Painting corners: How do you make decisions when your choices have unknown pros/cons?

(My secret sauce for decision-making. So simple… I must be stupid to benefit from this.)

The background:
For the past three summers, I’ve spent a week in the outdoors with my friends Ryan and Matt (one of those rare types with zero Google presence). We’ve gone backpacking, canoing, overseas, etc. These trips were great fun, rebooted my perspective with a week completely offline, and helped me build some incredible friendships.

That is, until last summer. Matt was starting school at the end of August, and Ryan was working until early August. And it just so happened that I’d been offered the chance to spend August at TechStars.

Decision: TechStars or my friends?

I spent two weeks agonizing over the decision, knowing that I was picking between two extremely attractive options–and the worst part, I didn’t know exactly what would be the outcome of my TechStars experience, nor whether the three of us could get together over Thanksgiving (the only potential compromise.)

How do you make decisions when your choices have unknown consequences–you DON’T know the pros/cons?

You paint the corners. ‘Cause you almost always know the absolute best and absolute worst. You just don’t know the probabilities.

paint-the-corners

A binary decision has two outcomes: What’s the best and worst possible consequences for each outcome?

Eg, if I go to TechStars, the best outcome included massive learning, extending my network, and connecting with Matt and Ryan over Thanksgiving. The worst outcome was a month in Boulder minus the opportunity cost of staying home.

If I go with friends, the best outcome was making money for a few weeks, plus spend a week with friends. The worst that happens is I make a little money, spend a week with friends, and forgo opportunities from TechStars.

The Pros/Cons are unknown–or rather, known outcomes with unknown probability..

I chose TechStars, and was also able to connect with my friends over Thanksgiving.

(Note: I first read about “Best-worst case analysis” in Ben Carson’s book, Take The Risk–thanks Jerome!  I’ve found these four questions make most of my decisions very easy.)

Steve Blank provides another decision-making heuristic:

Think of decisions of having two states: those that are reversible and those that are irreversible. An example of a reversible decision could be adding a product feature, a new algorithm in the code, targeting a specific set of customers, etc. If the decision was a bad call you can unwind it in a reasonable period of time. An irreversible decision is firing an employee, launching your product, a five-year lease for an expensive new building, etc. These are usually difficult or impossible to reverse.

My advice was to start a policy of making reversible decisions before anyone left his office or before a meeting ended. In a startup it doesn’t matter if you’re 100% right 100% of the time. What matters is having forward momentum and a tight fact-based feedback loop (i.e. Customer Development) to help you quickly recognize and reverse any incorrect decisions. That’s why startups are agile. By the time a big company gets the committee to organize the subcommittee to pick a meeting date, your startup could have made 20 decisions, reversed five of them and implemented the fifteen that worked.

Creating Useful Filters Rather Than Useless Speed Bumps

As long as we live in a resource-constrained world (time, money, etc), we will create filters to separate the top-notch from the tolerable, the Thinkpad’s from the Acer’s, the Nunatak‘s from the Campmor‘s.

Most of these filters are intuitive, unconsciously acted upon.

I remember hearing a basketball referree, a seasoned college-level veteran, recount how crowds went from respectful to jeering when he let his hair grow long. (An amatuer thespian, the long hair was necessary for a community play.) No fan consciously thought, “an extra three inches of hair causes bad officiating”–they just knew the good refs kept their hair short.  Long hair signalled bad ref.

In The Dip, Seth Godin writes about living within a filtered world. It’s a fascinating book about “when to quit and when to stick.” One way to separate a dead-end from success-just-around-the-corner: look for “measurable progress.” Maybe you can’t see the end of the tunnel, but can you identify progress?

(There is a danger here. Gen Y grew up accustomed to accurate and constant feedback. In video games, I knew how much farther until the end of the level, and how many more hits until I died. As a result, we’re addicted to measuring progress.)

But what about when you’re the one creating the filters for other people?

You face this question whenever someone asks for lunch. Every time you hire someone. Every time you create a sales funnel. How do you decide the best use of your time?

My friend Ramit faced this question recently. He wanted to enable someone’s dream to make the world a better place. Someone with the capacity to dream big, and the tenacity to make it happen. Ultimately, he created a scholarship for a twenty-something. (Hurry, today’s the deadline to apply.)

Many people create useless speed bumps–obstacles, especially to test tenacity.

“Thanks for reaching out–really busy–ping me in two weeks.”

But what if you created a useful, self-selecting filter?
“Thanks for reaching out–so I don’t waste your time, can you e-mail me three questions you want to discuss?”

Something that requires thoughtful effort. But the effort actually creates value for the rest of the world.

A guy applying to Seth’s latest internship reached out to me for advice. I looked at what he’d created, gave him some advice, and noticed how consistently he created value.

So I offered him a chance to come on board with another project I’ve got (still in stealth mode).

Just last night he sent me another e-mail saying thanks. And all because Seth used a filter that created value BEYOND Seth.

My super-abstract rule for filtering people: Constrain the outcome, not the process. And make the outcome value-added even if they get turned down.

I’ll spare you the rant. But you must create useful filters, rather than useless speed bumps. Otherwise, you’ll get less than the best. Because the best are filtering you. If you waste their time now, how do they know you won’t waste their time later?

Copy the master: http://www.squidoo.com/Alternative-MBA and http://www.squidoo.com/summerintern08

Create a filter, not a hurdle.

(Hat tip to my lifecoach, Chuck Westbrook, who prompted me to think more about filters.)

If a picture is worth a thousand words…

What do I want those words to say?

How do I make those words say what I want them to say? (Not worth a darn if they don’t say what I want them to say.)

Spent about a couple of hours last night thinking about the header image. This, along with my top navigation bar, are the first things people see… this is my chance to communicate what my blog is about.

It isn’t looking too smooth right now, but I’ll run it by a friend or two who have far better graphic design skills.

Free Advice: Failing to plan is planning to fail.