I want to talk today about making tough decisions because we all make a lot of them. Who you hire, how much to pay, what risks to take, and what opportunities to pursue, are all hard decisions that will determine your success.
When you’re making a really hard decision, you probably experience some anxiety. Whenever we make a hire, we get anxious about the downside. What if the market turns around and we’re squeezed financially? Or what if they turn out to be a bad hire that can’t meet our expectations?
There’s a framework for thinking about big decisions that I really like, and it’s called fear setting. Fear setting encourages you to sit down and really think about the absolute worst-case scenario. Put it down on paper exactly what happens, and how you’re impacted, if all goes wrong. If interest rates go to 5% tomorrow and there’s a huge market correction, if the new hire is terrible at their job, if the business falls through and we wish we had sold it, what exactly is the worst thing that will happen? What you usually find out by doing this is that the worst-case scenario is not that bad, and the risk you’re taking is more manageable than you realized. You can talk down that anxiety.
When big decisions come around, practice fear setting. Run through those worst-case scenarios. Don’t just talk or think about them, write them down. Think about the risk you’re taking like a poker player; there are probabilities for every outcome, and nothing is blake and white. This will help prevent you from making emotional decisions.
As you put these risks on paper, you separate yourself from emotions. Emotions can cause us to make big decisions when we’re not thinking clearly, and those can be destructive to your life and business. Fear setting helps you separate your anxiety, ego, greed, and other emotions by making you look at the tangible landscape.
Anger, fear, desperation, and any number of other emotions can cloud our ability to think and make really good decisions. Great executors are made by thinking clearly, separating themselves from those emotions, and making decisions based on risk-adjusted rewards.
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