I recently listened to two podcasts featuring Patrick Collison, the co-founder and CEO of Stripe.
The first was this episode of The Tim Ferriss Show.
The second was this episode of The Knowledge Project.
I’ve also been reading a lot about decision making.
In both episodes, Patrick commented on his framework for approaching and making decisions. I found it so valuable I wanted to share a summary here.
The quotes featured here are from the transcripts of each podcast.
You can find the full transcript of The Tim Ferriss Show episode here.
The full transcript of The Knowledge Project episode is here.
Before Making a Decision
Patrick comments “decision making in organizations is slightly overrated”.
He elaborates, saying that it is important for organizations whose business is binary decision making. He gives the example of an investment firm, where the primary work is a yes/no answer on investing or not.
His point is more about the tendency to over-focus on the decision itself. Instead, he says we should be focusing on two things:
- Aiming to have better options when faced with decisions.
- Making decisions quicker, and then course-correcting when required.
Focus on Better Options
“How do I make sure the decisions I’m confronted with end up being better?” It’s not like, “How should I choose between option A and B,” but, “How do I make sure that both options A and B are as good as possible, and there’s also a C, D, and E, and that those options are great too?” - Patrick Collison, The Tim Ferriss Show
Before making a decision, think instead, “Have I considered all options?”
This discussion took place between Tim and Patrick. Between them, there were two suggestions for finding better options.
- Cultivate people you can consult who think differently.
- “...finding the people who think a bit divergently, the returns are really high.” - Patrick
- If you have trouble finding other people, at least create different personas.
- Both Tim and Patrick point out that it’s possible to mentally simulate the reactions of other people. This alone can be a useful exercise for coming up with alternatives.
Rank Speed Above Being Right
“You don’t necessarily need to be that good at decision making if you get really good at remaking the decision when and as necessary...Instead, it’s all about the constant feedback and course and error correction. And I think that’s, as a general matter, a better model for life and that even a lot of the decisions that look pretty trapdoor may not necessarily be.” - Patrick Collison, The Tim Ferriss Show
Tim agrees, saying:
“In my case, I think I focused excessively on getting better at decision making without really refining that to say that perhaps the better question to ask is how can I get better at...undoing or redoing the decision…”
If you can reverse a decision if it turns out to be wrong, it matters a lot less if you’re making the right decisions.
The key point here is that you must become good at reversing decisions or correcting course. Both individuals and organizations struggle with this.
A tool that can help is a decision journal. Record the factors leading to your decision, and next steps if it turns out to be right or wrong. This will help you course-correct in future.
Patrick summarizes his thoughts on The Knowledge Project:
“I now just place more value on decision speed. If you can make twice as many decisions at half the precision, that’s actually often better.”
“Make more decisions with less confidence but in significantly less time. And just recognize that in most cases, you can course correct and treat fast decisions as a kind of asset and capability in their own right.”
Don’t Treat All Decisions Uniformly
“The second thing is to not treat all decisions uniformly. I think the most obvious axes to break them down on are degree of reversibility and magnitude. Things with low reversibility and great impact and magnitude, those ones you do want to really deliberate over and try to get right.” - Patrick Collison, The Knowledge Project
Patrick’s thinking here mirrors this article from Farnam Street which breaks down decisions into four categories:
As suggested by the graphic, you should aim to make only decisions that are of large magnitude (consequential) and irreversible. These are the ones you want to get right.
Delegate everything else, as the consequences are either small or reversible.
Make Fewer Decisions
“The third thing is, I now try to fairly deliberately just make fewer decisions.“Why am I making the decision?” And for some kinds of decisions, there are some good reasons for that, and there are some decisions the CEO ought to make and is fundamentally on the hook for, but there are some decisions where if I’m making it or if I have to make it, that probably suggests [that] something else organizationally or institutionally has broken.” - Patrick Collison, The Knowledge Project
Again, you should aim to only make decisions that are large consequential and irreversible. Delegate everything else. Then you can focus on making better decisions for those that truly matter.
Focus on the Process, Not the Outcome
“And then fourth, when I realize that I would make a decision differently [to] how someone else would make it, not even really discussing the decision itself but trying to dig into, what is the difference in our models such that they want to make Decision A and I want to make Decision B?
And so, now, I in decision making, I place more importance on making sure that we have the right foundational agreement such that the disagreements that then tend to arise are of the essentially more superficial sort and where agreement is actually less important.” - Patrick Collison, The Knowledge Project
Patrick’s point may seem aimed at organizations, where executives may have different priorities. But we can apply this process to ourselves too.
When we ask ourselves “What would my best friend tell me to do?”, why is it often different than our own opinion? If we change how we rank decision making criteria, how do the outcomes change?
It forces us to think about what we are optimizing for, which we don’t always make clear. In hindsight, this often gets distorted.
As Patrick commented when suggesting decision making is overrated for most organizations: “in organizations, everything is more fluid and continuous; it’s much more about designing the feedback mechanisms…”
Focus on the process, not the outcomes, and how that informs future decision making.
Decision Making According to Patrick Collison
In summary, here are Patrick’s suggestions for improving your decision making skills:
- Before making a decision, first focus on having better options.
- Prioritize speed over making the correct decision.
- Categorize the importance of your decisions. Focus on those which are large and irreversible. Delegate the rest.
- Make fewer decisions (see previous point).
- Focus on the process and feedback mechanisms, not a particular outcome.
You can listen to The Knowledge Project episode with Patrick here, and The Tim Ferriss Show episode here.
You can find out more about Patrick on his website.
