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The Shadow of Resulting
To be fair, in the first exercise, I didn’t give you enough information to figure out whether the decision was good or bad on its merits. Maybe your mind just fills in the blanks when there isn’t much to go on, like what happens with some visual illusions. That is not to say that resulting leads you to good conclusions under those circumstances. We would all learn better if we didn’t autofill those blanks because we happen to know the outcome. But maybe resulting is confined to situations when you don’t have much information about the decision.
Does our tendency to result disappear when we aren’t operating in an information void?
Let’s do another example in which we fill in some of those blanks to find out.
1 You buy an electric car and you love it. It’s an awesome car, manufactured by a tech genius widely hailed as a visionary. Based on your experience with the car, you buy stock in the company.
After two years, the company’s stock soars and your investment has increased in value twentyfold.
Rate how you feel about the quality of the decision to invest, on a scale of 0 to 5, where 0 is a terrible decision and 5 is a great decision:
Write down the reasons for your rating.
2 You buy an electric car and you love it. It’s an awesome car, manufactured by a tech genius widely hailed as a visionary. Based on your experience with the car, you buy stock in the company.
After two years, the company is out of business and you have lost your investment.
Rate how you feel about the quality of the decision to invest, on a scale of 0 to 5, where 0 is a terrible decision and 5 is a great decision:
Write down the reasons for your rating.
If you’re like most people, you interpreted the details about why you bought the stock in a different light depending on whether the outcome was good or bad.
For the good outcome, you most likely interpreted the details of the decision to invest in a more positive light: You had personal experience with the product and that should count for a lot. After all, if you love the car it’s likely other people will. Plus, the tech genius is known to be successful, so if he is running the company it is likely to be a good investment.
But when the company turns out to be a dud, the poor outcome can make you see those same details in a different light. Now it is more likely that your reasoning includes how picking a stock based on your personal experience isn’t a substitute for real due diligence. Are they making a profit? Can they? What’s their debt burden? Will they have access to capital until they achieve profitability? Can they keep up with demand and increase their manufacturing capacity? Maybe you were such a happy consumer because they were losing buckets of money on every sale.
This is, of course, not limited to investment decisions.
You quit your job to join a promising start-up because it offers you equity. It ends up as the next Google. Great decision! You quit your job to join a promising start-up because it offers you equity. It fails after a year. You end up out of work for six months and you run through your savings. Terrible decision!
You pick a college because you want to go to the same school as your high school sweetheart. You graduate with honors, marry your high school sweetheart, and land an amazing job. Picking that school feels like a great decision.
You pick a college because you want to go to the same school as your high school sweetheart. Within six months you have broken up. You decide to change majors and the school does not have a good program in your new major. You hate the town the school is in. And by the end of the first year you have transferred. Picking that school feels like a terrible decision.
In all of these cases, the quality of the result filters how we view the decision, even when we have identical details about the decision process , because the quality of the outcome drives how we interpret those details.
This is the power of resulting.
When the outcome turns out poorly, it’s easy to focus on the details that suggest the decision process was poor. We think we are seeing the decision quality rationally because the bad process is obvious.
But once the outcome is flipped, we discount or reinterpret the information about the decision quality because the outcome drives us to write a story that fits the ending.
The quality of the outcome casts a shadow over our ability to see the quality of the decision.
We want outcome quality to align with decision quality. We want the world to make sense in this way, to be less random than it is. In trying to get this alignment, we lose sight of the fact that for most decisions, there are lots of ways things could turn out.
Experience is supposed to be our best teacher, but sometimes we draw a connection between outcome quality and decision quality that is too tight. Doing so distorts our ability to use those experiences to figure out which decisions were good and which were bad.
Resulting makes our crystal ball cloudy.
N ow that you know what resulting is, think about a time in your life when you resulted. Use the space below to describe the situation.
If you want some examples, go back to the very first questions I asked you: What were your best and worst decisions of the last year? The point of having you write those down is that most people don’t actually think much about their best and worst decisions . They usually start by thinking of their best and worst outcomes and work backward from there.
That’s due to resulting.