1. Read ASAP! · Book Review Actions · Book Reviews · Psychology · Self Improvement · Skills

BR 144: Decisive by Chip Heath and Dan Heath

Category: 1 – Read ASAP! (All Categories are 1 – Read ASAP!, 2 – BUY it!, 3 – SHELF it, 4 – SOMEDAY it)

Comments: I think the Heath brothers are the best business book authors out there. Made to Stick was brilliant. They managed to surpass it with “Switch.” And, against the odds, they’ve delivered another great book.

As always, a perfect blend of stories, research “wrapped” in an easy-to-remember and apply framework. I’ve begun implementing the learnings from this book already and I’m sure it will go on to be a very important part of my decision making.

(Add on Mar 16 2016: Quick add more than a year after writing this post: This book did impact my decision making and I carry the WRAP framework card in my wallet. )

Top 3 learnings:

Instead of 3 learnings, I’ll share a somewhat long overall synthesis. Please ignore the formatting – this is just a copy paste. You’ll see a better formatted learnographic on http://www.learnographics.com soon. :)

The first step to decision making is understanding the difference between kind environments and wicked environments.

Kind environments – where feedback is clear, immediate, and unbiased by the act of prediction. e.g. the weather.

Wicked environments – where feedback is unclear, delayed and biased by the act of prediction. e.g. stock markets, new products introductions.

“Gut” works well in kind environments e.g. if you are well trained in chess/football, you know there are only so many different possibilities. So, your gut is an important data point.

In the stock markets, however, the gut might be a data point but doesn’t suffice.  Life is also a wicked environment. As a result, we tend to make decisions with narrow frames and overweight the short term.

We need a good decision making process to make good long term decisions. Hence, the WRAP framework –

W – Widen your options (avoid narrow frames and “whether or not” decisions)

R – Reality test your assumptions (fight confirmation bias)

A – Attain distance before deciding (resist short term influences, make decisions aligned to core priorities)

P – Prepare to be wrong (don’t get cocky about your decisions)

W – Widen your options (avoid narrow frames and “whether or not” decisions)

  1. Make sure you have at least 3 options before making a decision – and think AND not OR – can you follow multiple options at once?
    Whenever you hear a decision being prefaced by “whether or not,” it is time to reconsider.

  1. Find someone who has solved your problem.
    Sam Walton who made many Walmart decisions by copying competitors.

  2. Toggle between “Promotion” and “Prevention” mindsets.
    Circuit City’s actions in the aftermath of the 2001 stock market crash was a perfect example – they cut down underperforming stores (prevention) and also invested in new product lines (promotion)

R – Reality test your assumptions (fight confirmation bias)

  1. Tripadvisor it!  Zoom out (consider base rates) and zoom in (take a close up)
    Pick a job like you would a sushi bar on tripadvisor. Speak to lots of people and get an overall rating. Then, take a close up at negative feedback.
    Similarly, when engaging with experts, don’t ask them for predictions. Ask them historical trends and understand them to really understand your probabilities of success.

  2. Fight confirmation bias – spark constructive disagreement by considering the opposite point of view
    Alfred Sloan, legendary CEO of General Motors, refused to make decisions if there wasn’t at least one opposing point of view.

  3. Ooch before you leap
    An “ooch” is a small experiment to test a hypothesis. Approach a decision like a designer approaches a design – put together a prototype first and gather feedback.

A – Attain distance before deciding (resist short term influences, make decisions aligned to core priorities)

  1. Identify and refer to your 3 core priorities
    Take stock of what matters to you. You might decide against that expensive car if your long term priorities are to save and invest wisely.

  2. What would you advise your best friend to do? / What would a new person do?
    Intel took one of it’s biggest decisions after years of debate – getting out of memory and focusing entirely on processors – by asking the question “What would a new person do?”

  3. Try the 10/10/10 rule
    How would you feel 10 minutes from now? What about 10 months from now? And 10 years from now?

P – Prepare to be wrong (don’t get cocky about your decisions)

  1. Bookend the future – view it as a full spectrum of possibilities
    A top fund manager creates a whole range of potential future stock prices and a list of criteria that would make the upper end of the range more of a possibility. Predicting the future is impossible – viewing it as a spectrum of possibilities is realistic and guards against over confidence.

  2. Set a tripwire/trigger to review your decision
    What if Kodak, who religiously followed their 1980 report that said digital cameras would not get mainstream in the next decade, had a set a “tripwire” saying that they would review their decision not to enter digital cameras if adoption was greater than 10%? Would it have filed for bankruptcy in 2010?

  3. Create a realistic job preview
    Call centers did a much better job of retaining employees when they gave them a one day job preview taking them through the worst situations they might face. This triggered all sorts of coping mechanisms and also increased determination among the future employees.

If you were to make a quick spur-of-the-moment decision, I’d suggest a quick version of the WRAP process

W – Make sure you have at least 3 options or find someone who has solved your problem

R – Tripadvisor it!

A – Identify and refer to your 3 core priorities

P – View the future as a spectrum of possibilities and set a tripwire

The key principle – Follow and trust the process. You might fail on individual decisions. That’s okay.

Bookbytes here and learnographic here.

2 thoughts on “BR 144: Decisive by Chip Heath and Dan Heath

  1. Hey Rohan,

    I loved the millionaire teacher-I flew threw it and still understood the convoluted world of personal finance (that has never happened before :) ). Thank you for the recommendation! I cant wait to go through your list of read asap and find a few more must reads!
    -Astha

    Like

    1. Hey Astha, really nice to hear! :))

      I loved the book as well. I think it’s among the best starter personal finance books out there.

      Do let me know if you’re looking for a specific topic and I’d be happy to recommend.

      Like

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