Why is decision-making important?
Because sometimes it involves money. A lot of.
Decision-making is essential when it involves money. In 2010, Nokia stubbornly decided to use Symbian while all developers join iOS and Android. In 2017, Microsoft adopted a similar approach to challenge the duopoly. The Redmond-based company embedded Windows Phone in its Lumia lineup instead of Android. As you’ve already known, this decision lead to billion of losses.
Microsoft knows that the lack of developer support is the reason why Nokia – Symbian failed. Why did the tech giant still take that approach? It is interesting that under specific situations, people tend to take completely known wrong decisions. And it is not only about corporations. It could also happen at the individual level.
Imagine in February 2021 you invest in Teladoc due to its prospect in telemedicine. In reality, it is just a zoom or video conference consultation. But it suddenly turns ugly till today. From February 2021 to October 2022, the stock price falls from 293 to 23 per share.
People make investing decisions because it looks new, modern, and revolutionary. And it cost a lot.
Nah, How do you make important decisions?
To answer, we begin with what is decision making.
Decision-making is gathering information, assessing them, then taking one which is most suitable.
Quality information
To make important decisions, we need to gather quality information. In individual cases – investing in Teladoc in our example – the lack of quality information plays a fatal role. Investors fail to recognize how easy replicating Teladoc’s business model. You just need to set up zoom and hire a physician.
Livongo is another case, but not enough to carry Teladoc alone.
So, let us remind you: You need to gather quality information.
Overload Information
Making decisions with little information is terrible, but collecting too much of it also brings you nowhere. Too much data make us confused and distorts our assessment. We address this issue specifically here.
Act Accordingly
Microsoft with Windows Phone falls in this category. Steve Ballmer (at that time) led the company to know all the facts: developers, the OS.
Looks simple and easy, but it is the hardest part. Acting accordingly will be difficult if something does not go as you expected. For instance, it is difficult to keep investing in good company while your friend makes thousands of bucks from Bitcoin. You will be tempted – and may be ended up buying the crypto.
This call the empathy gap.
You have determined, and set your goal, and your plan for the future, but suddenly things change dramatically. You have no idea what you will do. There is a gap between what you already planned and when you really face it in the future. You and you in the future look like different people.