DECISION MAKING… How I Became Successful

Summary

• To avoid career-damaging mistakes, focus on not making poor decisions rather than just making good ones.
• Even a single bad decision, a Net Zero decision, can negate years of good decisions and dramatically alter the trajectory of your life or business.
• Always assess business leadership; poor leadership, like I experienced with a company operator, can severely damage a company.
• Overpricing services or products can lead to substantial revenue and profit loss, as happened with my company Gym Launch when we cut prices without reducing churn.
• Limit choices to prevent overanalysis and indecision, demonstrated by increasing a portfolio company's sales by simplifying their offers.
• Don't let perfectionism stop you from taking action; accept that every solution will have trade-offs and new problems.
• Develop a clear process for decision-making instead of relying on emotional reactions.
• Separate emotional reactions from practical problems to make rational decisions and prevent overreacting to issues like negative feedback.
• Ask productive, specific questions that guide you to effective solutions and limit overwhelming options.
• Discern the root problems from the symptoms by thoroughly analyzing the situation and considering what changes could resolve the symptoms.
• Test assumptions rigorously to differentiate between opinion and fact, which helps in asking the right questions and finding viable solutions.
• Map out decision options with possible outcomes, weighing the pros and cons, and consider the worst-case scenarios to ensure you can live with them.
• Choose solutions based on their long-term benefits, aiming for outcomes that are positive today, tomorrow, and into the future.

Video

How To Take Action

I would suggest implementing these steps to make better decisions. First, limit choices. Too many options can make it harder to decide, like with the jam example. If you have a business, simplify your offers. It worked for a company we helped by increasing their sales when we reduced their options.

To avoid getting stuck in perfectionism, understand every choice comes with its own set of problems. Choose the problems you're okay with. For example, if you want to start a tech business, be ready for the challenges that come with it, like finding talent or learning new skills. If that seems too hard, maybe start a simpler business.

Next, create a clear process for decision-making. When you face a tough choice, don't let emotions drive you. Ask yourself these questions:

1. What good and bad things could happen with this decision?
2. Can I live with the worst outcome?
3. Will the result be good not just today, but also in the future?

And when things go wrong, like negative feedback, don't make it bigger in your head. Treat it as a practical problem to solve, not an emotional one.

Also, to get to the root of a problem, ask

• Why is this happening?
• What changes can fix this?
• Do I need expert help or more knowledge in this area?

Test your thoughts too. If you think you've tried everything and it's not working, challenge that idea. What haven't you tried? This way, you make sure you're dealing with facts, not just feelings.

Mapping out your choices and their outcomes is a tool you can use right away. Write down your options, the good and bad points, and see if you can handle the worst that could happen. That's how you make smart choices for the long run. I used this method to guide someone at work through their problem, and it really helped them.

So, my advice? Keep things simple, think about the future, and separate facts from feelings. This will help you avoid bad decisions and go for the ones that add value to your life and business over time.

Quotes by Leila Hormozi

"No matter how many good decisions you make, if you make one bad decision it can wipe all the good ones out"

– Leila Hormozi

"You don't need to learn how to make good decisions, you just need to learn how to avoid the terrible one"

– Leila Hormozi

"The more options somebody has to choose from, the less likely they are to make a decision"

– Leila Hormozi

"We're always trading problems"

– Leila Hormozi

"The fewer dumb decisions we make, the higher quality of life we have"

– Leila Hormozi

Full Transcript

actually just boils down to one thing which is avoiding bad decisions let's look at Oprah who started a television show and became the host of it the rock who started his career in entertainment and continued in different sectors of entertainment Jeff Bezos who started a store that sold books and turned into one of the biggest e-commerce stores essentially in the world what do all these people have in common they've all avoided making career ending dumb decisions no matter how many good decisions you make if you make one bad decision it can wipe all the good ones out and I call this a net zero decision I knew a guy in high school he had everything going for him got a scholarship to an Ivy League College had all the best friends got a great internship and then he came home for one summer between College he decided to drink and he decided to drive and that night he actually hit somebody and because of that incident he lost his scholarship he lost his internship he lost his job and he lost most of his friends his life was never the same after that and that guy who might have gone on to be the CEO of a Fortune 500 company he now continues to work at a bar in our hometown he made one Net Zero decision that wiped out every good decision he'd made for 15 years leading up to that we had a company that came to us and they wanted to work with us we were doing our diligence on the company and I asked to speak with the operator because apparently this person was running the whole company and the founder was just kind of taking a back seat so I met with the operator and I could immediately tell that this person was not it they couldn't tell me their metrics they were micromancing people and it was good they didn't have intentions with the founder as soon as I talk to that person on the phone I was like one I don't think we can invest in this company right now because I don't think we have the right leadership and two I need to tell them that this person's probably not right for the role and so I met with the founder and I told him and he said Layla I don't think that's the case she's amazing well he called me eight weeks later and that person not only had quit but they took the whole team with them and essentially left the company at 50 less than it was doing in terms of Revenue because they also stole the customers another example is that when we own gym launch that year we had made like 42 million in terms of Revenue ebitda was fairly high like 17 million ebitda we got to a point where our turn was higher than we wanted it to be at that point in time we didn't have a CFO we didn't have a strong finance department and I remember our team came to us and they kind of almost had like little intervention at the time they were like listen we're priced too high we really need to cut the price and in that moment we dissipate the Net Zero decisions because we decided to cut the price and instead of decreasing our turn we just decreased our ebitda by 5 million a year we didn't decrease turn at all in fact that's a net zero decision because that's very hard to get back took years for the company to recover from that and it was definitely a decision that I wasn't happy that I made so what most people tried to do is they try to learn how to make good decisions you don't need to learn how to make good decisions we just need to learn how to avoid the terrible one so in order to learn how to not make a terrible decision we need you to dissect why people make such terrible decisions the first reason is called the Paradox of choice given a situation where you have more options than less you're more likely to make a bad decision or no decision at all customers given more choices are actually 10 times less likely to buy than customers that have less choices for example in a grocery store there were 24 jars of jam for people to choose from three percent of Shoppers that came in for Jam bought Jam in another grocery store there were six choices of jam and 40 of the Shoppers bought Jam the more options somebody has to choose from the less likely they are to make a decision I see this all the time when it comes to starting a business people who don't start a business are not the ones have limited options if somebody has no way to make money but to start a business they will find a business to start if somebody has many things that they could choose from they could freelance they could start this business they could take this job and that person is more likely to not start a business because they're overwhelmed by the optionality they have we had a portfolio company that came in and they actually on the sales call would present six different options to their customers to buy and we said oh shoot we're gonna be able to increase the closing percentage probably double it just by eliminating products and we did we actually doubled their closing percentage by taking from six products to two the second reason that we make bad decisions is what I call the prison of perfectionism we're afraid of taking action because we're afraid of an imperfect solution and this tends to stem from the thinking that when we make a decision it will create a solution that creates no other problems but in reality what we're always doing is we're always trading problems and so the question actually comes down to what problem would I prefer to deal with the one that I currently have or the one that I will have by making this decision so you see this a lot of the times in starting a business people say I want to make so much money so if I want to make a ton of money I'm going to start a tech business you decide to create a tech business you have to accept the problems you're going to have which is attracting engineering talent for a reasonable cost when you have no money the fact that you know nothing about technology you're gonna probably have to bring in a partner who you have to get a percentage of the business to so that they can help with the technology piece and just pure ignorance which is that you've never built a business before and you're picking a fairly hard business to start if all of those sound like problems that you wish to have sure start a technology business but if those sound like problems you don't want to have maybe consider a different business or something that's easier the third reason that we make poor decisions is because we've never learned how when I ask somebody how do you make decisions they can't even tell me they don't have a process for making decisions and so if you don't have a process for making decisions you're probably just being led or dictated by your emotions we don't have a process where most likely going to just do what feels good in the moment which often serves Us in the short term and not in the long term and the last reason that we make poor decisions is that we escalate practical problems into emotional problems I'm not making enough money in my business we allow that practical problem not making enough money to turn into a full-blown emotional disturbance an example of this in someone's home life might be my husband didn't get me what I wanted for my birthday what does that then turn into my husband doesn't love me he doesn't care about me he doesn't even think about he doesn't even know what I want for my birthday the Practical problem was the husband did not get me the gift I wanted we interpret that into an emotional disturbance by what we make it mean the same happens in business all the time we had a portfolio company and they had some upset customers that left a poor review online and they had an amazing business despite that they said we are a terrible company and we are not doing a good job we need to redo our whole department wow that really escalated quickly and the reason for that is because of what they made the Practical problem mean which maybe it was just that hey this person left a battery view online we should call them and figure out what happened because this could have been a one-off situation oftentimes we end up making poor decisions because we emotionally escalate ourselves when in reality we can practically fix the problem without escalating into an emotional disturbance and the reality is is that the higher our emotions the lower our intellect Studies have shown that the more emotional we are feeling the higher velocity of an emotion in our body the worse decisions we make and this is why we need a process to protect us from making dumb decisions the fewer dumb decisions we make the higher quality of life we have so how do we not make dumb decisions Step One is we're going to identify the correct question to ask we asked the wrong question then it leads to the wrong answer how do I make more money that question provides no direction if we swap that for a question such as how might I add enough value through my product or service that I can charge an additional 600 a month and can keep my customers happy we ask the right question we immediately eliminate our overwhelm because it's clear and what the right questions do is they eliminate Endless Options the more vague the question that you're asking the more likely you are to make a bad one because you have too many options to pick from when you ask the right question it will provide you with Direction immediately when it's answered the second step is that you want to separate the problem from the symptoms the way that I would find out what the actual problem is I would ask these questions one what are the possible reasons I'm noticing these symptoms two what is happening that if it stops happening would make the symptoms go away three what is not happening that if it did happen would make the symptom go away so for a business owner for example it might be I am not coming up with a strategy to grow my business and if I was able to come up with a strategy the symptoms would go away what this leads me to think is the problem is that the business owner doesn't actually know strategy because they are inexperienced if we brought in somebody who knew strategy and was talented and had done this before then the symptoms would go away so the solution is Let's either hire somebody as a mentor consultant or hire somebody and bring them into the organization who knows what they're doing the third step is you want to test your assumptions where are you substituting opinions or facts I've tried everything and I just can't lose weight is that true yes it's true I've tried everything is it absolutely true would you stake your life on it well no I don't think I'd stake my life on it okay well that's not true I've tapped out my market we've absolutely saturated the market is that true yes I can't get more customers okay Would You Bet Your Life on it well no why wouldn't you bet your life on it well I guess we haven't tried anything besides Facebook and Instagram ads I guess we haven't tried Tick Tock we haven't tried LinkedIn we've never done outbound I guess I wouldn't save my life on it when we're substituting opinions for facts we ask poor questions the issue is that we're making assumptions that are not true which lead us to ask false questions which lead us to solutions that don't make any sense step four is the last step and probably the most practical one that you can put into use you want to map out your options for the decision and the most likely results in one column all of my options here's the three things I could do to make a decision to solve this problem whatever it may be now I'm going to ask myself for each one of those scenarios what is the upside to each option what is the downside to each option could I live with the worst case downside is that my preference and then four is what is the likelihood of occurrence of that downside when I was teaching my team about decision making some of the co-workers were having an issue with each other and one of them came to me and they were like I don't know how to handle this or what did you do I bring you in do I not bring you in and so I gave her this Matrix to make the decision the three options that she had were one confront my co-worker myself two avoid my co-worker indefinitely three tell my boss about my co-worker to handle it if she confronted her co-worker the upside is that she might resolve the issues and make her life easier the downside is that the co-worker might not take it well and it could actually escalate the situation could she live with her co-worker escalating the situation and now they have a worse relationship and then what does she think the likelihood is the co-worker would escalate it she said it was about 40 second case scenario is she avoids the co-worker what's the upside she doesn't have to be uncomfortable or risk reduction the downside is that she's always going to have an underlying anxiety around them it's going to stop her from progressing and working with that person could she live with the worst case downside which is not progressing in the company because she hasn't had a hard conversation and then feeling badly about herself for not upholding herself to the values of our company and what does she think the likelihood of that downside happening is if she plays out that scenario she said 95 because that's a feeling and the last one was tell her boss about her co-worker and have them talk to them what's the upside the boss will handle it for her what's the downside the co-worker might actually lose respect because she went through the boss what's the worst case downside the co-worker loses respect for her because she played monkey in the middle and put the boss in them what's the likelihood the co-worker will actually lose respect for her she said 65 so mapping all that out she said the best solution was to confront the co-worker because she could live with the worst case downside because at least then she keeps her Integrity even if that person escalates the situation which there's only a 40 chance they will when you're mapping out these scenarios how do you pick which one to choose what you want to pick is the solution that has the most probable compounding positive outcome it's not just good today it's good tomorrow a month from now and a year from now if you have a solution and it's only good for today but it's not good a year from now then it's not the best solution