This is a first in a long series of posts about decision making. There are many aspects to talk about, now I want to focus on one of those only. And that is time you should allocate to make a decision, especially if it’s a low risk, rather irrelevant one.

I had a colleague with whom we went out several times to eat. He would sit down, read the whole menu, ask questions about the ingredients, preparation method and even engage in discussions with the waiter who was definitely inexperienced in answering. Once he picked and ate his food, there were still cases (about 50%) when he was not satisfied. Either the taste, the texture, the smell. So his whole decision making process to ensure perfection was a waste of time…

I often experience those simple decisions which don’t have much impact on the outcome to require a lot of time, while important discussions and decisions are not made. This is why it is important to decide what to decide, or in other words, which decisions are worth the time.

My pizza prosciutto

When I go out to eat pizza with friends or colleagues, I enter the restaurant, sit down, order pizza prosciutto and beer. The whole process takes less than a minute. Pizza prosciutto is one of the most commonly ordered pizzas, so the restaurant statistically has the highest probability of making this one right, which is a guarantee for an at least average culinary experience. It is also always available in every pizzeria. Beer is also offered everywhere and I always take whatever is on the tap. It should be fresh and taste ok. Neither exceptional nor bad. Alternatively, I could study the menu for 15-20 minutes and still pick something that I might not like at the end. Or choose something from the beer list after careful evaluation, but there is a chance it’s not available or doesn’t taste as good as I expected. Instead, I get what I always get and start chatting with friends/colleagues immediately, which for me is the real purpose of going out, not the culinary adventure. Most importantly, this is a decision (time and effort) that I save for myself each time I’m eating out with friends/colleagues.

What happens in the office?

There is no pizza in the office, but there are decisions made frequently. Also, there are decisions not made, a topic that I will cover in a different post. That is one of my favorite topics.

I often see a business case or an investment proposal that is discussed and rediscussed, worked and reworked, people pondering about minor things, whereas the whole sense of the business is not even discussed. If you want to produce something that requires a new machine to be purchased for 1 million $, you should first of all question whether the product can be sold or not. Only then discuss what cost of capital and inflation should you use in your model, especially if the choice is between 14% or 15% for capital cost and 2% or 3% for inflation. However, more often than not the less important ones are discussed first, taking away time from what should be dealt with. Just pick 14.5% of the cost of capital, 2.5% of inflation and move along. Like picking pizza prosciutto and move on to chat with your friends.

People discuss how much overhead should be allocated to a product so it stays profitable and discuss this at length, but don’t question the sense of the whole business. Often because there is no time to discuss that, once the allocation was decided.

Tough choices

Not all decisions are easy. Picking an ERP system is a difficult one, as it has long term consequences that are difficult to change. Choosing a strategic supplier is also a difficult one, as you are tied up with them for a long time supposedly. Deciding to do another test before you invest a couple of billions is also mission-critical. Investing all your money, savings, and borrowings in bitcoin or a given stock is also a tough decision with high stakes.

Similar to marriage, that is a decision you take for life, hopefully. You can change your mind but the costs and damage are way too high. When you decide to source your product from China instead of Germany, that’s a tough choice and has an impact on every single aspect of your company. When you pick your logo, the impact is usually much lower.

Length and impact

The seriousness of a decision can be evaluated by how long it will have an effect on the business how big the impact is (on financials, operations, marketing, HR, etc.), and what effort will be required to change the decision if it turns out to be a bad one. A few years back BMW (the car producer) had to decide where to build parts of its car. The choices were between China, Eastern Europe, and Germany. This is a German car, so that would have been the easiest choice, However, production prices were the highest among these countries. China was dangerous due to quality concerns and loss of control. Eastern Europe due to political risks. The brand value was also vital. You cannot sell a German car produced in China… Or can, but not at a premium for sure. The decision was obviously a long term one, as a factory had to be built, people hired, etc. The impact is huge on financials, brand value, continuity of production. It is a decision difficult to change as you cannot simply relocate a factory. So this is something that requires careful evaluation and discussions, analyses with many departments involved. Deciding on whether to do it in Word or Excel is a minor one. I hope nobody was pondering that for long…

Tim Ferris, the guy who experiments on everything once had a post about how he makes life easier by pre-deciding his meal plan for the entire week, often repeating certain items. For example, breakfast is oatmeal 3 times a week, eggs twice a week, free to choose on the weekends. Lunch is always ham salad, etc. These are just a few examples, but I bet he finishes eating faster than many people decide what to eat, where, etc.

Conclusion

You have already faced millions of decisions in life, so you should know one when it comes to your direction. How have to be able to see which are the important ones and which are not. You can save time and effort for the first type if you decide quickly on the latter ones. Don’t let small things get in the way and distract you. It is harmful to your life, your work, your business eventually.