The Guide to Making Better Decisions teaches you how to make smarter decisions by implementing a few techniques. Among these techniques are Mental models, Cost-benefit analysis, and gaining distance from a decision. Let’s examine each of these tips to make better decisions. Hopefully these tips will help you make smarter decisions in life! And remember, good decisions aren’t always easy to make.
Mental model for making better decisions
In this article, I’ll share a mental model that the leadership of HubSpot uses to make better decisions. This model prioritizes three different groups of people – your customers, your team, and yourself. Using this framework, you can scale the effectiveness of your decision-making and improve your overall results. Another helpful tool is the total addressable market (TAM). This model can help you understand the size of your target market and what you can do to meet that demand.
This model helps you make better decisions by reducing the stress and confusion of making decisions. It helps you focus on the parts of a product that are meaningful to you. Similarly, clearer thinking leads to better outcomes. While this list is too large to summarize, it contains five mental models that Shane recommends using:
Cost-benefit analysis
The first thing to remember when performing cost-benefit analysis is that it is not an easy process. There are several factors that need to be taken into account and a number of parameters to set. Not every factor has a direct or explicit cost and return. It is also difficult to predict future outcomes due to its indirect nature. In addition, a high benefit-to-cost ratio is not a given.
The concept of cost-benefit analysis was first introduced by Jules Dupuit in the 1840s, but it really took off in the 1950s after the government mandated the use of cost-benefit analysis for all government projects. In this way, the costs and benefits are weighed against one another to see which is the best option for the company. The result is often expressed as a payback period, or the time it will take for the benefits to cover the costs. Many people look for a payback period of three years or less.
Getting some distance from a decision
When it comes to making decisions, one way to improve your ability to make sound ones is by getting some distance from them. Before making any major decisions, try talking to a friend or colleague about the issue. Asking them what they would do in a similar situation can help you remove emotions from your decision-making process, allowing you to think more objectively. In addition, you can also pretend to be a trial lawyer and argue for or against your decision.
Conclusion:
Another good way to get some distance from a decision is to imagine yourself in 10 years from the moment of the decision. Think about what you would say to your friend then, or imagine what you would have done ten years ago. You can also adopt the mindset of a child and ask someone who is creative about your decisions. Once you have a friend or family member’s perspective, you can list your objectives. This will help you make a better decision.