Decisions and Consequences - taking calculated risks

A book by Keith Cameron Smith: "The Top 10 Distinctions Between Millionaires and the Middle Class" has a cocky title but it's a very good (and short) read. I actually read it two times already. It's not about "how to get rich" but how to live a happy life with money being just a tool, not a goal to your happiness. It's been a great food for thought for me each time.
Decisions
Upon my 2nd read one point stood out significantly:

Millionaires take calculated risks

What does that mean? Well... it basically means millionaires are no gamblers, they don't risk all they have and get lucky... they actually know what they are doing....

... and here's the process of how Millionaires think if they have to make a decision. They ask themselves these three questions:

1) What's the best thing that can happen?
2) What's the worst thing that can happen?
3) What's the most likely thing that will happen?

... and the process goes like this:

If you can live with the consequences of the worst thing and the thing most likely to happen will help you grow, go for it.

That's it. There is no rocket science here - they just need to recognize all three scenarios and decide what to do. Sometimes the best thing happens, sometimes the worst thing happens... but be prepared for all three.

Looking back at my decisions over the last years I can safely say that this formula has helped me make some really good decisions. Some were riskier than others but all were very calculated and most of them fell into the "most likely" or "best thing" section. When there was an opportunity I knew I wouldn't be able to live with in the worst case scenario, I just didn't pursue it... and now after some time I'm happy about not taking the route.

How is your decision-making process?

I'm Michael Sliwinski and I'm an entrepreneur who's also the...
.. Founder of Nozbe.com - a time and project management web application
.. Editor of Productive! Magazine - a global PDF publication on productivity
.. and a blogger as well as a producer of a weekly 2-minute Productive! show.

Posted on Monday, July 18, 2011 (books,business)

Al Pittampalli
Jul 18, 2011 20:42
And I would say that the important thing is to have a process altogether. Most people just make decisions emotionally, instead of strategically. The book Winning Decisions, calls this the meta-decision...deciding how to decide. Great post!
Michael Sliwinski
Jul 18, 2011 23:23
Deciding how to decide - I like that. Emotions are a key part of our lives but we should be able to decide with reason on the important decisions. If in doubt about your emotional state... take a deep breath, sleep on it and then think again :-) Great advice Al, thanks!