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).
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- 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:
- Decision-making with uncertainty/risk
- 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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11 thoughts on “Bad Decision vs. Bad Outcome (and How to Tell the Difference)”
Hi Victor,
Just an unrelated product management suggestion: it would be great if we get email notifications from this comment board/page so that we do not have to proactively dig through the emails and links to check other people’s interactions with us. This should help build the community or make it more active.
Thanks,
Cedric
Hi Vic – May I kindly ask How’d you advice on choosing consulting offers?
I’m currently with Deloitte Consulting for 4 years as star employees, aiming for MBA. And CapGemini Invent came up with a same-level offer but double salary at another country (more diverse than my own)…how might you evaluate the career choice given I don’t want to risk in an unknown area/organization or taking unsure time to adapt, but maybe I might promotion faster as a boutique firm (then pursue MBA, if I passed the GMAT ideally)? 🙂
Thank you and would appreciate some kind advice. Cheers!
Jimmy – Be clear on your objective, then pick the option that gets you to your objective. If both options will achieve your objective, then choose the option that is either faster or with less risk. If the option that’s faster has more risk, then it’s a personal risk tolerance and tradeoff decision. How much risk of a bad outcome are you willing to tolerate in order to save X months to achieving your goal.
In theory, making a decision with low risk and moderate/high upside is a no brainer, but often times this isn’t what’s presented.
Example:
A few years ago, one of our major clients pulled the plug on a project, taking nearly 30% of our annual revenue. This reflected poorly on me and my team and was a career limiting situation that I had little control over (client had internal open capacity and took the project in-house).
Meanwhile, a second client fell into our lap that not only covered this gap but nearly doubled the lost revenue, however the project carried a huge amount of risk which we communicated to the client and to internal management. Nonetheless, I pushed to accept as the alternative would have put my team in a compromised position anyway.
First half of the project was a huge success and I was on track to make VP, but eventually the risks caught up to us and it ended up with me resigning and leaving the company. Losing that revenue would have likely ended in the same result so when my head of HR asked what I would have done differently, I was honest and said under those circumstances I would push to take the project every time. Taking on a high risk, high reward project, in that situation, at least gave us a fighting chance.
Often times we try to pick between a bad decision and a less bad decision. Run across a busy freeway, or don’t, and be mauled by the bear that’s chasing you. How do you assess this?
It’s easier to pick between a good option and a better option. Pick the better option.
It’s psychologically much more difficult to pick between and bad option and a worse option. Logically, you pick the bad option… but it’s hard to do emotionally even though it’s the right decision.
In terms of your question, I think you assessed your options accurately. The issue is you didn’t have any good options to choose from. A few things to consider:
1) Can you create a 3rd option that wasn’t immediately obvious?
2) Can you pick the least worst option and then mitigate risks?
Just some things to consider.
Thank you for another great article Victor 🙂 This reminds me of an old philosophical concept called “Stoicism” (early 3rd century BC), and a Greek philosopher : Epictetus. I remember this from High-School classes but this concept really resonated with me until now.
The concept is quite simple: you can separate everything in life in 2 categories: things on which you have control (basically your own actions, values, mindset, decisions etc), and things on which you have no control or very little control (such as health, reputation, money, success, etc).
Epictetus says that the secret to a happy life is to act only on what you can control, and not search your happiness in things you cannot control.
It is very simple in theory, but very hard to practice everyday. If you take an extreme example, the loss of a child due to illness is beyond your control so you shouldn’t be affected by this event (in theory). Of course this is impossible.
However it is possible to practice this philosophy on a smaller scale, step-by-step: for example trying your best at work and still accepting that you may not see the exact outcome you were expecting. You can still be happy because you tried your best, no matter how good or bad the result is.
Of course life is much more complex than that (e.g. wars, pandemic, climate crisis, poverty…) but keeping the concept in your mind and trying to practice it step-by-step everyday on small things, can really help you to be more optimistic over time (at least this is what I believe).
The Stoics are great. Wise words. Simple, but not always easy.
People tend to look solely at outcomes partly because outcomes can be measured. For example, interviewers screen resumes solely based on candidates’ (or the candidates’ company’s) accomplishments. Few would bother to dig deeper.
Also it is really difficult to consistently make good decisions (such as treating others with respect and fairness) over time if the payoff is in the long run. You might get discouraged along the way. You need really unshakable self-esteem to hold on to what you believe is right.
I agree it is difficult to continue to make good decisions in the face of bad outcomes. I guess it depends on one’s motivation. If the only reason to be respectful to others is because they might give you something you want, that’s one option. Another is to be respectful to others even if they don’t ever give you what you want. The latter is more of a values based decision, than a strategy to achieve a specific outcome.
What would you say if someone makes decisions that you think should be repeated, but does not get anything back in the long run (10+ years)?
Is a decision that should in theory be repeated, but in practice gets you bad outcomes in 90% of times as opposed to ‘once in a while’, still a good decision? Or is it just plain stupid considering what real-world feedback says?
I can give ample examples:
Working hard, but being fired or not offered a full-time job – not once or twice, but in the vast majority of times?
Or working hard and being skilled, but seeing 90% of job applications be rejected and ending up jobless for long periods of time?
Or treating other people with respect, but being pelted with dirt by all those disgraceful bastards in this world, sometimes including the own family?
Julia – Your first examples refers to decisions based on probability. There’s a risk/reward tradeoff for many decisions (which is probably a topic for another article). That’s a probability word problem combined with a personal risk tolerance decision.
Working hard and not getting what you want doesn’t mean working hard is incorrect. It may mean HOW you work hard, WHEN you work hard, or for WHOM you work hard may need some adjusting.
For the your last example (which is the more extreme amongst the group of examples), by my reasoning being treated poorly by others doesn’t mean treating people with respect is incorrect. In my view, treating people with respect is generally a good thing. HOWEVER, allow others to treat your poorly is a different matter entirely. That’s a matter of boundaries. So I’d agree to treat people with respect even if they treat you horribly. But once you realize they treat you horribly, decline to spend time with them again (even if it is family). Saying no can be done and delivered respectfully.