A lot of people tend to judge the quality of a decision based on the outcome of the decision.

This is a foundational premise that many (if not most) people hold that underlies their decision-making process.

Here are some typical examples where this thinking works and gets reinforced… and counter-examples that challenge this notion.

  • I worked really hard and got promoted. Therefore, working hard was a good decision (because I got promoted).
  • I worked really hard and got fired. Therefore, working really hard was a bad decision (because I got fired).

  • I asked a person I found attractive out on a date, and they said yes. Therefore, asking them out was a good decision (because I got the outcome I wanted).
  • I asked a person I found attractive out on a date, and they said no. Therefore, asking them out was a bad decision (because I did not get the outcome I wanted).

Let’s look at some more extreme scenarios.

  • I walked across the highway blindfolded during rush hour and made it across without getting injured. Because I got the outcome I wanted, this was a good decision… (and I should repeat the decision every day for the rest of my life).
  • I played the lottery, and I won $100. Therefore, playing the lottery is a good decision… (and I should repeat that decision with my life savings).

I think this type of thinking — where a “good decision = a decision that led to a good outcome” — has some limitations.

These limitations come into play under two primary conditions:

  1. Decision-making with uncertainty/risk
  2. Decision-making where the outcome depends on someone else (e.g., ultimate outcome is not fully in your control)

Under these conditions, I think it makes sense to think about the quality of a decision based only on what information is known at the time.

From my perspective, a good decision should ideally be a decision that should be repeated (even if you get a bad outcome occasionally). A bad decision is one that should never be repeated (even if you get lucky and get a good outcome).

So, walking across the road blindfolded is, in my view, a bad decision. Even if you get lucky the first time you make this decision, it’s not a good idea to repeat the decision.

Treating coworkers with respect is, in my opinion, a good decision (at least it is for me). It is something I will repeatedly do, even if once in a while, I get a bad outcome.

It’s very important to recognize the difference between a bad decision and a bad outcome.

They are not the same thing.

When it comes to business decisions, I typically look for opportunities where the upside is moderate to high and the downside is very low. This is my definition of a good business decision.

Regardless of the outcome I get, I will repeatedly say yes to opportunities with high upsides and low downsides.

(From a probabilities and statistics standpoint, the math is overwhelmingly in my favor. Even if I get a few bad outcomes, the overall approach of making high-upside and low-downside decisions works out very well over the long run.)

Regardless of the outcome, I strive to treat others with respect and fairness. This costs me very little, day-to-day. But in the long run, I get much better relationships with myself (e.g., I can live with myself) and with others (they like me, trust me, and are far more willing to do business with me after I treat them this way for 10 to 20 years).

Sometimes, a good decision has a bad outcome. That alone doesn’t make it a bad decision. Sometimes, a bad outcome is just that… a bad outcome… and nothing more.

What do you think about this topic? Comment below to let me know.

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