Taking life decisions on excel

De-clutter decision making by removing the noise and staying focused on the bigger picture

The decisions you make today will have the second greatest impact on your life, closely following luck in the first place. For something that has an outsized impact on our lives should be given more thought, right? Think about the last major/minor decision you took today — It could be to switch a job, change your house cook/help, where to go to for your next holiday, whether to go for a MBA or join a start-up, you get the gist. Taking larger decisions have multiple variables which complicates the decision.

Existing ideas — There are enough books and frameworks around decision making. Some that made sense to me were: Thinking in Bets by Annie Duke, Thinking Fast and Slow by Daniel Kahneman, and The Paradox of Choice by Barry Schwartz. 

In Thinking fast and slow the great Kahneman makes the argument that when it comes to the larger decision, take time in making them which in-turn makes the smaller (daily) decisions easier eg. You can decide on your monthly budget of eating out and then every time you go out you won’t have to think a lot before spending as long as you are within your budget. This frees up bandwidth to not focus on everyday decisions. Steve Jobs and Mark Zuckerberg made this popular by wearing the same set of clothes everyday to reduce cognitive load

The Pareto principle or the 80/20 rule states that for many outcomes, roughly 80% of consequences come from 20% of causes — this again highlights the importance of taking big decisions and the outsized roles they play in our lives.

Now that we have established that taking the big decisions has big impact, how should we be taking them?

The pros and cons approach seems to be quite popular. Let’s see how a pros and cons list would look like when someone is choosing between a switch from working at an MNC to an early stage start-up:

This is an example of a typical pros and cons list — it’ll vary based on different organisations and individuals.

Question: Will you be able to conclude basis that because pros outnumber cons by 6 to 5 it is favourable to switch to the start-up? I hope not!

For you maybe work life balance and getting a steady salary is more important at this stage of your career, but that is not getting captured in the list. This is because the pros and cons approach gives equal weightage to all the points but in reality some things matter much more than the others. To account for this you can use a weightage based decision making approach. Where you try to put in weightage to each of the parameters and then assign scores to the various options you are comparing with. Here is a step by step guide of how you can take data backed decisions in your personal life

Step 1: List down the different factors which you want to consider while making any decision. Try to make the list MECE (Mutually exclusive and collectively exhaustive).

Continuing with the same use-case these are some of the factors a person may take into consideration.

Step 2: Assign weightage to these parameters basis how important they are to you. Ensure that the sum adds up to 100%. Number are not important they just help you quantify what are the important factors and what is just noise.

This is how your list for factors would now look like when you sort by weightage

Step 3: Now define the different options you have on the x axis. In our fictional example we have 2 options (MNC vs Start-up). Try to put options which are directly comparable.

Step 4: Now the fun part — assign scores to the options across the factors you have defined basis how favourable they are vs the other. Again the numbers you put here are not important, they help you quantify how one varies with the other. Your scores can be out of 10 for simplicity. For example work-life balance at the current MNC is good and hence you can score it at 9 or a 10 vs the start-up where you may be expected to work longer and can score it at 6 or 7. The difference in the scores can be used to emphasise the degree of difference between the two options.

Step 5: Phew, the hard work is now done. Sit back and let the excel give out the answer. Take weighted average (You can use sum-product) of the scores basis the weightage you assigned to the factors. And viola you have your answer.

What this process helps you do

1. Quantify what is important for you in any decision you make. It is important to cut out the noise
2. Helps you include all the factors associated with any decision
3. Taking decisions based on hard numbers will help reduce “what could have been thoughts”. When you look back you are less likely to question your decision

Conclusion

Making decisions is hard, but if you can break down the larger decisions into micro decisions it makes the process easier. The next time you are about to make a decision and are facing difficulty in choosing one over the other try making the decision on excel.

Sharing a sample excel sheet here — make a copy and give it a test drive

“The world makes much less sense than you think. The coherence comes mostly from the way your mind works.”

Thats all Folks! Happy Decision Making!

Enjoyed my take?, share your thoughts with me on LN — Amatya Agarwal

Until next time 👋🏼