Welcome to the Rocket GTM newsletter where we discuss go-to-market strategies for $0-$10M revenue startups.

If you're a founder or entrepreneur and need sales coaching, or help building an effective revenue machine then check out my website or feel free to schedule a coffee.

The Resulting Fallacy

How do you know when you've made a good decision?

Most people look at the outcome of that decision, the result.

Good outcome means good decision, right?

Not necessarily.

Resulting is when we judge the quality of a decision based on the quality of the outcome.

Unfortunately, this is ineffective

"...the outcome tail is wagging the decision dog. There’s a name for this: Resulting. When people result, they look at whether the result was good or bad to figure out if the decision was good or bad." - Annie Duke. "How to Decide"

Imagine you're playing a game of poker. You decide to bluff and thankfully you win.

Did you make a good decision?

Perhaps you just hired your first employee. They turn out to be a resounding success.

Did you make a good decision?

In both cases the results were positive. But that doesn't mean that the decision was good.

In both cases, we must look at the information available to us when we made the decision.

Taking the poker example ask yourself:

• What were the cards in your hand?

• What cards were dealt on the table?

• How much money was at stake?

• What was the probability of winning?

Let's say you win. How do you know if you just got lucky?

You see, if the probability of a positive outcome was 1% and you win, was that a good decision?

The answer is no, since if you continue to make the same decision you'll go on to lose the next 99 times.

Here you can see that the result is not indicative of the decision quality, but if we just looked at the result we'd falsely assume the strategy was good.

So how do we better judge the quality of our decisions?

Write a Decision Diary

Let's look at the hiring example. It can be hard to know whether a candidate will turn out to be a good hire or not, and building your interview process based on the results of a few good hires may set you on a negative path as you scale.

Writing a decision diary is an effective remedy.

During the interview process write down all the reasons you think the candidate will or will not be successful. Six months later, review the outcome and review the reasons for your decision.

Do they match? Were they successful for the reasons you thought?

Sure, the candidate may have been a resounding success, but how much of that success was predictable?

Let's say your candidate turns out to be a success. Did your interview process effectively highlight and predict those reasons? If not, are you asking the right questions?

Writing a decision diary lets you distinguish the difference between dumb luck and strategically effective decision making.

🌯 Wrapping it up

Looking at the results of a decision is not an effective strategy for judging the quality of a decision.

Instead, we must compare the decision against the available information at the time of the decision.

To ensure this assessment is accurate write a decision diary and compare notes once the outcome comes to fruition.

You may have made a good decision based on the available information at the time. Equally your decision diary may highlight that you didn't have all the information necessary. Or perhaps you attribute greater weight to a less important factor.

If you take anything away from Annie Duke's concept of resulting it's this:

A good result doesn't mean a good decision.

A bad result doesn't mean a bad decision.

Quality outcomes may be due to dumb luck or strategically effective decision making. Write a decision diary and judge your decision against the information you had at the time it was made.