Strategies to Learn How to Make Better Decisions

I often look to Warren Buffett, CEO of Berkshire Hathaway, and Charlie Munger, vice chairman of the same company, as inspiration for my days. Both have developed a reputation as sages in the investment community and beyond. They invest in new companies infrequently and hold on to their investments for the long-term. Buffett and Munger spend their time reading, studying, and pondering and have been able to build a business empire based on this strategy of deep analysis and sparse action.

As I have been working on building my company over the past couple of years, I find myself often in constant action mode, completing one task after the other. As often happens, I find it difficult to find the time to ponder ideas and decisions. With time, I have come to realize that I must slow down to be more effective, as the idea is to take the time and learn to think as clearly as possible.

Therefore, one of my main tasks lately is spending more time thinking so that I can better synthesize the information I find. The goal is to be more effective, to foresee better and plan, and to make the best decisions that will not only be successful but also avoid problems in the future. I am approaching this task through different angles. For one, I am learning to think better by reading and writing, while another angle is learning how to make more strategic decisions and studying more about the fundamental mental models that Buffett and Munger use to think before eventually acting.


[Photo: Kieran Sheehan/Unsplash]

[Photo: Kieran Sheehan/Unsplash]

Reading and Writing

When we read books, especially those by the world’s greatest authors, we are diving into the worlds of the most brilliant minds. Unfortunately, none of us will get the opportunity to meet Plato or John Locke, but we can get to know their thoughts through the books they produced. We can read their words, and we can also converse with them, in a way, when we take notes and agree or disagree with their points of view.

If you have not yet read Mortimer Adler’s How to Read a Book (public library), I highly recommend it. In it, Adler describes the different forms of reading, which are elementary, inspectional, analytical, and syntopical. The first level of reading – elementary – is learning how to read and is what we were taught in grade school. The second level is limited by time and quickly grasping the idea of the book by skimming. One way to inspect your book is to examine each chapter and read the beginning and end paragraphs. This process will give you an idea of where the book is going and whether you want to read it.

Adler best describes analytical reading: it’s “thorough reading, complete reading, or good reading—the best reading you can do. If inspectional reading is the best and most complete reading that is possible given a limited time, then analytical reading is the best and most complete reading that is possible given unlimited time.” [1]

The final level of reading is syntopical, which entails reading multiple books on a single subject. It is a profound kind of reading to obtain the deepest understanding of a topic. You can go through the first three levels of reading any time you read a book to deepen your understanding and learning. As you read, I recommend taking notes and making summaries at the end to better analyze the book.  

Writing can also be a great tool for learning. It forces us to be explicit about our thoughts, and as we write, we can often find the gaps in knowledge that were previously not apparent.  We can then go back and research the information we are missing to develop a complete knowledge base. As an example, I am in the middle of writing my first business book, and it has been an enormous learning experience. It has pushed me to hone my understanding of the topics I write about, as I can only explain them well if I comprehend them thoroughly. The more I write, I find that I learn more deeply.


[Photo: Kasturi Roy/Unsplash]

[Photo: Kasturi Roy/Unsplash]

Decision-Making

The results we get are determined by our habits and our decisions, including our schedules and the actions we take as part of them. Sometimes we make decisions based on a feeling, and sometimes we’ll commit to a project because we didn’t want to say no. This process is true for both small, daily decisions as well as bigger, more impactful decisions.

It is at that inflection point of those decisions we make that it’s most important to pause and develop adequate models for making those decisions as best we can. Then, we can learn about our decision-making process and identify how it can be improved so we can sharpen our skills. I like using a decision journal since it forces me to make better decisions.

By using a journal, we also remove biases, and it forces us to think and better weigh our options. You can buy the one I have here. For instance, one way to analyze a decision is by considering its effects in the next month, in the next year, in the next five years, and even into the next ten years. This different point of view can help take us out of the short-term and into the long-term effects of the decisions we make.


[Photo: Eriks Abzinovs/Unsplash]

[Photo: Eriks Abzinovs/Unsplash]

Develop Knowledge of Mental Models

Charlie Munger and Warren Buffett recommend developing a latticework of mental models. These models take the tools and principles of each of the major fields, including biology, history, psychology, engineering, and mathematics. The concept is that all these ideas are interconnected, and they can, therefore, serve as a framework for thinking and decision-making. In the words of Charlie: “I’ve long believed that a certain system—which almost intelligent person can learn—works way better than the systems most people use. What you need is a latticework of mental models in your head. And, with that system, things gradually get to fit together in a way that enhances cognition.” [2]

Some examples include the concept of compounding interest, redundancy, and diversity. These ideas come from different disciplines, but they can be used to approach any problem we have in business. To dive deeper into this subject, I recommend Poor Charlie’s Almanack (public library).

[1] Adler, M. J., & Van, D. C. (1972). How to read a book.

[2] Munger, C. T., & Kaufman, P. D. (2008). Poor Charlie’s almanack: The wit and wisdom of Charles T. Munger. Virginia Beach, Va: Donning Co. Pub

Pamela Ayuso - About the Author

ABOUT THE AUTHOR

Pamela Ayuso is an author and the co-founder and CEO of Celaque. She is a real estate entrepreneur and developer who has executive leadership experience in two of the most successful real estate developers in Honduras — managing operations at Alianza and leading Celaque. Celaque develops office and residential buildings and manages a broad portfolio of properties. Pamela’s focus is on growing Celaque into a model for the 21st-century company.

In addition to her role as CEO at Celaque, Pamela is the author of Amazon best-selling book, Heptagram: The 7-Pillar Business Design System for the 21st Century. She offers practical business and personal development insights for other entrepreneurs and business leaders on her blog and LinkedIn. Her husband and her three wonderful daughters inspired the story of her first children’s book, Alicia and Bunnie Paint a Mural.       

Time Management for Busy Business Owners

Join our mailing list and receive our free Time Management for Busy Business Owners e-book.

Pamela Ayuso will use the information on this form to be in touch with you and provide updates. You can change your mind at any time by clicking the unsubscribe link in the footer of any email you receive from us, or by contacting us at pamela@pamelaayuso.com. We will treat your information with respect. We use cookies and similar technologies to run this website and help us understand how you use it. For more information, read our Privacy Policy.

Looking for something else? Search to find more practical tips from Pamela.

Categories