How to make better decisions more often

Tom Wolfe writes in Bonfire of the Vanities that “decisive men made great decisions not because they were smarter than other people, necessarily, but because they made more decisions, and by the law of averages, some of them would be great.”

Lots of people take this approach. Make a lot of decisions, and statistically some will always be great.

What this approach doesn’t account for is the ability to improve at the decision-making process over time.

If someone in their twenties and someone in their fifties is making a decision, then, all else being equal, the person in their fifties is more likely to make the correct decision because they have an additional thirty years of decision-making experience.

The best way to get better at making decisions is to make more of them.

When you do this, five things will happen:

  1. At first, your percentage of wrong decisions will be just as high as if you had made fewer decisions.
  2. But—and this is why this is hard—your real number of wrong decisions will be higher than had you made fewer decisions. You’ll be tempted to stop. But don’t.
  3. Fortunately, over time, it will be balanced out by your number of right decisions.
  4. Over even more time, your percentage of wrong decisions will begin to shrink.
  5. Over even more time, the cumulative effect of your right decisions will begin to make up for the high initial cost of wrong decisions from #1.

It’s a high cost up front, but the payout over the long term makes it a good investment.

Peter Drucker takes this one step further. He says that “effective people do not make a great many decisions. They concentrate on the important ones.”

Or: you’ll eventually reach a point where you’ll not only be great at making decisions, but you’ll be able to perceive what decisions are even worth considering in the first place.

Here’s how great decision-makers operate:

They try to think through what is strategic and generic, rather than “solve problems.” They try to make the few important decisions on the highest level of conceptual understanding. They try to find the constants in a situation. They are, therefore, not overly impressed by speed in decision-making. Rather, they consider virtuosity in manipulating a great many variables a symptom of sloppy thinking. They want to know what the decision is all about and what the underlying realities are that it has to satisfy. They want impact rather than technique; they want to be sound rather than clever.

The practice of decision-making starts before you need to decide.

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A well-managed organization is boring

Sometimes, excitement means something exciting is going on. But other times, excitement only masks confusion, disorder, and decline.

If your organization places value on a strong work ethic and your people put in long hours, that’s exciting. If there are couches and soda and stock options, but all that effort is wasted only on fixing mistakes you could have avoided with more foresight or better processes or a little planning, then—even though it’s exciting—your organization is poorly managed.

Peter Drucker writes:

Years ago when I first started out as a consultant, I had to learn how to tell a well-managed industrial plant from a poorly managed one—without any pretense to production knowledge. A well-managed plant, I soon learned, is a quiet place. A factory that is “dramatic,” a factory in which the “epic of industry” is unfolded before the visitor’s eyes, is poorly managed. A well-managed factory is boring. Nothing exciting happens in it because the crises have been anticipated and have been converted into routine.

Similarly a well-managed organization is a “dull” organization. The “dramatic” things in such an organization are basic decisions that make the future, rather than heroics in mopping up yesterday’s mistakes.

It may be exciting, but that doesn’t mean it isn’t declining.

Aim for boring.

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The aim of marketing is to make sales superfluous

There are myriad reasons why someone would buy your product. Is it the product itself? Is it the story you’ve told about your product? The story you’ve told about your customer? Is it the person who asked for the sale?

It’s possible that if your marketing is terrible, you’ll need to rely on your sales team. If your sales team is terrible, you’ll need to rely on your marketing. And if your product is terrible, you’ll need to rely on both. (And your customers will feel lied to.)

Peter Drucker writes that “the aim of marketing is to make selling superfluous. The aim of marketing is to know and understand the customer so well that the product or service fits him and sells itself.”

If your marketing is terrible, your sales team needs to do more heavy lifting. That’s true.

But the larger truth is that pitting marketing and sales against each other creates a false dichotomy.

This product will sell well only if we have good marketing. This product will sell well only if we have a good sales team.

The aim of marketing may be to make sales superfluous, but it will never achieve that goal.

Marketing and sales is not a zero sum game.

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Build on your strengths, not your weaknesses

“You cannot build performance on weaknesses. You can build only on strengths.”
—Peter Drucker

If you think about what you want to improve about yourself, you’re more likely to identify things you’re not good at instead of things you are good at. (Recall your most recent New Year’s resolutions, the goals you regularly set for yourself, or your last performance review… they were probably all aimed at improving a weakness.) The underlying assumption is that the key to get better is to fix what’s bad.

But starting by improving what’s bad is the wrong way to improve overall.

If you want to get better, worry less about your strengths and focus on improving your weaknesses. For the same amount of effort, you’ll see much greater improvement.

Peter Drucker writes in The Essential Drucker:

“Waste as little effort as possible on improving areas of low competence. Concentration should be on areas of high competence and high skill. It takes far more energy and far more work to improve from incompetence to low mediocrity than it takes to improve from first-rate performance to excellence. And yet most people—and equally most teachers and most organizations—try to concentrate on making an incompetent person into low mediocrity. The energy and resources—and time—should instead go into making a competent person into a star performer.”

Here’s what 50% improvement looks like across a range of skills with varying levels of competency:

For the same effort, you can improve a great deal more by starting with what you’re best at and getting better.

(The exception to this rule might be instances where the law of diminishing returns applies: as you improve, it becomes harder to improve at the same rate. This is why nobody will ever run the mile faster than 3 minutes, 39.6 seconds.)

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