How to Make Tough Decisions Easy

Several years ago, a professor of philosophy introduced me to an idea I have used to clarify my thinking and make the right business decisions time and again. You may find it as useful as I do.

We were having lunch, and the conversation turned to Nietzsche, the German philosopher and poet. I knew a little bit about Nietzsche. I knew he was anti-religion (as we say today) and believed man could perfect himself by self-assertion — an idea that made its way into the rhetoric of the Third Reich.

The professor told me that Nietzsche had many other interests, including classical philology, art, antiquity, and music. But it was what Nietzsche had said about “information” that most intrigued me. According to the professor, he predicted that, with the advent of information technology in the 21st century, secondary knowledge (what we learn from studies, books, newspaper accounts, etc.) would eventually replace experience as the basis of judgment.

I had never given much thought to the distinction between primary and secondary and knowledge. Many of the opinions I held — on topics ranging from global warming to national politics — were based on what I had read, not experienced firsthand.

Since then, I have paid closer attention to the origins of my ideas and the ideas of others. And I am convinced that Nietzsche was right. In fact, I think it’s fair to say that his prediction has already come true.

And this presents both a danger and an opportunity.

What’s Wrong With the Way People Think Today

These days, most people, most of the time, would rather act on the basis of theoretical knowledge (Nietzsche called it “wissen”) than on what they know from personal experience. (Nietzsche called it “erfahrung.”)

Let me give you an example…

I know from experience that when I invest in a business I know little or nothing about, I lose money. Yet I can talk myself into making such an investment if I see a business plan that has amazingly good numbers, superb credentials, and solid testimonials. I put aside the knowledge that is in my bones in favor of the facts and figures in my head.

Another example…

We know from experience that we can’t trust politicians to do what they say. Yet every election year, we vote for the man whose speeches makes the most “sense” to us.

There is so much information to deal with. Every day, we get more. And often it confirms our own experiences. We hear statistics about the growth of the Internet — and we know 10 people who have recently gone online.

But sometimes the facts contradict our experience. We are told that the economy is tanking and companies are folding left and right. But many of the businesses I know are doing just fine.

When secondary information contradicts our personal experience, we have trained ourselves to ignore our experience. “I must have incomplete knowledge of this,” we tell ourselves. “My experience is obviously not typical.”

Instead of using our experience to judge the validity of facts and figures (which, let’s be honest, can be rigged to “say” pretty much anything), we judge the validity of our own experience by them.

It’s really remarkable. We know how easy it is to manufacture information. And we also know that some people will do almost anything to have their way. Yet many of us never make the connection between the corruptibility of man and the corruptibility of facts.

Blunders of the Past Can Save You Money in the Future

When I think about bad decisions I’ve made in business, it is most often a case of my having favored facts over experience.

Case in point: A former business partner and I spent a year attempting to succeed with a publication aimed at new mothers. We were convinced — by the numbers we had come up with — that it was going to be a huge winner for us. The fact that neither of us had any experience in the industry didn’t phase us. The result: We were a quarter of a million in the red before we gave up.

Another example: All the direct-mail publishers I know have given advertisers free access to their lists in exchange for a split of the advertisers’ net profits. The publishers waive their advertising fees when they see the amazing numbers “other publishers” have experienced “using this very same ad.” The result: a much smaller response than predicted by the numbers. (The publishers get little or nothing. But the advertisers have some new leads they didn’t have to pay for.)

What You Can Do to Make Smart Decisions Most of the Time

I’m not saying you should ignore secondary knowledge. Sometimes you just have to make decisions without the benefit of experience. But when it comes to making important personal or financial decisions — the kind that can cost you plenty if you’re wrong — trust your bones.

Here’s something you can do the next time you are overwhelmed by the thought of making an important decision.

Take a piece of paper and fold it in half vertically. On one side, put down everything you know from experience. On the other side, put down the facts and figures you’ve been told. Then do this: Tear the page in half (vertically) and toss all those facts and figures in the garbage. You’ll then have everything you need to know to make the right decision.

Will you ever miss out on a great opportunity? Possibly. But my experience tells me you’ll go broke a hundred times before you succeed at something you have no experience in.

P.S. How do you get business-building experience… if you’ve only worked for other people? There is no better way than by starting and growing an online business. The cost of entry is super-low, so you won’t risk losing a bunch of start-up capital. With ETR’s recently launched Internet Money Club, Class of 2010, you’ll find out firsthand what it takes to be a success. You’ll learn from your mistakes — and triumphs. And your learning curve will be slashed, because you’ll have an experienced entrepreneur coaching you along the way.

[Ed. Note: Mark Morgan Ford was the creator of Early To Rise. In 2011, Mark retired from ETR and now writes the Palm Beach Letter. His advice, in our opinion, continues to get better and better with every essay, particularly in the controversial ones we have shared today. We encourage you to read everything you can that has been written by Mark.]