66. The MBA Secret Guide to Making Quick and Effective Decisions

You need to make a decision. How are you going to do that? You're stuck. You need to decide something. What do you do? All right, here's the first thing you can do. Who can I call? So I've got a decision to make and I'm like, crap, I don't know which direction to go or I don't understand this piece. What can I do? Give someone a call, call a mentor, call a friend, call an expert in the area, right? And if you don't have any of those, ask ChatGPT. This is just a really awesome thing where you can type in your problem, be like, hey, be a therapist or be a mentor and, you know, feed something back to me. And that just helps you to get unstuck and reframe the problem that you're in and keeps you going along that path.

Welcome back to another episode of the Bennetberg show with your favorite MBA and high school dropout talking everything crypto, business and personal growth. And today we've got a cracking episode where where Berg shares the secret strategy on how to make great decisions when you don't know how to make them. Because we've all been there. We're at a crossroads. We need to make a call on something. Do we go left, do we go right? Do we go forwards, do we go back? How the fuck do we figure it out? Bergs has done the science behind it. He's done, he's done the math, he's run the numbers. He's going to share this little secret insight that's going to help all of us make better decisions. So, Bergs, I'm going to handball over to you, mate.

Let's get into it, mate. Thanks so much. And these are what we're taught in our MBA plus things I've picked up from other people in my experience and a lot of it from EO as well. But really this is based in hardcore decision science, but just makes it super easy. Enough about all that. Let's dive into it, right? You need to make a decision. How are you going to do that? You're stuck. You need to decide something. What do you do? All right, here's the first thing you can do. Who can I call? So I've got a decision to make and I'm like, crap, I don't know which direction to go or I don't understand this piece. What can I do? Give someone a call. Call a mentor, call a friend, call an expert in the area, right? And if you don't have any of those, ask ChatGPT this is just a really awesome thing where you can type in your problem, be like, hey, be a therapist or be a mentor and, you know, feed something back to me. And that just helps you to get unstuck and reframe the problem that you're in and keeps you going along that path. And be know you've done this a lot, where you've got a task where you're like, I have to go raise capital, what do I do? And you end up calling someone and asking an expert.

I was just thinking, I think the hardest decision I made in a little while was when it was trying to was in my relationship, my past relationship, and whether or not if this relationship was actually working and whether I needed to break up with that person. And I feel as though like.

This.

Decision framework probably would have helped me a lot, you know, by being able to trust and rely on other people. Because later I probably realized that if I just spoken to a few people, they probably already knew, you know, it wasn't going to work out. But at the time I really struggled. So, like calling that friend or calling that trusted person I think is a great starting point.

Absolutely. And then if you still need more help, the next one. What data can I look at? So we have a lot of programs and subroutines running in our heads. We've got a lot of bias, a lot of models that we use. But data will help to unstick you because it'll give you important facts about something you're looking at. So let's say you're going for a new job and you don't know how much money you should ask for. Go and look at the industry data. What is similar data on there? What are the salary bounds? What does your company pay? Or let's say I'm building a new product and I want to know what people want. I can look at our site data, I can look at what people are interacting with, what they like, when they don't like their bounce rates. Let's say I own a website. I can look at things like similar web to see what my competitors are like. You can look at benchmarking and then do some analysis on the data. This is really huge. So I do quite a lot of data analysis and simple things like just trending. Like do a trend analysis and plot something so you can see the direction you're heading, or a scatter plot where you've got two different variables and you can see how they interact together. Or even sometimes I've used a regression model where you have really Nerdy terms, but a dependent and independent variable. So it might be Ben's golf swing. What are the top four variables I'm measuring that go into his golf swing? And it might be the way he moves his hips, his power, the weather, whatever. Or it might be, okay, what leads to a customer conversion for us? So let's say we've got a thousand conversions. We can look at their path, and it might be they've looked at an ad, they've subscribed to our newsletter, and they've jumped on a call with Ben, and that accounts for 80% of the variance. So we know what data to look at. And when you've got really hard problems, data really helps you in this area. And then let's say you've called a friend, you're still stuck, you've looked at some data, or you might not have the data and you don't know what to do. That's great. Next one. What experiment can I run? This is a brilliant one, and this will really help you, because sometimes we have. We don't know the outcome. We can look at some data. We could talk to people, but we don't know until we really try it. And examples of this would be like, I'm buying a house or a car. Like, yeah, you can talk to people about a house. Everyone has an opinion. You know, you can look at some data on how well the car runs, what it looks like, or the house and the area, but you don't know until you're actually there. And you're going to spend hundreds of thousands of dollars on a house. Well, what can you do? You can rent in that area for a month. You can do a small experiment. You can rent there. You can see what it's like to live there, what the people are like, what your commute is going to be like, how noisy it is, what your neighbors are like. And that will give you so much more information to make a decision than just looking at a spreadsheet or data or talking to people. The same with a car. You're going to spend 50 grand, 80 grand, whatever, on a car. Or let's say you're really rich, you're going to spend hundreds of thousands of dollars because you need the Lambo. Go and rent the Lambo for a weekend, see if you can actually, if it fits up your driveway, if you fit in it, if it pisses you off, if it's too scary to drive because it's so expensive.

And even that resonates with me because I always think, like, it's an all or nothing decision. I'm always in, I'm always out. There's usually the answer somewhere in the gray where you can test something out, you can trial it, you can take your first step, you can tip your toe in the water to see if it's, you know, warm.

Exactly. And people don't want to spend like maybe 1% of what you are going to spend. But you're like, why are you spending such a big amount of money without really knowing? Spend that 1% and de risk it and get the thing you really want and it'll lead to a better decision. And at work it can be, hey, how do I do a small test to get more feedback, like, I want to implement this program or I want to build something? You can do a survey, you can ask people, you can prototype, you can run little experiments and you can get more information. You can get buy in, you can get feedback. Just try the new thing, do the routine for a few days, go to that different gym. You don't need to sign up for a year. Go do a couple of casual sessions and see how it goes. All right, Next mental model you can use is, I use this quite often where I've got multiple decisions in front of me or things I need to do and I know I need to do them all. But then I ask myself, which decision knocks out subsequent tasks and makes it easier? So how can I make one decision to make five? And this can be, can I roll up all these tasks and I do the one task and all the other ones become small, irrelevant, or easier? And even simple things. Like at the end of the day, I'll be like, okay, I need to wash the dishes, exercise, make dinner and meditate. And I'm like, I can't be fucked. I don't want to do all of those things, the mental state that I'm in. But I'm like, hang on a minute. Can I do one of these to make the rest easier? So I'll meditate because it's easy. It's relatively passive. It's 10 minutes, but it refrains me and I get in the right mind frame where it makes exercise really easy. It gives me enough to be able to stretch and then get in the gym and start lifting. Once I've started lifting, all the bullshit goes away. I'm in such a good mood, I could just pop my headphones in. I can easily wash the dishes and make dinner, whereas before that it would have been really, really hard to do. But I've got myself into that mind Frame. And making that one decision made all the subsequent decisions a lot easier. And yeah, yeah, I use that quite a lot. And even in business, I've got 15 things coming at me. I'm like, right, what's the most important thing that I can do? And it makes all these other things either really small or irrelevant. And then here's one I've started using recently and this is more in my personal life and it's which decision will increase my surface area for luck? So I'm faced with a decision, a very simple one. I either sit at home and I watch a movie or I go to the pub with my mates. Sometimes I'm like, I'm knackered, I can't be bothered, I don't want to drink. But what increases my surface area for luck. And it's always going out and doing the thing and meeting new people because you don't know who you're going to meet at the pub, the conversation you're going to have, how to help solve that problem you've got incubating in your head or it'll pop back in three months. Or things like, do I just sit down at the we work or do I go and talk to that person or do I go and have a coffee with them? Or even when I went to the city, I caught the train as a guy sitting next to me, I'm like, do I have a chat with him or just say so? I'm like, I'll just have a chat. You never know where these things are going to lead.

I was going to say, did you? Because you've been sort of wanting to go to an office for ages. We've been talking about ages but just haven't been able to get there. You went there the other day, was that something similar, this decision?

Absolutely game changing, mate. Like, the way it reframed me, how I was able to work, it just showed me the world is a much bigger place. When you're at home and you're working by yourself, the things that you think about are just stupid. And I got on the train, I looked at different people, I saw all the different suburbs going down, heard what they were talking about, talked to different people. I'm like, mate, you're a fucking idiot. The things that you were talking about and the conversations you had in your own head was so dumb. And get out of your house, do real stuff and be a real human. It's not that serious.

The world becomes really small and stressful and painful when it's just like you sort of Stay in one spot for so long and you don't really realize until you get out and you're like, oh yeah.

And I take it so serious. I have to work so many hours and you're like, no, I can stop. I could call my mate, I can have a coffee, I can sit in the sunshine, then I can get back to it and things just become easier. So increase your surface area for luck. So I'll be doing that every week now, which is fantastic. Now let's really get into the decision science. So this is one MBA tool I use all the time when I need to make a decision and I've got multiple choices and this is called Multi Criteria Decision Analysis mcda and it's very simple to do. So I've chosen an example of I want to get a new car and I don't know which one to get and let's pretend I've already run the experiment and I've driven these cars. So I've got a little spreadsheet here and for those on the pod, I'll explain it to you. It's very simple to use and I'm going to share it so you can use it yourself. So let's say I want to get a car and I've got three options here. I've got the 2022 Tesla Model 3 Performance, right? It's a Tesla. We all know what they look like. That's $80,000, let's say. I've also got the 2017 Holden Commodore VFSS V Redline Baby V8. Beautiful. Love it. $50,000 red with black stripes. Can't go wrong. And I'm also going to choose between a 2021 Subaru WRR WRX SDI Spec R. That's about $78,000. So as you can see, I kind of like performance cars, sedans. These are the ones I want to choose from. So how does this multi criteria decision analysis work? It is super simple. All you need to do is come up with a criteria and give it a weighting and this whole thing will take you less than five minutes to do. So my criteria here is I thought, okay, I'm going to get these cars. What are the things that are important to me? So I wrote them down. The things that were important were price, safety, fuel, cost in car entertainment, performance and color. Let's say they are the six things that I am interested in. Now I've got those six things, all I need to do is place a weighting on them. The weighting can just be a number. Do it out of 100 because it's easy. You can go over 100 if you want. But what I've done is, let's say I'm very price sensitive. So price is going to make 30% of the weighting safety. 10% because I care about that in my family. Fuel cost, 10% is in car entertainment. I really care about audio and what the little touchscreen looks like when I'm in my car. So I'll give that 20% performance. It's got to have a bit of squirt, so 20% and color. I like my red cars, so 10%. All right. And then all we do is we fill it out in this simple table. And the way this works is for the best option you give 100 points. For the worst option you give 0. And then for the next, the middle option you give somewhere in between. And I'll show you how to do this. So let's say price. So the cheapest is the Commodore, right? So the Commodore automatically gets 100 points. The Tesla is the most expensive, so it gets zero. And the Subaru is 78,000. So between 100 zero, it's $50,000. It's 78, so it's 2 grand off the top. So let's just call it 3 grand, which is 10%. So we'll give the Subaru a 10. Very, very easy safety. Both the Tesla and subaru have a five star ANCAP, so let's both give them 100. Let's say the Holden has a four, so we'll give it a zero.

Right. Fuel cost, let's say the Tesla is the best, so it gets 100. Commodore is definitely the worst. Big V8, 98. Wrong guzzler. And let's say the Subaru is somewhere in the middle on 50. In car entertainment, the the Tesla is by far the best. Holden is the worst. And the Subaru, let's say it's about. Oh, it's a 70. Let's say it's almost up there with a Tesla speed. Let's go for this Tesla, definitely the fastest of the three.

Holden and Subaru, let's just say they're kind of equal. Oh, let's just say the holders are worse and the Subaru is about a 50. And the color, let's say I want a red. Tesla doesn't come in red. Holden does 100 points and Subaru doesn't. There we go. So I've quickly done this table. The 1000 make it very, very easy. And right here at the weighted scores, all this does it just multiplies the score you gave it by the percent and down the bottom you've got a score. So what do we end up with? Tesla is on 60 points, Subaru is on 42 points, Holden is on 40 points. So based on this, the best option on my criteria is the Tesla. Now here's the source. The beauty about multi criteria decision analysis is it doesn't make the decision for you, it gives you information about what's important to you. So right here I can see that Tesla's already got 40 points from in car entertainment and speed and that's already pretty much what the Holden and Subaru have. So I can go back and I can say, okay, I understand it's telling me that you know, the Tesla is there, but that doesn't feel right to me. So what I can go, I can go back and see what's important to me. So in car entertainment I can change that to 10%. And let's say color doesn't matter to me anymore. I want to call it fun and I'm going to make that 20%.

So if we go back and now this instead of color, it is going to be fun. I'm going to put the Holden at 100 because it's the most fun car that I drive, the Subaru, let's put it at 40 and let's put the Tesla at 0 because it was the least fun for me to drive. And now let's have a look at this. Now the Tesla and Holden are both on 50 and the Subaru is on 43. And what I'm really getting at here is when you go through this, it'll show the criteria and, and I've suddenly realized in all of these cars the price is negligible between them. I'm not really that price sensitive, so I'd probably reduce that. And the feeling I get when I drive that Commodore, the sound and the big V8 raw and everything that it does is amazing and I love that. And I would even place the Subaru above that just to sound that is just so good on a Subaru that I know those two cars when I drive them. The silence of the Tesla when I drove it really bothered me. Even though it was fast and even though it had really good in car entertainment, that car is out of there. My choice is between the Holden and the Subaru and I'm going to choose that Holden. And this is how multi criteria decision analysis has helped me to get to a decision.

Amazing bugs. That's really fun. I'd love to for you to share the spreadsheet maybe somehow, maybe we can throw it in like a Google Drive link so we get the, like the spreadsheet, what's it called? The.

Out.

Absolutely. I'll put it in the show notes and you can use that for absolutely anything. It can be choosing a house, which project am I going to do next, which job should I choose? Anything you want. And it won't make the decision for you, but it'll make it a lot easier to understand what's important to you and it's not an individual thing. I've used this so, so many times in team meetings when you have 10 people or let's say let's go stream 20 people in a meeting and you need to make a decision. Everyone's got their own mental model and it's very hard to understand what everyone knows. So this will help get everyone on the same page, it'll help you talk through each scenario and it'll help people to understand what's important to the individuals and the group and get you to a decision.

And I think it's at a very simple level. It's, you know, if we're making decisions, it's not just going off gut feel or like a pros or, or cons list. It takes a lot more like a dynamic thought process data driven approach where it's not just one or the other, it's it's percentages, it's weightings, it's it's points, it's, it's a very data driven approach. So absolutely man. Thanks for sharing.

No worries at all. And look, just to sum up the mental models, who can I call? What data can I look at? Which experiment can I run? Which decision knocks out subsequent tasks and makes it easier. So one decision to make, five, which decision will increase my surface area for luck. And then you've got a hardcore MBA tool with multi criteria decision analysis.

Amazing. There you have it folks. That is the MBA secret strategy on how to make great decisions. If you have someone around you that is having a tough time making a call on something, please share them this episode. It's going to help a lot, help out a lot of people. So thank you very much for listening as always. You can leave us a review on your favorite podcasting app. We'd love to get your feedback as well. We have a new Twitter you can head us up on Ben and Bergs on Twitter and also Instagram. And yeah, thank you very much for listening and Bergs will be back next time. Thank you.

Thanks so much folks.