A Self-Made Billionaire Uses This Easy Trick for Decisions

Ideas

April 17, 2015 7:00 AM EDT

The first chapter in Seymour Schulich’s book, Get Smarter: Life and Business Lessons, offers a decision tool that adds to the simple pro-and-con list that many of us have used to make decisions. Schulich, a self-made billionaire, is one of Canada’s richest and best-known businessmen.

I learned this tool in a practical mathematics course more than fifty years ago and have used it for virtually every major decision of my adult life. It has never let me down and it will serve you well, too.

You all know the simple pro-and-con list? The one where you divide the page in two and simply list out all the pros and cons. Well, the Decision-Maker adds a twist to that. Here’s how it works.

On one sheet of paper, list all the positive things you can about the issue in question, then give each one a score from zero to ten—the higher the score, the more important it is to you.

On another sheet, list the negative points, and score them from zero to ten—only this time, ten means it’s a major drawback. Suppose you are thinking of buying a house, and you tour one that’s in your price range, except the owners have painted every room to look like a giant banana. If you really hate yellow and can’t stand the thought of lifting a paint brush, you might give “ugly yellow house” a ten, and if it’s not that big a deal, maybe a two or a three.

Now add up the scores. But here’s the rule.

If the positive score is at least double the negative score, you should do it—whatever “it” is. But if the positives don’t outweigh the negatives by that two-to-one ratio, don’t do it, or at least think twice about it.

Yes that sounds simple. I agree. But I also don’t think that things need to be complicated in order to be effective.

The Decision-Maker is designed not to allow one or two factors to sway a major life decision in a disproportionate way. It forces you to strip away the emotion and really examine the relative importance of each point—which, of course, is why it works so well.

This tool works for groups too.

When we were considering whether to sell our royalty company, Franco-Nevada, to Newmont Mining, Franco’s executive team produced a collective Decision-Maker. We listed all the pros and cons, then the top four executives assigned their own point scores to each. We averaged them, the positives far outweighed the negatives, and we sold the company.

This piece originally appeared on Farnam Street.

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