How to decide with limited information

No matter your decision process, you never have enough information. Or at least this is how we feel.

As creators, we deal every day with complex systems: our relationships, our businesses, our habits. Too many moving parts, too many factors we can’t control.

And don’t underestimate the role played by time. Every factor can change over time and you can’t predict how.

So, you will never have the amount of certainty you desire. This doesn’t mean you have to close our eyes and jump, though.

There are many tools you can use to decrease risk and avoid analysis paralysis. Here are some that actually help.

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Which decisions can you delay?

Sometimes you have to decide as soon as possible. Other times waiting is not a problem. You can take your time, gather more data and reflect a little more.

A famous tool helps you understand when you can wait and when you can’t: the Eisenhower Matrix (watch the video on this page for a helpful introduction).

You probably heard about it as a tool to prioritize tasks. It can also help prioritize decisions.

This is the matrix:

Assess every decision:

  • if it’s important and urgent, you have to decide, regardless of the amount of information you still need,
  • if it’s not important, it doesn’t matter, consequences are reversible,
  • if it’s not urgent, but important, you take the time to gather every bit of information to help you decide.

For example, your content strategy for next year is neither urgent, nor important (unless it’s December 21st 😜). Take your time to analyze past year, jot down ideas, ask for feedback.

Instead, the draft of a landing page you have to deliver in 2 days is urgent. It’s also important, but you can’t agonize over the font size or the button color. Do the best you can with your current knowledge, delay small fixes after the draft is approved.

The decision matrix

If the Eisenhower matrix doesn’t help, another matrix could better suit your way of thinking. In a previous issue I introduced you to the “decision matrix”. It will help you choose which decisions need more effort, which don’t.

Bezos’ 70% rule

If you wait until you’re 100% sure, either you’ll end up doing nothing or starting when it’s too late.

For Jeff Bezos speed of innovation has always been crucial. Waiting to have perfect information would have made Amazon lose its competitiveedge.

So, he coined the 70% rule:

Most decisions should probably be made with somewhere around 70% of the information you wish you had. If you wait for 90%, in most cases, you’re probably being slow. Plus, either way, you need to be good at quickly recognizing and correcting bad decisions. If you’re good at course correcting, being wrong may be less costly than you think, whereas being slow is going to be expensive for sure.

Total certainty is a mirage. Even 90% can be too much.

This rule applies even if you are an humble creator 😉:

  • if you wait too long to cold call a client, someone else could take the job,
  • if you wait too long to start your independent carrier, life could get in the way,
  • if you have to put up the perfect website before launching your next online project, it will lose steam before taking off,
  • and on and on and on.

So, when you are 70% sure of a choice, stop searching and go. But how do you know you are at 70%?

It’s subjective. But recognize that your need of certainty is subjective too.

You could describe 70% this way: you think you should act on that decision, but you still have some fear it could not work.

Start acting this way and you will become better at estimating that 70%.

Reason from first principles

Often we get lost in the details. We need more information because we think we need an exhaustive and detailed plan. Only then we will able to decide.

But this is not true. Many details can be figured out later. Their implementation doesn’t affect your decision.

The key to avoid wasting time this way is reasoning from first principles. The Farnam Street blog describes it as follows:

the idea is to break down complicated problems into basic elements and then reassemble them from the ground up. It’s one of the best ways to learn to think for yourself, unlock your creative potential, and move from linear to non-linear results.

James Clear helps with this definition:

A first principle is a basic assumption that cannot be deduced any further.

How do first principles help to reduce uncertainty?

Every decision is a problem to solve. You first break it down into its core parts.

This will show you the order of execution. Some core part will be more important than others.

So you you gather the information necessary to tackle that part. You can combine this with the 70% rule to avoid endless research.

Then you start.

For example, we work with many customers that want to launch some kind of online course. Starting from scratch, the amount of necessary decisions is endless.

But you can strip the project down to three core parts: traffic, email subscribers, customers.

You need a reliable traffic source, a good conversion mechanism to email subscribers, a product (and the corresponding sales method) to convert subscribers to customers. Until you find a reliable traffic source, it’s silly to think of a product. You don’t know the specific needs of your audience. You don’t have anyone to sell to.

So, you don’t have to decide anything about product sales in the beginning. Uncertainty on this core element is not a problem. You just have to decide which traffic source to invest in.

Small bets

Small bets are the panacea. The Lean startup movement showed it. I told you in another issue how they can help make fewer decisions.

They also help overcoming uncertainty.

We fear wrong choices because we fear the consequent losses. Our negativity bias amplifies the possible negative consequences.

Small bets cut down risk. How do they work?

  • Find the smallest version of the project that
    • will still bring progress and
    • will help you gather information to assess the validity of the idea.
  • Set a deadline.
  • Suspend your judgement and work on that small bet with full focus and effort, until the deadline.
  • Evaluate the outcome and decide how to go on.

This is the default approach in our business. For example, we applied it to our growth strategy on Twitter for

  • we were looking for an organic acquisition channel,
  • we saw many newsletter owners having success on Twitter,
  • we to focus on that for some months,
  • we studied the most promising tactics,
  • we decided to devote some time daily to implement them,
  • every week we evaluate our subscriber count growth relative to the activity on Twitter.

What’s your strategy?

You surely have dealt with limited information in the past. Tell us in the comments which techniques worked for you.

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