Making informed decisions

What is the meaning of life?

If you’ve read The Hitchhikers Guide to the Galaxy you’ll know the answer to this question is 42.

How do you know when you have enough information to make an informed decision?

If you read the newsletters of my (excellent) former technology coach, Gihan Perera – who these days describes himself as a ‘futurist’ – you will get an equally precise answer… 37.

Yes, 37 – That’s the point at which Gihan tells us we should stop gathering information and start making decisions.

In computer science, this is known as the Optimal Stopping Problem, and it has a (mathematically) proven ‘best’ solution. You spend 37% of your time just gathering information, and then choose the next option that’s better than any of those you have seen so far.

By way of explanation, he shares this example:

Suppose you’re recruiting a new team member, and you decide to interview 100 candidates. You know the most talented people have a choice of jobs, so when you find the best person, you want to grab them immediately.

But how do you know when you’ve found the ‘best’ person?

If you’re impulsive and you stop after, say, 5 candidates, you probably haven’t reached the best person yet, because they are more likely to be in the other 95.

On the other hand, if you’re hesitant and wait until you’ve interviewed 95 candidates, the best was probably among them, but you passed them by and they would have already been snatched up by somebody else.

The Optimal Stopping decision-making process says you should interview and evaluate the first 37 candidates (without choosing any of them), and then choose the very next candidate who’s better than those first 37.

This doesn’t guarantee you’ll get the best person, but it maximises your chances – according to computer science.

And Gihan has a Computer Science degree, so he should know!

He goes on to say, “I’m not suggesting you should use this process for every decision you make. That just wouldn’t make any sense (but)… If you want to make smart decisions now for success in the future, you need to think differently!”

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Jurek Leon is a storyteller, speaker and trainer. Subscribe to Jurek's FREE monthly 'Terrific Tips' e-newsletter at http://www.terrifictrading.com/terrific-newsletter/. Alternatively, email info@terrifictrading.com.