he didn’t need to decide what to wear each day.

2) The most important decisions are often made by default.

The second rule of decision making is that the most important decisions have already been made without you even realizing it.

Just take a look at all of the urgent things that have happened to you over the past week. Each one of these mini-crises were caused by a previous decision or indecision.

As the lyrics of the classic Rush song states “If you choose not to decide, You still have made a choice.”

Step 1: List out all of the emergencies that have happened in the past week.

Step 2: Look for patterns and identify the top 20% that are wasting time and energy.

Step 3: What one thing can you do, to reduce their frequency or better yet, prevent them from happening again?

3) Use the 80/20/100/100 principle of decision making

The third rule of decision making is to use the 80/20/100/100 principle.

“Gather 80 percent of the data and perform 80 percent of the relevant analyses in the first 20 percent of the time available, then make a decision 100 percent of the time and act decisively as if you were 100 percent confident that the decision is right.” – The 80/20 Principle by Richard Koch

Let’s break that down:

Step 1: Look at the total time available and spend the first 20% on gathering data.

Step 2: Gather 80% of the data and perform 80% of the relevant analysis.

Step 3: At the end of the data gathering period, make a decision 100% of the time.

Step 4: Act as if you are 100% confident that you have made the right decision.

Step 5: Let go of all other options and proceed without regret.

The key to this rule is to make sure you’ve time-boxed your decision-making period. If you have one of those never-ending projects or suffer from analysis paralysis, set a deadline for making a decision.

4) If what you have decided isn’t working, change your mind early rather than later.

There are a couple of crucial insights buried in this rule.

First, how will you know if what you’ve decided is working?

When you make a decision, you need to be clear on two things. What direction you are going AND how will you measure progress.

Second, it’s ok to change your mind.

Moving ahead with the mindset that you are 100% confident that you’ve made the right decision doesn’t mean that you move blindly forward.

All decisions are just best guesses based on available data. Build in regular milestones to check your progress.

Third, it’s NOT ok to second guess yourself.

The reason you make decisions is so that you can move forward.

You can’t make progress if you keep using up valuable brain power judging and regretting each choice.

Once you’ve made a decision, let go of all other options. Conserve energy by monitoring your key measures every few weeks.

5) When something is working well, double and redouble your bets.

Once you’ve discovered something that is working well, throw more resources at it.

Continue to refine your approach, investing in what’s working and discarding what’s not.

In Summary

The secret to effective decision making is to create a system that enables you to guess and test your ideas.

  1. Not all decisions are important. Conserve time and energy on the top 20%.
  2. Most important decisions happen by default. Build awareness and be more proactive.
  3. Use the 80/20/100/100 principle of decision making. Time-box your decision-making period. Once you’ve made a decision, act as if you are 100% confident that you’ve made the right one.
  4. If what you have decided isn’t working, change your mind early rather than later. It’s ok to change your mind; it’s not ok to second guess yourself.
  5. When something is working well, double and redouble your bets. Go all-in when you’ve discovered something that works.

As you continue to guess and test, over time, you will have created an effective strategy for achieving your long-term goals and critical projects.

What are your most challenging decisions? Where are you stuck? Post your comments below, and I will be sure to respond.

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