Sunday, February 21, 2010

Questions to Ask Before Making a Big Decision

Before making a big decision to do something new, try honestly answering these questions:

  1. If a business associate were considering this decision, would I advise him to do it? If not, why am I considering it for myself?
  2. What is the very worst thing that could happen if I do this? Could I manage if it did happen?
  3. Assume I can't manage the worst case scenario, but I still want to do it. Would people whose thoughts I respect tell me that I'm being silly or irrational?
  4. Do I get excited when I think about the decision? Is that good or bad? Why?
  5. If you're excited, explain your good or bad response to your respected adviser. What does she think of your explanation?
  6. What are the known unknowns1 related to this decision? How material is the unknown information to making the current decision?
  7. What are possible unknown unknowns2 related to this decision? Should thinking about unknown unknowns make me re-assess my answer to the questions in (2) and (3)?
Different angles yield new insights. This is a list of some of the questions that I sometimes ask myself. There are many other possibilities that are equally illuminating.

1 Known unknowns are "what you know that you do not know." For example, I know that I do not know how many people will be reading this blog six months from now. As a result, any decision I make based on an estimate of future readership should be tentative.

2 Unknown unknowns are "what you don't know that you don't know." The classic example is this: Imagine that you are a lone Chicken on a farm. Every day, the farmer feeds you. Over time, you come to regard the farmer as a friendly food bringer. That is . . . until the day that the farmer kills you and eats you. Nothing from your entire life experience as a chicken would help you to predict that the farmer would kill you.
The farmer's plan to kill and eat you (the chicken) is an unknown unknown.