How to Become Smarter: Improve Your Decision-making with These 10 Clever Principles

10

From: The commonplace of Sir Sunström.

Section: Checklists.

Topic: 10+ decision-making principles.


As to methods there may be a million and then some, but principles are few. The man who grasps principles can successfully select his own methods. The man who tries methods, ignoring principles, is sure to have trouble.

–Ralph Waldo Emerson.

Do you know the difference between a novice and an expert?

(Well, lots of things obviously. . . but if there was just one.)

It’s pattern recognition; what information they chunk together and focus on, versus what information they filter out.

The novice pays attention to all kinds of random B.S, while the expert uses his limited focus to concentrate on the select few things that matter. This enables him to understand how things work together to produce results.

When we talk about “experts”, the most common association is that of a specialist; someone whose knowledge and pattern recognition is fine-tuned to a small area (of business or academics).

But that’s not what I want to talk to you about now. . .

I want to talk about a number of important general decision-making principles that will make you smarter. You can apply these decision-making principles to become. . .

. . .More successful at just about ANYTHING!

–If you have the dedication to practice them, that is.

When I read books, usually, this is what I’m looking for.

–I train my pattern recognition for these decision-making principles by stacking up repetitions and collecting examples of their application in different areas of life; in business, through history, in nature, and so on…

I think that just about everyone can become successful 1 at just about anything, so long as they abide by a strict code of principles in their decision-making.

What follows are what I think are some of the most fundamental decision-making principles. You should strive to have them all down so well that you can recite them in your sleep.

Decision-making Principle 1: Occam’s Razor

Occam’s razor is a philosophical heuristic which states that when you are faced with more than one choice or explanation, you should start out with the simplest one 2

Example: Begin with the least risky choice and escalate from there.

My Internet has been acting up at home lately, so I called the support of my provider. We then figured out that the problem was related to my computer, and not the network connection. Next, I called the support of Asus (my computer). They told me to do a full-system reset, and then–if that didn’t work–send the computer over to them for repair.

But I didn’t do that. . .

. . . because it would be a more time-consuming and risky solution than necessary (and it meant I wouldn’t be able to use my computer for several days).

So, instead, I did a systems recovery and restarted my computer a few times.

And that worked! 3

Decision-making Principle 2: Diminishing Returns to Scale

A.K.A: Return on investment (ROI).

Most activities in life follow dynamics that look like this picture below (in the sense that you eventually reach a point where further investment of time and resources yield negligible results).

This is true whether the “result” you’re seeking is related to business, happiness, health, status, or some other form of success.

diminishing returns to scale

Example 1: Bodybuilding.

Lately, several friends have suggested to me that my return on investment (ROI) from working out and improving my body cannot be high. They are probably correct 4.

My physique is near-perfect (in my opinion), and I am now going into “maintenance mode”, just working out to break out of homeostasis, push through the plateau, and break records.

Example 2: Optimizing health.

My health has never been better. I have great digestion and I haven’t been sick in like 3 years. All that remains now is to. . .

. . .get the results from the diagnostic blood test I just did 5. . .

Then there will low ROI on further actions.

I’m going to look and feel better when I’m 40 than I do now. No doubt.

Decision-making Principle 3: Pareto Principle (80/20 principle)

In all activities and areas of expertise there are a few fundamental ideas and actions that will give you most of the results. The Pareto Principle states that 20 % of the activities represent 80 % of the end results 6.

Example: Find and apply the fundamentals.

Einstein supposedly said that if he were given an hour to solve a problem, he would spend the first 55 minutes analyzing the problem to make sure he understood it correctly, and the remaining 5 minutes on solving it.

Point being: in nearly everything you do, your time is best spent first finding the underlying fundamentals–the 80/20 activities–and then applying them. Avoid the esoteric and flashy stuff.

 

Decision-making Principle 4: Begin with the End in Mind

Always ask: What is the end goal?

Then use that as a filtering mechanism for determining whether or not some action is worth taking. Super simple, but not enough people do it.

Example: Simplify decision-making.

1) Assume you’ve reached the said goal, is [the course of action] you’re currently considering really worthwhile? 7

2) What is the #1 action you can take, or perhaps should continue taking, given your end goal?

Decision-making Principle 5: Start by Inverting (the problem)

Turn the problem on its head to speed up the decision-making process.

Example: It’s easier to find out what to avoid than what to do.

Instead of trying to think of all the things you potentially could do to become successful–because there are typically an overwhelming number of options–start in the opposite direction and invert the problem 8. . .

Then you will quickly find the key things to avoid; these are typically the aforementioned fundamental 80/20-activites.

Decision-making Principle 6: Winner’s Game vs Loser’s Game

Winner’s game = Win by taking risks and doing bold moves 9.

Loser’s game = Win by trying to avoid obvious mistakes 10.

There is no shame in playing the loser’s game.

–In fact, you should play the loser’s game in most areas of life.

Example: Which dynamics are at play in this situation?

–This is a question you should learn to ask yourself habitually.

For example. . .

Job interviews follow the dynamics of a loser’s game. You have little to win by trying to do crazy things and impress the recruiter, but you have a lot to lose if you mess up. The smart choice is to be calm, confident, and avoid obvious mistakes by doing your research and then rehearsing it.

Decision-making Principle 7: Seek to Understand First

Contrary to popular belief 11, being forceful, pushy, and ‘dominant’ doesn’t work too well in trying to influence others.

The best way to connect with people, befriend them, persuade them to take some action, or sell them stuff, is by first finding their underlying motivations.

Example: Establish rapport first

Even if you do not have a stated goal with an interaction, the best thing to do is to first ‘get in sync’ with the other person. Try to listen more than you talk.

Decision-making Principle 8: Status Quo Contrarianism

The contrarian does not make decisions based on irrational B.S like herd behavior and social proof 12.

Public opinion is of no value whatsoever.

–Oscar Wilde

What is everyone else doing?

I will do the opposite and profit/benefit from contrast.

Example: Assume everyone else is wrong and start from there.

  1. Assume popular opinion (on just about everything) is either wrong, or lagging behind independent thinkers by 100 years.
  2. Assume most people have no idea what they’re talking about, and have little–if any–capacity for accurate thinking.

Decision-making Principle 9: Assume the Worst from Human Nature

Hope for the best, but prepare for the worst.

You may go broke or get in big trouble by OVERestimating the intelligence and sophistication of the masses, but you will rarely find yourself in harm’s way by underestimating them.

Example 1: Stoics don’t get upset at stupidity.

Marcus Aurelius said this:

Begin each day by telling yourself: Today I shall be meeting with interference, ingratitude, insolence, disloyalty, ill-will, and selfishness – all of them due to the offenders’ ignorance of what is good or evil.

But that was almost 2000 years ago. As a modern-day translation, I say this:

Most people have no integrity; they are empty shells without substance, flailing back and forth in reaction to seemingly magical forces. The only thing that keeps them going in their pitiful existence, is the large number of rationalizations and comforting beliefs that they’ve come to harbor. 

These lies help them cope with their ineptitude in life, and works to maintain their homeostasis. You could liken it to the glue that holds together the beggar’s nest of patched-up cardboard boxes.

Example 2: Be an Intelligent Pragmatist.

Henry James once wrote that:

Life is, in fact, a battle. Evil is insolent and strong; beauty enchanting but rare; goodness very apt to be weak; folly very apt to be defiant; wickedness to carry the day; imbeciles to be in great places, people of sense in small, and mankind generally unhappy.

Some people might say: “But that’s so misanthropic!”

I say: So be it.

Click this little box for a third example 13.

Expect the worst of human nature and you will not fooled or ruined.

Decision-making Principle 10: “What Price Will You Pay?”

–Because there is no such thing as a free lunch 14.

Before committing yourself to anything substantial, first get it straight how much you are willing to sacrifice to get the thing. If you don’t, you will–almost certainly–end up paying a bigger price than you rationally should.

Example 1: Purchasing something.

Before buying the thing, know this first:

  1. What is the purpose? 15
  2. How well does [the thing] fulfill this purpose?
  3. Is there another way to fulfill this purpose, but cheaper or faster? 16

Only after you know this can you decide if it’s worth “paying the price”; whether the price is money, time, or stress.

Example 2: Is this necessary?

You think you want something, and maybe you do–but how bad, exactly?

What will you lay on the sacrificial altar?

–Your blood? Your sweat? Your afternoon?

Check your intentions at the entrance. . .

. . .before venturing forth into the gauntlet.

Bonus 1:

Decision-making Principle 11: Make Legacy Decisions

Don’t do [whatever you’re thinking about] unless it is something you want to be remembered for.

Example 1:What will they say?

Is this something you want the newspapers to report on? Or for your biographers to cover? Or for the historians to debate over, when they talk about your accomplishments? If “NO,” then don’t do it.

Example 2:How will this help?

Felix Dennis once got drunk and high–right before an interview–and then told a reporter about the time he (supposedly) killed a man in self-defense. That was a dumb legacy decision; fortunately for him, it did not catch on.

Lee Kuan Yew commented on President Jimmy Carter’s biography:

[Carter] recounted how, as a boy, the father gave him a penny or whatever to put into the pew box, and instead of putting one in, he took a penny out. So, the father then thrashed him. I said, why does the man do that? Having done it, how does telling the world that he was a petty thief help?

Exemplary persons to study involve:

  1. Lee Kuan Yew,
  2. Talleyrand, 17
  3. Napoleon,
  4. Caesar, 18,
  5. John D. Rockefeller,
  6. Charles de Gaulle,
  7. Winston Churchill,
  8. Richard Nixon,
  9. and Steve Jobs.

Bonus 2:

Decision-making Principle 12: Cover Your Ass

All courses of action are risky, so prudence is not in avoiding danger (it’s impossible), but calculating risk and acting decisively. Make mistakes of ambition and not mistakes of sloth. Develop the strength to do bold things, not the strength to suffer.

–Niccolo Machiavelli

It is foolish to take more risk than necessary. Before doing something, first figure out if the risk is acceptable. Maybe you can reduce it?  Then get clear on whether you have more to gain than to lose by doing the thing.

Example: Upside vs downside.

My friend wanted to hang from a pole and do pull-ups 145 meters above ground. I advised him not to do it, because the downside is huge (dying).

Even if he had done it, got it on film, and put it up on YouTube or whatever, he still wouldn’t be the first person to do it 19.

Bonus 3:

Decision-making Principle 13: Synergistic Thinking

Synergistic thinking is the fancy word I’ve invented for combining as many of your goals as possible into the stuff you do on a daily basis.

I believe that people who are natural entrepreneurs have some gene for this; the rest of us have to practice it 20.

The purpose of synergistic thinking is to create synergistic processes and systems, which feed into each other in different ways to improve your life.

Synergistic thinking can be applied to anything to make it better, but it requires persistent practice.

Anti-example: Why most people’s lives suck.

The average person works a job from 9-5 that he/she doesn’t feel overly enthusiastic about, and often the job is a bad fit for his/her genetics. This person puts in 8 hours of work each day 21 and then, typically, goes home to indulge in escapism.

–That’s no way to spend your time if you have goals to achieve.

The more successful people combine their free-time with their work-time, by devoting all of it to some sort of action which aids them in attaining the object of their major purpose. Thus, they work about two-thirds of their time and sleep the other third.

–Andrew Carnegie

4 Questions to stimulate synergistic thinking:

  1. How can I combine what I’m doing right now with my long-term goals? 22.
  2. How can I turn my hobbies/interests into a money-making skill? 23.
  3. How can I make this thing I’m doing interesting to someone else?
  4. How can I leverage my existing assets for more value/happiness/results?

This is a very important decision-making principle.

I will write about it in more detail some time in the future.


Conclusion:

1)

Train your pattern recognition for these principles, practice them until they become habitual, start making much better decisions, and–as a result–watch your life improve.

2)

Don’t become an expert at some blah-blah topic because society dictates it; instead, become an expert decision-maker, and you will live a good life regardless of what you do.


Question:

Are you using any of these principles? Can you suggest some other useful principle?

* * *

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  1. Maybe not elite, but reasonably successful.

  2. You start with the hypothesis that has the fewest, or least risky, assumptions.

  3. Notice how I am escalating my actions one step at a time, and not skipping ahead in my assumptions.

    This is the shit that builds Nobel laureates! It’s just common sense, but it’s when you don’t follow simple principles like this that you make foolish decisions.

  4. Often, commitment bias, addiction, and other psychological ailments trick us into continuing past a point of positive ROI.

  5. And see what my omega 3/6 ratio + various fatty acid levels are like!

    –After I perfect that, which should take about 3-6 months, I will have reached the end of my quest for optimal health.

  6. –In reality, it is often even MORE extreme; it could be called the 95/5 principle.

  7. Notice how I am applying this principle to my goals for fitness & health, as mentioned in the previous section?

  8. For example, by asking yourself: If I wanted to sabotage my life, what would be the best ways of doing that?

    Assume you will be a winner; assume you have the world, and everything in it, coming to you. Now just avoid obvious idiot mistakes!

  9. Like in talent shows or with publicity stunts.

  10. Like in poker and investing, unless you’ve got some big advantage in your favor.

  11. Well, among young men at least.

  12. Since you’re reading this site, I’m guessing you don’t have a problem with this.

  13. Example 3: Preserve your integrity through accountability.

    Only those who plan in advance and start living by smart principles relatively early in life, to make higher quality decisions, can achieve freedom without compromising their integrity.

    Failure to take responsibility and prepare = not enough personal freedom & power = forced to act out of necessity = high probability of doing dumb shit = ruining their integrity.

    “But I had to beg, steal and rob, I had no other choice!”

    Is necessity a valid excuse for immoral behavior? For example, should Sweden allow parasitic beggar gangs from Romania just because Romania has failed to take care of their own problems?

    In many cases–often enough to use it as a rule of thumb–people who commit atrocious acts out of necessity are idiots/criminals. If they cannot think long-term or understand accountability, whereby they naturally gravitate into circumstances where they are ‘forced’ to act out of necessity, do they not deserve to be where they are?

    Regardless of whether they deserve it or not, that’s exactly what happens. Again and again.

  14. Only socialists believe that.

  15. Why are you buying this thing in the first place?

  16. Consider alternatives / alternative cost.

  17. He postponed the release of his autobiography with ca 100 years, hoping to optimize the timing for when Napoleon’s honor had diminished.

  18. Why do you think he wrote his commentarii?

  19. So, the upside isn’t as good as it might appear to be.

  20. I have been practicing this like a madman for the last two years, and I now do it with relative ease (it has become part of how I think).

  21. (. . .more like 3-6 hours, taking into account useless banter, idleness, and interruptions to concentration.)

  22. E.G: work for expertise or relationships, not for a paycheck.

  23. Can I leverage technology to make this easier? With 99% probability = Yes.

Comments

  1. “Logical thinking has never failed me, except perhaps with women”

    –Hahaha!

  2. Brilliant article mate! I especially like the ROI principle as I am a huge proponent of the abundance-mindset vs. the scarcity mindset — the value of this decision/purchase/investment vs. the cost.

    Great article and content – this is the content that the internet needs more of!

    Cheers mate –

    Matt Kohn

  3. Good article, especially the part about the winner’s and loser’s game. Perhaps the term “loser’s game” doesn’t exactly fit, seeing how it’s a winning strategy. A more apt description would be conservative vs risky.

  4. Thanks for this, it’s an invaluable asset to be applied to everyday living.

  5. This is quite insightful Ludvig,
    Following these principles will really improve anyone’s life positively.

    I first read about the Pareto principal 2 years ago and that’s really wonderful.

    Most us usually do a lot everyday while achieving little to nothing at the end of the day. And this is because we usually focus on less important tasks.

    Someone once told me that you can be very very busy without being productive. This is so true. You’ll see somebody sweating I mean, it’s very obvious that he is very busy but when you check the output, it’ll be nothing to write home about.

    I really agree with all these principles man.

    Thanks for sharing.

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