Decision Making as a Random Walk

Let’s imagine that we make decisions 10% slower so in addition to an unhappy inbox, we end up making only 9,000 decisions instead of 10,000.Random walk position simulation with forward p=0.65 with steps=10000 (left) and steps = 9000 (right); graphics from WolframAlpha.A 10% decrease in the speed of decision making leads to 250 fewer steps forwards, or a 8.3% decrease in steps forward..The reason that speed doesn’t have as dramatic an effect is that not only are you making fewer correct decisions and thus not getting as far, but you are also making fewer incorrect decisions thus not hindering progress as dramatically.Accuracy (left) versus precision (right)..ThoughtCo.Another factor that changes moderately is the standard deviation — taking 9,000 steps instead of 10,000 leads has about a 5% smaller deviation in expected results..This can be neglected though as decision making tends to focus on accuracy rather than precision..After all, getting precise, mediocre results is generally less desirable than scattered, positive results.Size of decisionsThe last factor to look at size of decisions as measured by impact..To simulate this, we increase step size — a correct decision that’s twice as important leads us 2 steps forwards instead of one, but an incorrect one leads us two steps backwards.Random walk position simulation with forward p=0.65 with steps=10000 and step size = 2; graphic edited, original from WolframAlpha.When doubling step size, we double our expected results — from 3,000 steps up to 6,000 steps in this scenario..However, if your expected results are negative (such as if p=0.45), then you are doubling results and going further into the red.Interestingly an increase in step size leaves standard deviation unchanged, so you are changing results without any change in precision.SynthesisNow that we’ve examined the factors that impact our random walk, what are the key takeaways?Making correct decisions matters a lot more than making decisions quickly..Thus, taking the time to think things through and make the correct decision is overall more beneficial than making more decisions.Large decisions have an outsized influence on your results, without sacrificing precision..If we think of precision as a proxy for risk, then making fewer, more important decisions is better for outcomes.Combining these, to maximize performance it is paramount to get high-impact decisions correct, but low-impact decisions may be negligible..There is therefore value in being able to identify which decisions are likely to have the highest impact, and thus be able to spend time focusing on making the correct decision.How should we use these takeaways to improve our decision making?Quickly identify which decisions are the most important to make and focus on them and assign your best decision-maker.Small decisions that may be fast to make are good candidates to delegate..This provides team members opportunities to practice and decision making in an iterative process..A feedback loop and education is key to improving outcomes over time.Small decisions that take a long time should be compromised upon.. More details

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