Holding the position of Chairman and CEO of a 391,500 strong workforce is an incredibly daunting task. I nearly fell off my chair when I realised how many people Berkshire Hathaway employs. Needless to say, Warren Buffet has more on his plate than most. Here is a guy that at 90 years old (again I nearly fell off my chair, this is getting dangerous) is running a business that reported earnings of $81.4 billion and a revenue of $254.6 billion. I’ve decided to sit on the floor at this point.
These numbers are colossal. To put this in perspective the average house price in America is $226,800 according to Business Insider. With Berkshire Hathaway’s 2019 reported earnings you could buy roughly 3.6 million houses. If you want to know what 3.6 million homes look like, picture New Jersey, yep that’s right, the whole of New Jersey, that has roughly 3.3 million homes.
Eric Rassin published a paper in 2007 that described indecisiveness as a widespread phenomenon. Indecisiveness is described as taking a prolonged time to make decisions, regretting decisions, delaying decisive making, changing one’s mind frequently.
I don’t know about you but I have a tendency to overthink things which leads to a severe case of indecisiveness. So what can we learn from this business giant about making good decisions?
Indecision is the worst enemy of productivity
Indecisiveness is a huge productivity killer.
It comes before the to-do list is written and it sometimes wades its way in afterwards too. Before writing this article, for example, I was contemplating doing the wallpapering, getting a coffee, writing a different article for a friend and/or mowing the lawn.
I got up and made a coffee, started the article, looked at the wall to wallpaper and decided not to mow the lawn as it is currently 7:40 am, and the neighbours might not be incredibly happy about that.
I’d just wasted 40 minutes thinking about all the things I could be doing rather than spending 40 minutes on the things I should be doing. And that is pretty much the story of indecision. So why do we find it so hard to choose?
What happens when you have too much choice
There is a theory that by having so much choice we can optimise our decision making. By being exposed to so many different options we can increase our decision satisfaction but in fact, the opposite is true.
In a paper by Stefan Korff, the too-much-choice effect or TMC was tested. The paper tested different conditions and varies of choices on differing participants to understand the impact of TMC on negative physiological effects. The paper concluded the following:
“We find that participants assigned to a large choice condition report to be less satisfied with their choices made, experience more regret, and are more overwhelmed by the decision process.”
We need to start by limiting our choices. With that in mind, keep your to-do list small and non-negotiable. Decide on 3–4 tasks need to be completed today and work on completing them. Don’t open your mind up to any more choice than you need to.
Is There a Right or Wrong Decision?
Decision making has been studied for a fair while. Herbert A. Simon was an American Economist, his primary research was to understand how corporations make decisions. He is perhaps best known for his theories on bounded rationality and satisficing.
Satisficing is about making a decision that meets an acceptable threshold. It’s the joining of two words satisfying and sufficing, meaning at the level you will be sufficiently satisfied.
For example: let us say you are trying to choose what to have for dinner. You need something warm, that will satisfy your hunger and include some veggies. You are trying to work out whether to go with your initial idea of spaghetti bolognese or choose something else. The theory of satisficing suggests that the time wasted thinking of another option isn’t worth the upside of the new option. Spaghetti bolognese meets your criteria and thus you should choose that.
So arguably there isn’t a right or wrong choice there are just levels of satisfaction associated with choices and a level at which your choice to accept.
In Real Life
Would it matter if I wallpapered, wrote the other article or wrote this article? Would it matter if I decided to do any of the other things that I have on my list today? Sure, there is an argument for an optimal sequence of events, however, my time spent figuring what that probably derails the whole thing.
Let me explain.
There is no right or wrong decision to make. It wouldn’t matter if I started the morning out with mowing the lawn or wallpaper (although my neighbours would tell you differently). There is just stuff on a list that I need to complete, no rules or regulations about when to complete, by which time.
There is an expectation from myself that I will complete said tasks and do them to the best of my ability but that is as complex as this problem gets.
There are tasks to complete and me to complete them.
Moran Cerf, a neuroscientist at Northwestern University has been studying decision making for a decade. His research focuses on understanding the satisfaction that decision making leads to.
“It’s all about who you decide to spend time with. But it’s not just advice to choose your friends carefully”
So it’s not necessarily about what you’re having for lunch, it’s perhaps more important to focus on who you are having lunch with.
Indecisiveness Wastes Time
I am, or rather I was, incredibly indecisive. It’s something I’ve been working on for a while. At the height of my indecisiveness, it would take me half an hour to decide what sandwich to buy from the shop — needless to say it got a little out of hand.
So instead, I’m working on making decisions quicker, going with my gut on things and just choosing an option. For me, not doing that leads to huge amounts of procrastination and ultimately little productivity.
Now some decisions are just not worth more than a second of your time. Those decisions we tend to give way more attention to and they become time leaks in our system.
For example, deciding on what order you are going to complete your daily tasks in. Let’s say your to-do list comprises of the following:
- Clean the garage
- Write an article (first draft)
- Mow the lawn
- Wallpaper the landing
A fairly hefty to-do list but enough to do in one day. If we think about these tasks in terms of hours we can get an idea of the total work time we have for the day:
- Clean the garage = 2 hours
- Write an article (first draft) = 1 hour
- Mow the lawn = 30 minutes
- Wallpaper the landing = 2 hours
TOTAL TIME: 5 hrs 30 minutes
Any more than that and it’s rather unrealistic that all the items on the list would get ticked off. So, 5 hrs and 30 minutes to complete. If I spend any time deciding what to do, I won’t be chipping any time off the 5 hours and 30 minutes.
Waking up and spending an hour flitting between tasks, starting one thing and then changing to another is no good. Planning is quite a sneaky concept in that it tricks us into thinking we are being productive. At the end of a long planning session figuring out what to do today, I’ll have nothing to show for it.
Any time spent trying to optimise your daily to-do list is the time taken away from doing your actual tasks. There is little to no replacement for doing the work. Is an hour spent trying to optimise better than actually doing the thing you need to do?
Optimising the day above may save me 10 minutes total. I may as well spend that time doing rather than optimising, as it will take me much longer than 10 minutes to figure out how to optimise. And anything longer than 10 minutes is suboptimal and thus not worth my time.
Some Decisions Need More Time Than Others
Not that life is a race, some decisions take a lot of time to consider and mull over. Thinking of the pros and cons and making a rational decision in the right headspace. Those decisions need more time but still, they don’t require buckets of it. They just require the right amount.
Most of the time you know the answer. If you’re really honest with yourself you know the answer. You know the pros and cons, the ones that fall onto the paper are the most prominent.
Don’t sweat the small stuff.
An interesting thought, as explored in Paul Doolan’s book ‘Happiness by Design’ is how much time we actually spend on the big decisions. How many times you do view a house before buying it? Maybe 2 or 3. So perhaps total time thinking about it being a few hours. Conversely, you’d spend 30 minutes contemplating your lunch decision.
When you start to see each decision as an opportunity to allocate your time effectively, your decision processes should start to change. You can begin by asking yourself ‘how much time do I want to spend contemplating this?’
By bringing time to the front of mind whilst making decisions means that you are conscious of that being a factor, which hopefully means you start to reduce the amount spend on small decisions.
The Warren Buffet ‘Newspaper test’
With a workload and a list of responsibilities as long as your arm how do you make decisions? With so much on your plate, how do you make decisions that work? Well… it turns out, like a lot of decisions in life, there is a simple answer. A newspaper. In a CNBC report Buffet said:
“I ask the managers to judge every action they take — not just by legal standards, though obviously that’s the first test — but also by what I call the ‘newspaper test.”
So what’s that?
“would feel about any given action if they know it was to be written up the next day in their local newspaper.”
It’s simple, any action or decision needs to be passed through the newspaper test. If this story broke tomorrow, how would you feel? But bear in mind that this reporter is not just any reporter. She’s not the most friendly. It’s likely that whatever action you’ve taken she could put a cold spin on it. So, would you still take that course of action?
“It’s pretty simple,” he says. “If [the decision] passes that test, it’s okay. If anything is too close to the lines, it’s out.”
When you’ve got a decision to make and it’s hard to judge the right course of action, that’s the time to use the Warren Buffet Newspaper Test.
At the end of the day, time spent on the fence is life in limbo. Most of our time, I fear, is being spent between decisions and not actually doing the things we know we need to.
We spend time thinking:
Should I? Shouldn’t I?
When we should be busy doing the things we are setting out to do. If you’re unsure, use the newspaper test.
Make sure the balance is right. More time doing, less time making the decisions. The other way around leads to dissatisfaction and it’s a killer for your productivity. Don’t forget that time spent not making a decision is time that you could be doing something else.
The small stuff doesn’t deserve your undivided attention, save that for the big stuff, the stuff that needs your full attention, the decisions that need time and focus.