How probability thinking can help you make better decisions?

Life cycle of a decision: Big Vs Small

We sometimes face million dollar questions like,

Should I take Medicine or Engineering?
Should I marry Ambitious A or Docile D?
Should I take this ok job or wait for my dream job results to come back?
Should I quit my job to work on this  brilliant Startup idea or work to getting the onsite Job and promotion?

These are not similar to decisions like – Pizza or Burger ? or Western or Ethnic? In this case, you can have pizza one day and burger the other or have a small pizza plus a burger. The effects of the decision don’t last long enough to sweat over it.

However, in the first set the effect of decisions may last a very long time. A decision on a car last upto 5 years, an house upto 25-30 years, a career lasts for several decades, decision on a spouse for a lifetime. But we often think through the purchase of a car more thoroughly than choice of a spouse. Give the big decisions its due respect and think through them well.

Process Vs Outcome

Bhagvad_Geeta

We often fall into the trap of analyzing our decisions once the outcome is known. Every body seems to know who the selectors should have picked or dropped in the team once the game is over. We all know who would win the elections, which stock would outperform after the fact. We many stock pundits and subscription services that write books about how they had picked the multi-bagger stock with simple and obvious logic and how much return it gave them. The choices are simple and obvious only in the hindsight.

In contemporary business scenario, WeWork which is one of the most loved workplace solutions in several countries including India had turned out to be a nightmare for its investors. While Instagram which probably is based on a simple idea and not much thought to revenue generation, has given its founders and investors whooping returns. We have all seen up and coming towns and cities, stay unchanged for years while others with similar dynamics have changed by leaps and bounds.

As a decision maker, one must acknowledge that once must take a optimal decision based on the facts available at the time of making a decision. A good decision may lead to a bad result and vice versa. I feel it would be appropriate to quote Bhagavat Geeta here (Chapter 2 Verse 47):

‘कर्मण्येवाधिकारस्ते मा फलेषु कदाचन |
मा कर्मफलहेतुर्भूर्मा ते सङ्गोऽस्त्वकर्मणि || 47 ||

meaning : ”

You have a right to perform your prescribed duties, but you are not entitled to the fruits of your actions. Never consider yourself to be the cause of the results of your activities, nor be attached to inaction.

Probability of Success

Poker and Probability

Probability of Success of a startup : 10%
Probability of not being fired in current Job : 95% (say)
Probability of a successful marriage: 60%
Probability of your kid being a pain in the ass: 99%

Every Event has certain probabilities. While in love we think, this is the most perfect relationship ever and nothing can go wrong. We think our startup idea is so genius that it is inevitable that you are the next Bill Gates or Steve Jobs. While we think we know are an exception to the stated norm, more often than we are the norm.

I often here startups that seek fund from venture capitalists(VC) criticize them saying, ‘Anyway 9 out of 10 startups they fund don’t work out, so why are they unwilling to take a chance on my brilliant idea and the brilliant me. ‘ Well, they choose all 10 which they think will become big success, but know that atleast 9 of they will fail. They don’t think let me pick these 9 projects for failure and this one for the big success.

Limiting Downsides

So when we are betting on a 10% probability event, what should one do. In case of VC’s they hope to win really big in 1 project that would compensate for the 9 losses. Many rich people are aware of the 40% divorce rate. So they go for a pre-nuptial agreement that states out terms of separation.  Such an agreement would have probably saved Jeff Bezos a huge fortune.

In our case, taking a health and life insurance are ways to limit downsides of a sudden health scare and/or its aftermath.

Enhancing the Upsides

A restaurant’s revenue is capped by the seating capacity. However a kitchen only restaurant is limited only by the area of delivery. A teacher’s revenue is capped by the teaching hours and an institute by its seating capacity. But an online on demand video reach has no limit. In most cases the end product is the same, but the distribution channel, reach and impact can have a major difference in the upside. So you may examine how it is possible for you to enhance the upside for your product or service to reach more people or create deeper impacts.

Understanding Risk

Understanding Risk

‘Greater the risk, higher is the reward’.

This is a saying known to most people, but understood by very few. Infact I would say this saying is misleading and incomplete.

‘Greater the risk, higher is the reward when you succeed.’ Here the risk is greater because your probability of success is lower and also the downside is more than in a traditional choice.

Accepting the Outcome

Low probability events occur all the time. You may be fired from a safe job, your company may go under or you may win a lottery – all seemingly less probable events. While you should not count on winning a lottery to retire, once an event with low probability occurs. The best is to accept the event and plan the next course of action. Not accepting the event is going to make no difference to reality. But it will make a huge difference in your ability to respond to the same.

Conclusion

In an uncertain world, probability is a great framework to enable us think through important decisions in our life. Think Deeply. Act Firmly. Live Well.

Experience the joy of travel without the travel

Joy of Travel

If I got paid Re.1 for every time I heard people say ‘Travel is my passion’ I’d have been a millionaire..no wait..a billionaire may be. But most of them do not pursue their travel passion it due to lack of time, expenses, not having sufficient holidays, spouse not willing, friends ditched at the last minute, parents said no and several other excuses we generally find for not pursuing what we want to. But do we really need to travel to experience the joy of travel?

Why do we travel?

We travel to meet new people, experience new things, learn new skills, be exposed to a whole new world. But is it mandatory to travel to be able to do these things? Is it not possible to do this in the place we live?

Continue reading Experience the joy of travel without the travel

How India360 travel made us better?

Have you heard of people come back from long trips and say ‘Travel changed us. We are now better people’. What does travel do to change you ? We had written about our learning from India360 earlier. But this time I want to give a very objective view on how travel can change you based on a renowned model of measuring personality traits Continue reading How India360 travel made us better?

Book Summary: David and Goliath by Malcolm Gladwell

David And Goliath

Hardcover: 320 pages
Language: English

  • ISBN-10: 0316204366
  • ISBN-13: 978-0316204361

Buy Here : Amazon.in or Amazon.com

Malcolm Gladwell, in his book ‘David and Goliath’ covers the story of unlikely success. Instead of the cliche of how persistence and hard work pays, he analyzes the stories in depth and brings about how the underdogs chose a different path to win the game and how this learning can be used by us all.

Continue reading Book Summary: David and Goliath by Malcolm Gladwell


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How to work on feedback?

We have received feedback, filtered through it and determined it is appropriate and given by someone competent with a good understanding. What next?

Take a deep breath

Critical feedback is hard to accept for anyone, not just you. It hurts to know that you are not perfect, the world is not love in with the way you are. And unlike many cliches, they are probably right and it is up to you to make changes in your life for the better. For all its obviousness, it is still not an easy thing to do. So if you are sitting in front of the one who has given the feedback, thank them and tell them you will seriously consider the feedback given to you.

Try not to feel enraged and get defensive. Don’t get apologetic without understanding thoroughly. Don’t try to pass on the blame or call it a misunderstanding by the other person. Just breathe and let the feedback sink in your head.

Continue reading How to work on feedback?

How to take a compliment?

We often work hard to get noticed. Dress up well to get attention. But many times we are uncomfortable when finally the hard work pays off and attention is showered on us. We deny, deflect and feel uncomfortable with the attention and praise. It is surprising yet true, that compliment more than insults unnerve us and take us by surprise.

Lets look at what are the appropriate ways to take a compliment

Accept and say ‘thank you’

Often ‘Thankyou’ with a smile is the most sincere way to accept a compliment. You may elaborate on the thanks but never negate the acceptance.

Compliment: “That’s an excellent presentation. You really owned the crowd.

Bad response: “Thanks. But i forgot a few points in between. I think I could have done a lot better.

Good response: “Thank you.
Better response: “Thank you. I am glad you liked it
Thank you. I really worked hard on it and am very happy to know I got through to the audience

Continue reading How to take a compliment?

Advice and Feedback – When to ignore?

We saw how to give praise and Feedback the last few weeks. In the next couple of weeks, lets look at how to receive them and what to do with it. When and what to consider and what not to ?

We seek advice and feedback often when we are unsure of our future course of action. Sometimes people add relevant perspectives that we had never considered. They challenge the way we look at our world and bring clarity. Sometimes they leave us even  more confused and are best ignored. But  how do we know when to do what? Am I ignoring an advice because it makes me uncomfortable or if it is not relevant to me?

Continue reading Advice and Feedback – When to ignore?

How to give feedback the right way?

Providing feedback the right way is a critical part of the job of a parent, teacher, manager, friend, customer etc. Feedback provided the right way can help one to deepen relationships and become better at tasks at hand. A botched up feedback can turn a reluctant person into a rebel, beginner struggles into permanent disinterest and wasted talent. Last time we looked at ways to keep people motivated through right praise, let us know look at a even more vital aspect of sharing feedback the right way.

When to give Feedback:

Only when appropriate:

When your spouse is asking you about her new haircut, she is looking for validation and not feedback. It’s not much different from when your 5 year old artist shows his new painting. Distinguish between validation seeking and feedback seeking and act accordingly.

Continue reading How to give feedback the right way?

How to Praise the Right Way?

To share our sincere praise to someone is the best way to make them like us and listen and adhere to our requests. But delivering the praise has multiple aspects to it, that we are not normally taught. While it is of no need to mention a list of benefits of praising someone, delivering it incorrectly, can backfire badly. So let us look at various aspect of delivering praise.

How to Praise?

Praise Sincerely:

Like a fake smile, a fake praise is often easily deciphered by the person who it is addressed to. Even if it works in the short term and you derive benefits, in the long term, you are bound to be caught someday and it may really badly backfire.

Continue reading How to Praise the Right Way?

Book Summary: Mindset – Carol Dweck

 

Title: Mindset, the new psychology of success
Author: Carol Dweck
Publisher: Random House
ISBN-10: 1400062756
ISBN-13: 978-1400062751
Buy from: Amazon.in | Amazon.com

This book has been the most embarrassing book for me to read ever, for it showed me the mirror. In effect it was deeply revealing, it gave me a perspective into how I had been looking at several things. Dr. Carol Dweck’s research has been the most revealing and explained many of my bizarre moments of life.

Personality Mindsets: Fixed Vs Growth

People with fixed mindsets believe that abilities are frozen in stone. Most of their efforts are spent in trying to prove themselves. People with Growth Mindsets believe that we can change and improve with practice.

Mindset - Growth Vs Fixed
Mindset – Growth Vs Fixed

Continue reading Book Summary: Mindset – Carol Dweck


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