Strategic decision-making often requires you to estimate current and future quantities. Here’s a quiz to see how good you are at it. For each quantity below (2009 data unless noted otherwise), make your best guess. Don’t try to find the answers, just guess. World camel population Annual consumption of popped popcorn in the US (quarts) GNP … Continue reading How good are you at estimating?
Can you get fooled by random events? You bet you can. Here’s an interesting example, recounted by Daniel Kahneman in his book Thinking Fast and Slow. A survey of average student test scores at over 1600 schools focused in on the top 50. One item stood out. Of the 50 best schools, 6 were small. … Continue reading Are small schools better?
Isn’t it hard to build a spreadsheet to analyze financial issues? Don’t you need to be a math whiz? Don't you need to write complicated formulas into all those cells? No, no, and no! You can do a lot with just addition, subtraction, and multiplication, and Excel will do all the arithmetic for you. The … Continue reading Simple spreadsheets for complex questions
Are you saving enough to retire? That depends on how much you need to have when you enter retirement. Last time I showed you a spreadsheet to help one of my clients amass $2,000,000 by the time he retires. But will that be enough? We can build a simple spreadsheet that gives you a start on … Continue reading How much money do I need to retire?
Which would you rather know, where you are now compared to where you were last month, or where you might be in the future? Personally, I’ll take the view of the future. What might change and how can I prepare? Are there threats? Opportunities? What might I do to make progress and how well might … Continue reading What is…? or What if…?
You always have more than two choices in any decision. A lot of decisions come out of a problem or dissatisfaction. The temptation is to jump in and do something right now, especially if you’re angry. Before you do that, settle down and make a list of possible alternatives that will remove, mitigate, or otherwise … Continue reading Choices for Change
I just read a great article about thinking mistakes and how they mess up our decision-making. This article covers eight mistakes, any of which could be the basis for an article by itself. It also includes some terrific cartoons illustrating confirmation bias. Right now I want to focus on mistake #3, the sunk cost fallacy. … Continue reading It’s gone, you can’t get it back, and it’s making you crazy
Benjamin Franklin had a life-long interest in finding ways to make himself more effective. It worked. He become a statesman, an inventor, a publisher, a writer… and got his face featured on the hundred-dollar bill. One of his techniques was a simple way to make a difficult decision, specifically whether to do something or not. … Continue reading Ben Franklin’s decision technique
Your initial statement of the decision issue is almost always wrong! A common reason is that it focuses on the solution and not the driving need. For example, I might state a decision as, “Which cell phone to buy?” I would then say that my goal is to have a cell phone. But, in fact, … Continue reading Is that really your goal?
He couldn’t wait to retire. He had been planning for it for years. He had places to go and projects to complete. The day after he retired, he was on a plane. In between trips he tackled projects that he hadn’t had time to do when he was working. But then one day, about a … Continue reading Be careful what you wish for