Making Great Decisions in Business and Life
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The phrase "work smarter, not harder" has been repeatedly ridiculed in the Dilbert comic strip and elsewhere, not because it is a bad idea, but because it is thrown like a brick lifesaver to drowning employees. To tell someone to work smarter is like telling someone to be happier, healthier, and richer. It's not much help to merely repeat the objective; what people need is a plan for achieving the objective. In Making Great Decisions, we show our readers how to achieve their objectives. We write to help those in business and those in the business of life--i.e., everyone--to work smarter. Our ideas are both simple and powerful. We offer a better way to look at problems so that the solutions are easier to find. We help supplement our readers' clear thinking by summarizing some of the most powerful techniques we have discovered.
THING OUR FINAL THOUGHTS APPENDIX About the Authors Acknowledgements End Notes
the smaller car has a safety cost of $10,900 (1,090 micromorts times $10 per micromort) while the larger car has a safety cost of only $5,300 (530 micromorts times $10 per micromort). The larger car undoubtedly costs more to purchase and operate, but given everything else equal—don’t consider the smoother ride, the bigger trunk, or the worse gas mileage—it is worth $5,600 more purely due to its safety. The next time you purchase a potentially dangerous product or service, see if you can apply
focus on ways of getting there and lose sight of the end result, because the means may roughly, but not exactly, coincide with the ends. Ford Motor Company seems to have learned this lesson. Rejecting the accepted strategy in the industry, Ford has cut capacity to focus on more profitable vehicles and markets. Ford still wants to sell lots of cars and trucks, but now it is focused on profits. “I’ve seen us in eras where we blindly chased [market] share and created all kinds of problems,” says
my former colleague Hersh Shefrin, an economist still at Santa Clara who wrote the excellent finance book Beyond Greed and Fear (Harvard Business School Press, 2000). Hersh told me that he occasionally ran into alumni of Santa Clara who remembered me and thought well of me. “That’s not that unusual,” he said. “A lot of professors around here teach well and make some connection with the students. Here’s what’s unusual: your students remembered specific things they learned.” One of my Santa Clara
energy-saving devices are chosen by engineers at the firm’s operating level, using the rule-ofthumb procedure called “simple payback,” which calculates how many years of savings it takes to repay the investment in better efficiency and start earning clear profits. Four-fifths of the American firms that even think about future savings (instead of just initial capital costs) use this method. Moreover, they do so with the expectation of extremely quick paybacks – a median 1.9 years. Most corporate