On Decision Making | Quick and Decisive or Slow and Reflective?
Warren Buffett is often credited with the idea of making just a few good decisions in your lifetime to have a successful life. In his most recent shareholder letter, he talked about how just 12 decisions have been the driving factor behind Berkshire Hathaway's success over the past 5 decades.
He said that if you just make 1 good decision every 5 years, you'll do quite well in life.
I don't agree with everything that Buffett says. He's from a different era than I am. He believes a lot of things that I don't believe. He doesn't believe in a lot of things that I do believe in.
But when it comes to decision making, I have to agree with him. He's an incredible decision maker, business operator and investor. He will go down in the history books as one of the best investors in the world.
On the other hand, I don't think that "slow decision making" tells the full story. I think there is a nuance in decision making that exists. If you believe that Warren Buffett has meditated for 99% of the last 50 years and simply broke out of isolation to make 1 decision every 5 years, then you are mistaken.
There are slow decisions and there are fast decisions. One of the keys to a successful life - whether business, investing or otherwise - is to identify which decisions require slow thinking and which require fast action.
Quick and Decisive vs. Slow and Reflective
As humans, we make thousands of decisions per day. Do you go left at that street? Do you buy organic or regular? Do you go out to eat lunch today or stay-in and make a sandwich? Do you buy that stock now or wait until a better price? Do you read a book or watch tv?
We make all sorts of decisions all of the time. When Buffett talks about decision making, I think he largely refers to the decisions he makes at Berkshire in terms of the companies that he buys. There are plenty of other decisions that he has to make on a regular (daily) basis.
That being said, I think he has discovered a certain "secret sauce". That secret is being able to WAIT when making a big decision. Like what company to buy next.
Building
In building a tech startup, quick decisions are required. Buffett doesn't operate a startup. He still has to make some quick decisions, that much is for sure. He may need to decide whether to meet with a person or whether to take a certain phone call or if the company should do X, Y or Z small thing.
When it comes to buying businesses, he takes that incredibly slow. He has identified that the small decisions can happen quickly and almost on "autopilot" while the big decisions can ruminate in his mind. He can sit and read thousands of pages. He can think about a company. He can visit the company. He can interview people in the company.
He can take his time reviewing the company. Look at how late in the game he was to Apple. A lot of people say this shows he has lost touch with technology and can't properly evaluate the sector. He missed out on huge gainers like Amazon and Apple in the early days.
That's also not the full story.
The fact that he takes his time with the big decisions of what companies to buy is why he's beat the S&P so consistently. It's why even in down years, Berkshire can still churn a ridiculous profit.
Slow Decisions
When making a decision - and not what to eat for lunch - try to determine what kind of decision it is. Is it a quick, decisive action that you can take?
OR... is it a long-term impact decision. Is it something on the order of buying a stock or investing in a crypto project?
When you evaluate and make decisions consider that quick, decisive decision making can be ridiculously valuable. When you're decisive, you can move fast and break stuff. When you do this, you can learn quickly and rebuild something better consistently.
When the bigger decisions come along, don't be afraid to ruminate. Don't procrastinate. There is a difference.
What Decisions Have You Made Recently? Can You Identify a Few Small Ones and a Few Big Ones? Leave a Comment Below!
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I just left my job and starts working full time a self employed or that's a decision I made recently and I am very hopeful it will help me to get rid from working as a employee
Wow that's awesome! Big leaps like that are always challenging but always rewarding too. I wish you the best of luck and also... you got this!
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Thanks for encouragement I hope I will become successful and able to achieve my goals
It's actually one decision... just join the "insiders". Who buys airline stocks in 2020? He did a quick U-turn after a phone call from Bill Gates... wonder why he got left out of the ring on that one? 😉
lol well, that's nice too
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I really appreciate this content, I've learnt something from it.
This really sits in well.
I think I'm slow, sort of procrastinate, when it comes to making decisions especially about big projects. I usually take my time before plunging into it.
Getting onboard Hive was one decisive decision I took when I heard about it and I haven't regretted it.
I suffer from procrastination as well. I've found that it's a good decision to make ANY decision.
If you look at a problem and it can be solved quickly, then solve it quickly and keep pushing forward
If you look at a problem and feel the urge to procrastinate, decide that it's either a quick or slow problem. If it's slow, then don't procrastinate just because it's slow. Create a plan to solve it and then execute your plan. Even if it takes 6 months.
The worst kind of decision is the one that you don't make at all
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Yeah I agree.
Some problems need to be tackled over head without waiting to avoid spoiling things.
I've made some procrastinations in the past that spoilt things for me.
https://leofinance.io/threads/view/luchyl/re-tsunsica-2vlukfcks
The rewards earned on this comment will go directly to the people ( luchyl ) sharing the post on LeoThreads,LikeTu,dBuzz.
Small decision? I guess i make those on regular days like my budget for each days what to spend and what not. But Personally, I think the two big decisions i ever took were;
It took me a while to finally make those decisions but i can tell you now it was later worth it.!
There's indeed a difference! Ruminating about the decision isn't an excuse to procrastinate in making it. I like to think hard about big decisions, trying to perceived all possible outcomes and the likelihood of each one. Then I go execute on the chosen one and never look back.
I agree, it's nuanced and he's very much a man of his time. I am not sure that he could replicate his success if he started off again today.