Right way to make good decisions

'Good decisions are made by gut feeling'

'Good decisions are made by thorough analysis of the problem and consequences of each decision made'

There has been war between the two thoughts. Both make sense. In the book 'Blink', Malcom Gladwell makes a compelling argument to make decisions through gut feeling; he proves that gut feeling is a decision actually made by inner mind which has processed all the data over the years. The first gut feeling is right, but once you try to rationalize your gut feeling, your inner mind cannot give you all the details that it used to make the decision.

Game theory argues otherwise, that you have to have a flow chart of the decision alternatives and their consequences.

Now there seems to be a consensus, at least for me. Usually you won't be pressed to take a decision through gut feeling or you would not have time to do a thorough analysis. Here is the right way to make decision - put the problem at the back of your mind for a couple of days. Do not conciously think about the problem, let your inner brain work on it. The best decision is what your gut/first feeling says after those two days.

Framing Business Problems

Business decision making is a practice, but there is more science to it than most people think. Here, I give frameworks of issues to consider for common business problems.

1. How to increase profits


2. What to consider when increasing prices ?
3. Ways to reduce costs

Reduce funtional costs

Reduce income sheet costs
4. How can we sell more units ?


5. New market entry - considerations



6. Financial Analysis of a Project

ROI Analysis
7. Merger considerations
8. Silver bullets

How to evaluate synergy ?

How to evaluate an opprtunity ?

Business Frameworks

Business frameworks are useful for a quick analysis of a busienss problem, helpful to narrow on to specifics to concentrate.

1. Porters Five Forces
Porters five forces is used to analyze the attractiveness of an industry.





2. BCG's Product Matrix




3. 3Cs4Ps
Useful when analyzing a product

4. Value chain
Useful when analyzing the value of internal operations of a company

Investing Books

These are my favorite books on investing. These books give you solid foundation and a broad perspective on investing, they do not make you a over night prince.

The intelligent asset allocator (william bernstein)
A random walk down the wall street ((burton malkeil)
The intelligent investor (benjimin graham)
The four pillars of investing (william bernstein)
The essays of warren buffet (cunningham)

What is a good career for me ?

Parts of the book "what color is your parachute" are truly revealing to me. This is what you need to know for a successful career - What do you love to do most ?

Think about what would you do love to do now if you don't have any worries about getting paid. Think about what makes you exiciting, think about what your freinds or mother or wife has to drag you to stop doing. Continue doing that and money (enough for a comfortable living) will come.

Sounds too good to be true ? It is true. It follows these simple principles - There is some money for any job in this world. There is good money if you excel and are the expert in any particular job. They key to excel in a job is to love doing it all the time.

Now it might not work some situations. You are in the mid point of your career and cannot just stop what you are doing now, you have a family. Well you are lucky, you can use the comfortness (hey you are getting money now) of the existing platform to jump on to what you love to do most.

For people like me, there is another problem - I don't know what I love or I love too many things. For those, first write down what skills/work_sets you would love to do - Writing, giving speaches, kicking somebody, gossiping, photography, cooking, watching TV etc. Now go find careers which involves those skill sets.

Trust me, there are people who make lot of money running celebrity blogs and writing movie reviews !