Mini-Series: High Performance Decision-Making (Part 3)

👋 Hi, legend!

In high performance environments, decisions are rarely black and white. We've already discussed how structured models can provide clarity, precision, and measurable outcomes during complex situations. In this third part of the mini-series, we’ll explore three new decision-making models: Expected Value, First-Principles Thinking, and Occam’s Razor. These models offer practical tools to approach decisions logically, and build on foundations from Parts 1 & 2.

Expected Value (EV)

The Mathematical Foundation

Expected Value (EV) is a statistical concept used to determine the most advantageous choice in uncertain situations. It is calculated by multiplying the probability of each outcome by its value and summing these products:

EV = (Probability of Outcome A × Value of Outcome A) + (Probability of Outcome B × Value of Outcome B) + …

Practical Application

EV helps quantify the potential benefits of various options, making it particularly useful in scenarios like choosing between job offers, investments, or strategic initiatives.

Example: Investment Opportunities

Consider two investment options–a conservative fund with a 95% chance of yielding $10,000, and a high-risk fund with a 40% chance of yielding $50,000.

🛟 EV of Conservative Fund: 0.95 × 10,000 = $9,500

🎢 EV of High-Risk Fund: 0.4 × 50,000 = $20,000

The high-risk fund has a higher EV, but the decision depends on your risk tolerance. 

Example: Product Launch Strategy

You’re faced with two possible strategies for a new product:

• Strategy A: Focus on premium markets. There’s a 60% chance of achieving sales worth $150,000 and a 40% chance of achieving $80,000.

• Strategy B: Target mass markets. There’s a 70% chance of achieving sales worth $120,000 and a 30% chance of achieving $90,000.

Let’s calculate the EV for each strategy:

• EV of Strategy A: (0.6 × 150,000) + (0.4 × 80,000) = 90,000 + 32,000 = $122,000

• EV of Strategy B: (0.7 × 120,000) + (0.3 × 90,000) = 84,000 + 27,000 = $111,000

Based on EV, Strategy A is the better choice as it has a higher expected value.

EV and Repeated Actions

The true power of EV shines when applied to repeated actions over time. If the same decision is made multiple times on a decision like the investment or strategy examples, the EV becomes increasingly accurate.

First-Principles Thinking

First-Principles Thinking deconstructs a problem into its fundamental components, and rebuilds it from the ground up. This method challenges assumptions and fosters innovation by focusing on the core truths.

Actionable Steps

1. Identify the Problem: Clearly define the issue you’re trying to solve. This step should not be underestimated. So often we find ourselves trying to solve problems that we don't fully understand. 

2. Deconstruct the Problem: Break it down into its basic elements, discarding preconceived notions.

3. Rebuild Solutions: Use the inherent facts to construct innovative and logical solutions.

Example: Career Planning

Imagine you’re considering a career change but feel overwhelmed by the options. Instead of following popular advice or trends, ask:

• What are the core skills I enjoy using daily?

• What assumptions am I making about job security, income, or work-life balance in different fields?

• How can I design a career path that aligns with my goals and values more effectively?

This approach might reveal overlooked opportunities–such as freelancing or moving to an adjacent industry–that are more aligned with your long-term aspirations.

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Occam’s Razor

Occam’s Razor suggests that the simplest explanation or solution is often the best. By eliminating unnecessary complexity, it focuses on what truly matters. You may not have heard of Occam’s Razor before, but I’ll bet you’ve used it more than you realise… “Have you tried turning it on and off again? It’s funny how quickly we jump to simplicity in some situations, while we rapidly overcomplicate others.

Example: Reducing Onboarding Complexity

New employees are overwhelmed by lengthy onboarding processes. Using Occam’s Razor, you streamline onboarding by:

📄 Creating a single, comprehensive onboarding document or portal.

🔁 Automating repetitive tasks like account setup and policy acknowledgements.

🤲 Prioritising hands-on training for only the most critical tools and processes.

Example: Simplifying Meeting Schedules

Your team is struggling with back-to-back meetings that hinder productivity. By applying Occam’s Razor, you identify that many meetings could be replaced with concise email updates. Actionable steps include:

🚫 Limiting recurring meetings to once per week.

🎯 Setting a clear agenda and time limit for essential meetings.

📨 Encouraging asynchronous communication for non-urgent matters.

The Takeaway

Mastering these models equips you with tools to tackle decisions with clarity and precision. Whether you’re evaluating opportunities, solving complex problems, or streamlining processes, these approaches empower you to make informed and effective choices.

Stay tuned for Part 4 next Tuesday!

Speak soon,

Zac

Disclaimer: The High Performance Brief is for general education purposes only. The content is not a substitute for professional healthcare or psychological services. If you have any health/mental health concerns, please consult a qualified professional.