How to Make The Right Decision, Every Time

Back in 2013, one of the most impactful productivity books of the 21st century hit the market. Gary Keller’s “The One Thing” was a smash hit, quickly becoming the firm favourite of entrepreneurs the world over.

The book tells the story of how Keller (head of Keller Williams Realty, Inc.) overcame the greatest challenges of his career. On the surface, it seemed as if everything was going swimmingly. He was founder of a real estate franchise that was relatively successful, and had a good life outside of work.

The perspective from the inside was quite different. In his own words .…

“I’d experienced success in the past, but it wasn’t until I hit a wall that I began to connect my results with my approach. In less than a decade we’d built a successful company with national and international ambitions, but all of a sudden things weren’t working out. For all the dedication and hard work, my life was in turmoil and it felt as if everything was crumbling around me. I was failing.”   – Gary Keller, “The One Thing”

Struggling to make any progress by himself, he made the wise decision to look for the help of an experienced business coach. By working together, they realized that all of his issues (personal and professional) could be addressed by hiring the right people for 14 positions in his company. His coach believed that all of the stress and worry in his life was stemmed from this problem, so he wanted it to be the top priority. Keller initially resisted, thinking that it had to be more complicated than that, but he eventually committed to the task.

The results were astounding. Within three years, the company was growing by 40 percent per annum. This rate of growth continued for almost a decade. Today, Keller Williams Realty, Inc. is the largest real estate franchise in the world by agent count.

So, what does Gary Keller cite as the reason for his success?

Simple – the practice of finding the answer to the following question in every challenging situation: what’s the one thing I can do, such that by doing it, everything else will be easier or unnecessary?

At its core, this question is intended to make you focus. By really examining what you’re doing, and trying to figure out what your most important action is, you can practically guarantee ever-increasing returns on your effort.

The application this has to business is obvious – we can use it to prioritize and execute on the most important tasks we need to take care of. However, this article isn’t intended to be a review of the book, or an essay on how you can use it to boost your productivity. Instead, we’re going to go deeper, and look at how it applies to the topic of value selection.

There Can Be Only One Priority

When it comes to getting things done, you can only have one priority at a time. Sure, you can have a list of stuff you want to see completed, but to actually get anything crossed off that list, you’ll have to pick them off, one at a time. Even when you’re “multitasking,” you’re not actually doing two things at once; you’re actually alternating rapidly between the two tasks, splitting your focus and attention.  

The exception to this is when you’re doing some routine/non-cognitively demanding task, such as watching TV while eating dinner or texting while listening to your friend’s boring work problems (this one always goes down well).

When it comes to your values, this same principle holds true. Having defined values is crucial for the long-term success of your business. If you don’t know what your business values are, you’ll have a much harder time knowing how to act in non-routine/challenging situations. 

It’s easy to create a list of values that sound good to customers and pay lip service to “corporate responsibility.” It’s much harder to actually abide by them when you need them most. Conflicts can arise when companies either fail to truly believe in what they’re stating their values to be, or when they fail to understand how these values relate to one another.

These value conflicts are often avoidable. In a previous article here, we spoke about the power of “And/Or” thinking, and how it can be used to avoid false dichotomies.

However, we can’t always compromise. Sometimes, we have to make a firm decision. 

There’s a useful heuristic for knowing when you can compromise, and when you have to put your foot down. Simply put:

All values must either be independent of each other, or have an obvious hierarchical relationship. 

What does this mean?

It means that if you’re chasing 15 percent profit growth every year, then fraud can be a very attractive option. If you’re a building contractor, you could probably find ways to cut corners, underpay your staff, use second rate materials and overcharge for your work.

However, if you’re like most normal people, you’ll actually care about doing some good in the world (and having your business survive into next season), so you won’t do these things. You probably also value customer relationships. If you do value your customers, it’s unlikely that you’ll try to squeeze every penny possible out of them for your own gain.

In this case, we can see that one value (maintaining good customer relationships) superseded the other (profitability, as defined by an arbitrary growth benchmark). The two values conflicted in this particular situation, so something had to give.

But, what if you can make a decision that increases profitability a lot, but hurts customer satisfaction a little?

Now, we’re getting into economic decision-making, and that’s definitely outside the scope of this article. As a basic rule of thumb, you should know which values are more important to you and your business than others. The long-term success of a business is dependent on both profitability and good customer relationships, but depending on your industry/offering, either one could be more important. Only you (or someone who deeply understands your business) can tell you which one matters more in a given situation.

Fully understanding what’s most important in any given situation will enable you to make the best possible decision in any circumstance. While this is obviously difficult to achieve, your chances of doing so will greatly increase when you apply the principles outlined above and below.

The Dangers of “Either/Or” Thinking: Your Value Hierarchy and You

No matter how refined your thinking is, there’s always the danger of getting up in false dichotomies. We’ve already discussed “And/Or” thinking as a solution to this problem. The “And” portion of this model is invaluable when considering options that respect multiple values at once, while the “Or” portion is for clear-cut, “line in the sand” type situations. 

Going back to the example of our construction contractor above, it’s clear that they have a decision to make. Do they view the customer as merely a source of income, or do they focus on the relationship? Do they cut corners, or do they do the best job possible?

While these decisions will typically play out in a linear, predictable fashion on paper, the real world is much more complex. The reality is that, even though they conflict in some circumstances, our values are not always at odds with each other.

Perhaps, by sourcing materials at a lower price (and comparable quality), we can invest more in customer support, leading to a higher lifetime value for our clients, as well as increased customer satisfaction. This fulfills both of our values, showing that we don’t have to sacrifice one for another.

However, the values – by themselves – are worthless. Their value is determined by how well they contribute to your mission. If you keep this in mind, it’s a lot easier to make the right decisions.

And, that’s the most important thing you need to remember – your ultimate business objective. In the case of our contractor, his mission may be to build a long-term profitable business that serves the community well. Accomplishing this mission will require the business to abide by certain relevant values, such as profitability, maintaining good customer relationships and keeping up with technological developments.

These values cannot always be attended to concurrently. At times, they will conflict. Some course of action will be closed off to you. If you’re interested in maintaining long-term relationships with clients, you’re not going to build houses that start to fall apart in four years. On the other hand, you may actively choose to cut costs where you can, such as sourcing cheaper materials that serve the same purpose, provided it doesn’t impact your customers in the long run.

In economics, there’s an interesting term: “lexicographic preferences.” Simply put, it describes when people care far more about one thing (let’s call it X) than another (Y). X and Y are always bundled together in this type of scenario. They want as much X as possible, so their decision-making will reflect this. If they’re faced with two options, they’ll pick the one that gives the most X, regardless of how much Y comes along with it. The only time they care about Y is when the amounts of X offered in both options is equal. In that case, they’ll look at Y. If they want more of it, they’ll take the bigger. If they want less, they’ll take the smaller.

If you don’t have an economics background, that probably meant very little to you. And, if you do, I’m sorry for that explanation. In an effort to make this more relevant for everyone, let’s put it into everyday terms.

There’s No Smoke Without Fire

Pretend that thing X is fire, and thing Y is smoke. The two are inseparably linked, so they’ll always come together. In this scenario, all we care about is having as much fire as possible – the amount of smoke produced is of no concern.

There’s a variety of different fuels we can use to keep our fire going. For our purposes, there’s only two we’re choosing from is firewood and coal. They have the following stats:

One unit of firewood = 10 units of fire, 10 units of smoke.

One unit of coal = 12 units of fire, 20 units of smoke.

You don’t need an economics degree to know that you’re getting a lot less smoke per unit with the firewood than with the coal. However, we’ve decided that we don’t care quite as much about the smoke as we do about the fire, so we’ll always pick the coal.

Now, let’s pretend the stats look like this:

One unit of firewood = 10 units of fire, 10 units of smoke.

One unit of coal = 10 units of fire, 20 units of smoke.

In this case, we can see that the amount of fire produced per unit of each material is the same. When this happens, we look to the secondary measure: in this case, the amount of smoke produced. If you want to minimize the amount of smoke produced, you’ll go for the firewood. If you want to maximize the amount produced (hey – I won’t judge you … much), then you’ll go for the coal.

This example may seem a bit farcical. Sure, we rarely make decisions in a vacuum. We generally are at least somewhat concerned with the side effects of making a particular decision. 

Leaving that aside, we can also apply this concept of lexicographic preferences to our business decisions. We do this by knowing which value better serves our business mission in a particular situation.

Let’s look at another example.

When it comes to building houses for a client that has the potential to be a massive long-term partner, it doesn’t make sense to overcharge them, cut corners or do other things to jeopardize our future with them. In this case, their satisfaction is the fire we crave, while the profitability is the smoke – we only chase it when the primary need is fulfilled.

You can apply this principle to your own decision-making. There’s probably one thing that’s more important to you than another when making a particular decision. Do your best to optimize the decision for this more important variable, and don’t get too hung up on the secondary variables. Your “One Thing”, when intelligently selected, will move the needle a lot more than the countless competing factors that aren’t quite as significant.

Conclusion

In this article, we developed our understanding of the situations where values matter. Rather than engaging in shallow discussion of what values are, we instead focused on how we prioritize our values. Gary Keller’s “The One Thing,” a massively popular productivity book, gave some useful insight into this topic. By applying his notion of having one focus at a time, we were able to develop a more powerful approach to our own value selection.

 There can be only one priority. To reiterate this key lesson:

All values must either be independent of each other, or have an obvious hierarchical relationship. 

Getting caught up in false dichotomies is a massive mistake, but sometimes, there really is only two choices. In extreme cases, you can’t have everything. If two of your values are in clear opposition to one another (and you can’t apply the “And” portion of your “And/Or” model), you and your employees have to choose.

In order to choose effectively, you need to understand which values are more important, both in general and in the particular situation. Borrowed from economics, the concept of lexicographic preferences is an important one, and gives us valuable guidance in these circumstances.

It’s no use if you’re the only one in your business who understands these things. In order to ensure these principles can effectively guide decision making, you need to ensure that everyone involved is on the same page. Now, that doesn’t mean you need to teach everyone what a lexicographic preferences are, but you do need to clearly show them which values matter more than others when push comes to shove.

By employing these principles, as well as those we’ve previously discussed, you can put yourself in the best possible decision to make the right decision, every time.

Your Next Steps

  • If you haven’t already done so, create a list of your core values. Taking the time to do this will help you to crystallize your intentions, making it much easier to determine whether a particular course of action is worth pursuing.
  • When you’ve done this, construct a value hierarchy. Figure out which ones are most important to you and your business. Imagine the extreme cases: what if there was no way to avoid choosing between the two … which would you choose? Make sure you can articulate your reasons for valuing certain things over others, as this will help to reveal gaps in your logic (if any exist).
  • When you’ve finished your hierarchy, ask your managers/employees to do the same thing. Do they match up? If they do, then you’re both on the same page. If they don’t, there’s clearly been a breakdown in communication somewhere along the way. Work to address this by teaching them why your hierarchy is different to theirs.