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What Do I Know to Be True?

It is a brute of a question isn’t it; what do I know to be true?

Ray Dalio mentions the question in his book Principles. The question plays a key part in the steps he takes to make decisions. In the complex world of investing, having a rigorous process for making decisions is essential.

It separates the successful from the not so successful.

The question can – and should – play an equally critical role in our decision-making. Any decision, big or small needs a logical approach. Alas, we don’t tend to make decisions logically. Outcomes, no matter how outlandish blind us. Emotions do the same – and that’s all before we get to our walkway of biases looking to trip us up.

Of course, the outcome of your decision matters. But it shouldn’t blind you from using facts to make an informed choice. Often, choice brings a plethora of information. Most of it is incomplete information, which we use to form assumptions.

When we assume, we accept incomplete information as facts.

Therefore, asking what do I know to be true should be your first question. It allows you to challenge your assumptions, filtering out the truth from the hysteria, thus enabling you to see the facts. Emotions, biases, and assumptions have no place when seeking objectivity. And it is objectivity which facts provide, which in turn leads to a better decision.

It is why the first question you should ask yourself when faced with a decision is what do I know to be true?


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The Paradox of a Decision and Its Outcome

A good decision doesn’t always lead to a good outcome. The paradox – and this is the killer – is an unwise decision doesn’t always end up with a bad outcome either.

This reality blinds us.

It creates the impression we don’t have any control. Outcomes are random, influenced by fate, lady luck, and whatever else is in the air. Often, we negate what we can control as well, making choices without consideration. When outcomes go against us, we blame others.

We absolve ourselves of responsibility.

Understanding the paradox of a decision and its outcome is the biggest difference between those who succeed in life – and those who don’t.

It begins with an understanding of what you can control – and what you can’t. You can control the questions you ask; you can control the way you consider your options; you can control your assessment of the information you have. You can control the choice you make.

You can’t control others; you can’t control mother nature; you can’t control chance. You can’t control the outcome.

Knowing this, accepting this, and remembering this will empower your decision-making. It will empower you as accept you can be deliberate in your actions and choices. Your self-awareness will increase as you take control of the things you can control – rather than leaving them to chance. Your quality of judgements will improve.

Your outcomes might not get any better, but the responsibility will be with you. This is the true paradox of a decision and its outcome.  


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Reflect and Renew – Upgrade your New Year Resolutions

Reflect and renew is a great upgrade to the date act of a New Year’s Resolution. A resolution is a false promise of a new beginning – often crushed within a few days of the year commencing. Why? Because the act itself is flawed. A bold commitment to lose weight by eating less, or to stop consuming coffee by the gallon is whimsical and ill-thought-out.

But every year, with the changing of a digit we surrender ourselves to the aspiration of a new year resolution or two. The version in our heads of rarely matches reality. Instead, the outcome tends to look like the distorted reflection we see in a fairground mirror.

How can you change this outcome?

Two words spring to mind – reflect and renew. Two critical steps which, should always be a part of your decision-making process.

Reflecting on the year gone by, question the place you find yourself in today. What did you want to achieve at the beginning of the year? Have you achieved your goal? If you have – why and how did this happen? What works so you can repeat it?

If you didn’t achieve your goal – why not? What would have helped?

From this process of reflection, you will find some principles of behaviour. It is these you must renew and use as the platform for the year ahead as you adapt your goals for the year ahead.

Reflection and renewal will serve you far better than a new year’s resolution.


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Why is Decision Making Important?

Why is decision making important?  It is a question which forces us to pause as we consider the complexities of it. In business, it galvanizes energy – all in the pursuit of growth. On a personal level, we see it as a consideration of choices. It is often less urgent, and more emotional.

Decision making is selecting one from a series of choices we face. Each choice gives us options based on our current situation and offers a path for the future. It is the future we are concerned about. Although we live in the present, we imagine our futures and we dwell on our histories.

We can’t predicate our futures, but we can prepare for them. And therefore, the importance of decision making makes itself clear. Decisions for today affect today – but also tomorrow.

It is this grasp of the future we do not understand.  

We do not see beyond today. Only the present – and it leads to a sense of sadness when we reflect on our past. Each decision matters, but our weakness is how we see each possibility as binary – both in choice – and outcome. Life is a game of trial and error, of less certainty and more enquiry.

The importance of decision making isn’t the outcome, but the process. The correct process should be one of testing, seeing, learning, adapting, and repeating. Life is complex – too complex for a binary outcome.


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A Good Decision-Making Process Matters. Here are 5 Steps to Follow

A good decision-making process matters. So much so because a bad decision-making process – as in not having one – is even worse. The downsides open a window to a sky filled with darkness. The error-strewn landscape shows the full impact of allowing our impulsive urges and our misplaced intuition to shape our decisions.

Our primal urge to act quickly in every situation is one which must be overcome. Bad habits fester, growing into the blockers of progress which hold mankind back. The vices of gluttony and sloth come not from spectacular events of horror, but repetitive episodes of impulsive and badly thought through decisions.

To prevent the continued spread of the disease of habitual failure, we need a strong decision-making process. One which supplies a pathway to progress, of a means to fill engaged and forward-thinking, rather than standing still.


A Five Step Decision-Making Process

Five steps form the foundation of a good decision-making process. Here they are: –

  1. Stop
  2. Assess the information you have
  3. Name your Biases
  4. Gain a different Perspective
  5. Decide

Each step offers a means of improving your outcome, and although we can’t eradicate the role of chance, we can take consider its impact.

But first, let’s get into the decision-making process one step at a time.

1.      Stop

If everyone stopped before deciding what to do, things would be vastly different. A pause, a holt, a break, call what you want, but just the act of stopping changes the dynamic of every decision. If you don’t stop, well, you just run into your intuition which may be okay. The chances are though, your intuition won’t have an earlier experience; it will think what has gone before was a good fit, but it won’t be.

Stopping has the power to prevent impulsiveness. It is the circuit breaker to poor decision-making. It also gives you the space to begin to think…

2.      Assess the information you have

So, you have paused deciding what to do next. Now you’re in the right place, you start to assess the information you have about the decision in front of you. Questions prompt you to challenge what you know and most importantly, to find out what you know to be true.

Blinded by the bright lights of information, we often find ourselves dazzled, unable to see the reality of the choice we face. Although it is difficult for us to be objective, it’s crucial to assess the situation by proving the facts to ourselves. We must exclude opinions and emotions to exclusively consider the truth of the decision we are about to make.

3.      Name your Biases

Aside from the facts, cognitive biases feed us an alternative view of the decision we face. Confirmation bias limits our acceptance of the truth. We will seek one piece of confirming information to support our choice, conveniently ignoring all the other evidence to the contrary.

We are all gamblers; biased in favour of potential gains and too accepting of the losses. Such is the impact of loss aversion, another proven cognitive bias. There are many, many others. Too many to mention, but each of them has the potential to steer us away from the correct choice.

By naming your biases, you become aware of them.

Having awareness is a window into the limits of our objectivity. It creates some ability to limit what you see through the dimension breaking lenses of our biases. A lack of awareness is horrifying to the outsider who knows better. Therefore, it is imperative you name your biases. Then you have a chance of defeating them.

4.      Gain a different Perspective

Your decision is still fraught with incorrect influences. Information from sources we trust can turn out to be incorrect, but trust blinds us to the error. We can’t see it. The sequence of fact-checking risks exposure to our biases and further compounds a faulty view of the choice ahead and the outcome on offer.

An unfamiliar perspective can change everything. One of the greatest blindsides of a decision is in the moment. Feelings – both ours and others – provoke an emotional response to the choice ahead.

Our only thought is about how we feel now.

An alternative perspective, whether yours or someone else’s gives you the insights not previously considered. Asking yourself how you might feel about the decision in ten minutes, ten days or ten months can change a lot. Removing emotion, which time does changes beliefs.

Asking someone else is another way of shifting the viewpoint. A friend, mentor, or coach can give insights not visible to us when we’re caught up in the heat of the moment.

5.      Decide

Decisions matter. Deciding what to do is the end of the decision-making process I’ve mapped out here. Having made the effort to stop and assess the information you have, to name your biases so you can limit their impact, and seeking a different perspective you can now make the choice.

Deciding what to do isn’t about saying yes, it’s also having the means to say no. Arming yourself with knowledge offers progress. It empowers you to decide.



Decision-Making Process – a means to behave logically

As an ending, I’m going to offer a warning. It’s a warning of the perils of not using the five steps, of opting to go with one, or two, or even four of the steps to this process.

Typically, we face a multitude of decisions every day. Take the act of crossing a road, a behaviour so simple we don’t stop to even think about it. Our intuition normally takes control, ignoring the known dangers.

Sometimes, we dart across the road impulsively. Chance doesn’t favour us, as the red lorry struggles to stop in the rain, you’ve misjudged the lorry’s speed as it hits you, sending flying to the floor.

But what if we paused; what if we assessed the information to hand? What would we learn? We would see cars, buses, and occasional lorry going about their day. We might also assess the weather, becoming aware of the wet road surface as rain makes the tarmac slippery.

Getting to the second step of the decision-making process alerts to factors ignored in our dash to get to the other side. As we consider naming our biases, loss aversion appears. We forget about the downside of being run over, instead favouring the muffin and the caramel latte calling you from the café across the road. Confirmation bias alerts us to the speed of the car passing in front of us but ignores the red lorry that can’t stop as quickly on the wet surface.

At the third stage, you might still run for it. But what about an alternative perspective? “Should we go now?” You ask your partner. Her view suggests the pedestrian crossing a short walk away.


The outcome

Your decision made at the end of the decision-making process is not to cross the road. Instead, you decide to use the pedestrian crossing and remove the risks found when you assessed the information but also factored in your biases and an unfamiliar perspective.

A simple story, but one which proves the power of using the decision-making process in everyday life can change your outcomes.

It is exactly what a good decision-making process should offer.


Make Better Decisions

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In a world of irrational behaviour, Your Weekly Resolve will help you with making better decisions. Sign up here and every Tuesday, I’ll share valuable insights on the complex art of decision-making.

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