Life rewards goods judgement. Making the right call on what system to invest in. Where to live. How to allocated your budget. How to play your cards given the pot odds, betting position and opponents. Choosing the right people to be in your social orbit.
Good choices win out over time. Bad choices don’t.
But how do you tell if you're smart … or just lucky? The bias of fundamental attribution error suggests that we are prone to thinking that when good things happen to us, we created them. But when bad things happen, then it's just shitty luck. We blame external forces for bad circumstances and take personal credit for good ones. Basically, we are shitty at understanding when we made the right moves and when we were in the right place at the right time.
Now imagine if we could improve our decision making. What would the bottom line of your business look like if you removed your worst investment decisions? A lot different.
Denise Shull is a performance psychologist and the real life inspiration for the character of Wendy Rhoades on Billions. The promise she makes to her hedge fund clients is not to make them super-human. But to have them center their decision making process to remove their bottom 10% of decisions. Calls that they make when they're emotional. Or when they're relying on hope instead of facts. Or when they're exhausted and not thinking straight. To them, good judgement pays. Millions of dollars.
To be successful over time, we need to develop good judgement. But how do we improve ours? It's not easy. But it is straightforward.
The key to developing good judgement is the same as improving any skill. You learn by doing. You learn by doing, getting feedback on whether you made the right call, learning from it and adjusting for next time. And then you do it again. And again. And again.
It's a constant practice.
One of the best tools to leverage in developing this practice is a sytem to track your decisions. A system allows you to catalogue the variables that were impacting you when you made the decision. Were you tired? Hungry? What time of day was it? What was your emotional state?
A system enables you to revisit and input the results of your decisions. Were employees happier as a result? Did revenue increase? Were there more repeat customers?
A system helps you to identify patterns - those that lead to good decision and those that lead to bad ones. And once you understand what variables influence your decision making, you can make adjustments to optimize for it.
For example, Jeff Bezos adjusted his schedule such that he now will ONLY take important meetings that require high impact decisions at 10AM. He understands when his mind is in peak form to make intelligent decisions. And he has shifted his schedule to optimize for it. If he is asked to make an important call in the afternoon, he pushes it to the next day at 10AM. It's more valuable to make the right decision the next day than to make a the wrong decision at 4PM.
A tool to leverage in the pursuit of improving your judgement is a decision tracker. It creates a simple system to track, codify and revisit important decisions you are making. That way, you’re not subject to the bias of your own memore - cherry picking, dwelling on the negative or the other stories we like to tell ourselves.
*Download the decision tracking template PDF here. Apologies for not crediting the original source, but I lost where I adapted it from.
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I don't claim to be an expert on this. I still make plenty of bad judgement calls. By tracking them, I can better understand the patterns that led to those decisions. And by calling those out, I have a better shot at changing them for the next round.
Our minds are fickle. Our memories are constantly being overwritten and tweaked every time we recall them. Our stories change. By having something written down and revisiting it over time, it allows us to have a concrete record of what we thinking. Feeling. Hoping for. And that lets us improve.
- Christian