Make Better Decisions with One Question

Work and life are just a series of decisions we need to make.  Often there is not a clear best answer.  We just need to make the best possible decision given the set of constraints we have.

Our time, energy, and capital are all possible constraints that limit what we can do in any situation.  These constraints require us to make decisions between multiple options.  How do you think through a decision?  How do you make the best choice?

What Are You Optimizing For?

I first heard this from my director at work.  When I’m trying to decide on the scope of a project or features to prioritize, he asks me, what are you optimizing for here.  I find this is a useful question in figuring out what’s important.

Asking yourself what are you optimizing for is another way of figuring out what you value in this context.  What’s important to you here?  Take the time to reflect on this.  Understanding your values or what's important in this situation can be a guiding principle to view any potential options with.

An example from my life, I recently discovered an opportunity to buy an investment property.  In considering my options, I found myself thinking - what am I optimizing for here?  Is it the maximum return on investment? Maximum utilization of my working capital?  Portfolio diversity?  Ego gratification?

In considering this, I came up with the following:

Overall in life I think I am optimizing for some combination of work-life balance, financial freedom, and life satisfaction.  I want to grow my wealth with as little effort as possible so I have time for other things like enjoying my kids, building relationships, and learning new things.

Given this north-star, it became clear that the level of effort here vs the potential return was just not worth it for me.  With this understand, it was an easy choice to pass.

Additional Strategies

Optimize for Minimal Regret

We don’t know what the future will hold behind each option.  Given this uncertainty, you can consider the potential outcomes of each decision and think about which one you would regret having missed on the least.

For example, if someone told you about Bitcoin in say 2011 when it was trading at about $30 it’s easy to not pay much attention to.  It’s also hard to envision it growing to over $30k.  But if you thought there was at least a 10x upside, perhaps you could minimize regret by putting a small amount of capital into it instead of passing all together.

Optimize for Optionality

By this I mean picking the decision that provides the most options in the future.  This can be very good when at the early stages of something like your career or a business venture.  As you proceed over time you will learn more and be able to make choices with more data.

Going to college with a major selected is an example of this.  Choosing to use open standards in software rather then getting locked into a vendor is another example.

Optimize for the Long-Term

Remember that time is moving forward no matter what you do.  Small changes can easily compound over the months and years that will pass.  Little decisions today or decisions that don’t provide an immediate result can be easy to ignore or not put much weight into.  But this small choices will have a large impact over time.

Consider the compounding result of your choices and what these could mean down the road.

I was never a fan of sardines but I know they provide a lot of Omega-3s.  After two friends I respect encouraged me on the same day to start eating these, I pinched my nose and downed a whole tin.  Getting over that initial fear of eating these was guided by the long-term benefits of consuming Omega-3s on a regular basis.  I’m happy to say since this point I’ve eaten a few tins per week consistently, potentially adding years to my life.

Conclusion

The next time you face a difficult decision or one that is not immediately clear to you, ask yourself, what am I optimizing for?

Let this question guide you to what’s important to you personally and for the given context of this decision.  Having this value structure defined can help make it easier to see what the better choice is.  

Remember, the future is uncertain, that’s why making decisions can be tough.  We just do the best we can with the information available at the time.

So, what are you optimizing for?