Written by 1:49 pm Leading Views: 569

Good Decisions With Bad Outcomes

It’s faulty thinking to evaluate past decisions based upon your present understanding. And, doing so can lead to worse decisions in the future.

Think about a time when you made a leadership or business decision and had an outcome that you didn’t want. Was it a bad decision? Maybe not, even though the result wasn’t what you intended.

At times it’s tempting to evaluate a decision after the fact and determine whether or not it was good based upon the results. However, this is an ineffective and limiting way to determine whether or not you acted correctly. I call this dynamic Retro-Analysis Paralysis because the fear of achieving another bad result clouds your ability to make a good decision in the present. 

For example, let’s say that you decided to make an investment in an early stage startup. You did the research, saw the opportunity, knew that the leadership was competent and had a track record of growing similar companies in the past, and had the funds to make the investment happen. While losing the money would hurt you, it wouldn’t bury you. However, the potential upside was huge if the company did well. 

Unfortunately, shortly after you made your investment the world was suffered through a global pandemic and the business struggled to survive, eventually folding due to the economic shutdown. Your investment was lost.

Did you make the right decision to invest? By all objective measures, yes. Was the outcome bad? Yes. Both can be true simultaneously. 

You cannot evaluate forward-looking decisions using backward-looking metrics. You must apply the same criteria in retrospect that you use in the moment of uncertainty. Good decisions can lead to bad outcomes, and vice versa. Your job is simply to make as many good decisions as possible, given the data you have on hand.

Regret is often the result of applying new learnings to past situations. As you grow, you become wiser, more experienced, and more mature in your ability to recognize patterns. So, it’s natural to have a twinge of regret when you consider your youthful indiscretions. It’s possible that you will even paint your past decisions with a broad brush as poor and unfortunate. However, I encourage you not to do this. 

You cannot evaluate past decisions based upon present understanding. Yes, your present understanding will help you make better decisions moving forward, but be careful not to allow your perception of past mistakes to cause you to question your present competence. 

Eliminating Retro-Analysis Paralysis

When faced with a moment of uncertainty, consider whether regret and Retro-Analysis Paralysis could be playing into your decision making in the moment. For example, the gambler who – in a moment of stupid risk – decides he needs to make a silly bet in order to compensate for a previous loss. Or, a business leader who due to a series of bad results feels the desperate need to grasp for a home run idea in order to save her career and the organization. Both of these decisions are driven not by an objective analysis of the present uncertainties but by a regret over past results, which may or may not have been due to a bad decision. 

A knee-jerk reaction to undesired past outcomes can prevent you from choosing bravely in the present moment. It robs you of a sense of agency in the present moment because you are still living in the clouded past. 

Are there any regrets that could be clouding your present decision making, or making it difficult for you to act bravely in the face of present uncertainties?

(Visited 569 times, 1 visits today)

Last modified: May 1, 2023

Share This