Proper time to make a decision

 

In my last post I explored how certain flexibilities gave us substantial freedom when making decisions.  Having an emergency fund allowed one to make monetary decisions without panicking.  Or how a salesperson attempts to accelerate your decision process buy making you focus on certain aspects of a decision, i.e. a monthly payment.  Another forced "panic" would be an implied scarcity.  "Buy now they won't last long."  Having certain flexible assets is important at a tactical and strategic level, but what about at an operational level?  When a decision is needed how long should it take?  The obvious answer is dependent on the decision itself.  Having acknowledged this variance, are there frameworks or guidelines to help us make decisions within an appropriate time frame.

Before looking at any type of framework it would be best to review our basic decision making.  In its simplest form our decision making is comprised of a few basic tasks.  The first is recognition of an opportunity or a need to change the status quo.  As examples: I got a raise what am I going to do with the extra money, or I am now a high school senior, what am I going to do with my life?  These opportunities and changes are constantly entering and exiting our lives.  After recognition comes assessment.  What information is needed to make the decision?  We gather the information.  As a high school senior you may look at salary and cost data on different careers.  Becoming a doctor or a lawyer would generate substantial income but also a high cost.  A trade may cost less but produce less income.  Also important is an assessment of your personality and whether or not a particular career will suit it.  The last task would be an evaluation of the possible outcomes.  What will happen if I decide on a particular course of action.  How reversible is this decision?  How easily can I switch careers?  I start off in pre-med can I easily become a plumber?

After assessment comes options.  What are the possible paths I should take?  After getting a raise one could take many paths.  One path would be to spend the money on a new car (or a new bike).  An alternate path would be to save the money for retirement.  There are several options.  As an undergrad approaches graduations career options are being assessed.  Each of these steps vary in length depending on the decision.  If the decision is in an area one is familiar with financial markets investment decisions would have rapid information gathering phases.  If one is embarking on a health improvement regime and is unfamiliar with exercise sciences, they may spend considerable time learning the basics of nutrition and exercise.  After basic understanding is achieved than one can delve into the specifics.

When I look online I came across an interesting post.  It is the 40 - 70 rule for decision making.  This is a decision strategy followed by Colin Powell.  General Colin Powell was Chairman of the Joint Chiefs of Staff for the US military.  He was also President Bush's Secretary of State.  As you can imagine he had to make many critical decisions.  Many of those decisions would put service men and women in harms way.  A misstep could lead to many needlessly lost lives.  If there was ever a role that demanded good decisions he lived it.  His rule states that decisions should be made when between 40 and 70 percent of the available information has been obtained.  Having a minimum is obvious.  With too little information decisions are no better than guesses.  The proverbial "stab in the dark".  The upper limit is a little less obvious.  One would normally think that the more information the better your decision.  However, the time taken to obtain that information can lead to lost opportunities.

A college graduate could spend so much time researching companies and industries that all the jobs may be full by the time they are ready pursue their career.  In adversarial situations your rival is also gathering information.  The more time you take to decide the more time they have.  I think Colin Powell's upper limit of 70 percent exemplifies this.  At first glance 70 percent may seem low.  However if your enemy is poised to strike you would like to act first.  This forces the enemy to react to your actions and possibly make a rash decision.  A less dramatic situation would be a quarterback calling an audible based on the defensive alignment.  As the quarterback analyzes the defenders they are also analyzing the quarterback and the offensive alignment.  In their book In Search of Excellence Tom Peters and Robert Waterman labeled this "Paralysis by Analysis".  Also referred to as the "Excellence Trap"

There is a very subtle context to this rule.  The rule is applied to information that is available.  At an emergency board meeting the amount if information would be limited to what was brought into the boardroom by the participants.  Where as decisions regarding new medications or vaccines would sacrifice time for accuracy.  I find myself thinking of the movie Singin' in the Rain.  In this movie the industry is rocked when a rival studio releases a movie that integrates sound (the Jazz Singer).  At this this point the studio head shuts down all silent movie production to produce "talkies".  Very little analysis of the technology,  marketing or skills needed to produce the movies.  The only information was that the public now demanded movies with sound.

I guess we could rebrand the 40 - 70 rule to the stab in the dark - fish or cut bait rule.