The art of making decisions with least amount of information
4 min read . Updated: 18 Dec 2020, 08:37 AM IST
PremiumThe only businesses that are likely to thrive in the short-term are those that either facilitate digitisation or contactless commerce. Those impacted can bounce back too, but only if they are able to digitise their business operations at a fast clip
Unlike earlier recessions, which were all man-made, the current one is pandemic-triggered and the like of which no one alive may have seen before. As the crisis gets compounded, about 70-80 per cent of businesses are either already in dire straits or will soon find themselves in a tough situation.
The only businesses that are likely to thrive in the short-term are those that either facilitate digitisation or contactless commerce. Those impacted can bounce back too, but only if they are able to digitise their business operations at a fast clip.
Unlike in the past, when we had the benefit of hindsight through similar historical experiences, this time the road ahead is full of unknowns for all of us. The only thing we know for sure is: The world has changed for good and we have to accept it.
What’s the magic mantra for thriving?
If there is one thing we need to take in our stride, then that is: The world and the rules that govern it have changed permanently.
Customers may no longer have the same requirements for which you had designed your products or services. The harsh reality is, about 30 per cent of existing businesses are likely to be wiped out, 50 per cent will likely see plans stalled for the next 6-12 months and the remaining 20 per cent are likely to see a huge tailwind. Companies in digital health, digital education and online commerce sectors are already witnessing a ramp-up in business activity, but there are others too who could benefit.
Are you in the 20 per cent? If not, what will it take to be a part of that league? There are three rules of thumb: (a) Reassess: To see whether or not things are in your favour. If they are, evaluate what you are doing to capitalise on the opportunity. (b) Rethink: If things are not in your favour, then how far are you from getting into that 20 per cent league? (c) React: I do not think this is a time to wait. React early. Be smart and take charge of your destiny.
For businesses that aren’t in the fortunate 20 per cent category, the biggest challenge will be to make bold decisions based on incomplete information as there are no past data points (or experiences) to draw inferences from. There are no guarantees that a decision will indeed bear fruit, but not taking tough calls may also stymie growth prospects.
We have choices to make and sometimes the weight of the decision stokes frustration and anger, damages relationships and may even lead to inaction (‘paralysis by analysis’). The decisions fall into many categories, but the most common ones are broadly: (a) Emotion-driven decisions: What colour should the wall be painted or what colour should the napkins for the wedding reception be? (b) Logic-driven decisions with complete data: These often have financial impact and are easily reversible. (c) Decisions based on incomplete data: These aren’t easily reversible and are the real forks in the road. These are often the most important decisions one needs to make. The emotion-driven decisions are often the trickiest ones and it is surprising how, many a time, arguments over seemingly petty issues destroy relationships.
Over the years, the most common advice one gives or gets is the logical one: Make an informed decision, take your time, gather all the data you can, speak to all the experts, weigh the pros and cons, delay the decision-making to the very end, weigh the risks and rewards and, finally, make an informed decision. There are countless situations in life when this may be the right thing to do. Say, when buying a new car, a new house, choosing between different universities or a job, etc. I personally have never been a fan of these and, yes, I have perhaps made some poor decisions in life. However, as long as they were not life-defining or irreversible, I have gone with my instinct over analysis. Experience, however, has taught me that despite all the analysis one does, things almost never work out according to the original plan. I realised the biggest skill one needs is to master the art of making decisions with the least amount of information, not go on an analysis overdrive. Over time, people who succeed know how to quickly identify the key reasons for taking a decision.
Keep your decision-making process simple but, by definition, it requires being ‘decisive’. The sooner you rule out possibilities and focus, the easier it will be to make things work. Last but not the least is your gut instinct. Right from choosing a life partner to several decisions (micro and macro), including several investment decisions I have made, my gut instinct has been critical. I also realised every time I have gone against my gut, I have regretted it or certainly not enjoyed the outcome, even when things have worked out. On the other hand, every time I have gone with my gut, I have been happy with my decision, even when things did not work out.
Yes, the circumstances that covid-19 created are undoubtedly trying, but the opportunities they are leading to are indeed stellar. If you are an entrepreneur, this isn’t just your opportunity, it’s your responsibility to make the most of it.
Excerpted from Sailing Through A Storm: Making A Crisis Work For You by T.N. Hari and Sanjay Swamy.
