We all make decisions. And yet few of us think about what we can learn from our past decisions to make smarter decisions in the future. A decision journal helps you learn from past decisions, think through current decisions, and avoid problems before they happen.

In this article we’ll cover:

Ok, let’s dig in.

Your Product is Decisions

In most organizations your product is decisions. By and large, your success will be the sum of the decisions you make over your career. The problem is it’s not easy to get better at making decisions.

Bosses would be the easy solution to helping you improve. After all, they have the best view of the problem and you. They should be able to point out strengths and weaknesses in your decision process as well as your judgment. All of this is known at the time you made the decision. This is hard and subjective and requires people doing a lot of thinking. So bosses tend to default to resulting, a process by which the outcome of the decision is attached to the process used to make that decision. Under resulting good outcomes are the product of good decisions and bad outcomes are the product of bad decisions. The problem isn’t that people don’t want to get better at decisions, it’s the system that’s preventing them from doing so.

Even if we can’t get our boss to help us make better decisions we can take things into our own hands. The way to test the quality of your decisions is to test the process by which you make them. Daniel Kahneman, Nobel Prize winner and dean of biases, argues that using a decision journal is the best solution. Kahneman said:

Go down to a local drugstore and buy a very cheap notebook and start keeping track of your decisions. And the specific idea is whenever you’re making a consequential decision, something going in or out of the portfolio, just take a moment to think, write down what you expect to happen, why you expect it to happen and then actually, and this is optional, but probably a great idea, is write down how you feel about the situation, both physically and even emotionally. Just, how do you feel? I feel tired. I feel good, or this stock is really draining me. Whatever you think.

The key to doing this is that it prevents something called hindsight bias, which is no matter what happens in the world, we tend to look back on our decision-making process, and we tilt it in a way that looks more favorable to us, right? So we have a bias to explain what has happened.

A decision journal helps you collect accurate and honest feedback on what you were thinking at the time you made the decision. This feedback helps you see when you were stupid and lucky as well as when you were smart and unlucky. Finally, you can get the feedback you need to make better decisions.

The key to understanding the limits to our knowledge (see circle of competence) is to check the results of our decisions against what we thought was going to happen and why we thought it was going to happen. That feedback loop is incredibly powerful because our minds won’t provide it by themselves.

I’ll give you the spoiler right now. We don’t know as much as we think we know. We’re fooled into thinking that we understand something when we don’t and we have no means to correct ourselves.

Our minds revise history to preserve our view of ourselves. The story that we tell ourselves conflates the cause and effect of a decision we made and the actual outcome. The best cure for this revising is the decision journal.

What is a Decision Journal?

You can think of a decision journal as quality control for our thinking — something like what we’d find in a manufacturing plant or a restaurant. Using a decision journal is simple but not easy. Implementing one requires discipline and humility.

Not all decisions need to be journaled. Decisions of consequence should be logged with the basics of the situation, what you expect to happen, and why.

You should write in your decision journal before you make the decision official. Writing is the process where you realize that you don’t know what you think you know. Writing about your decision forces you to explain your thinking. If we write about the decision after we make it, it’s often too late to do anything about it.

Write your decision down sleep on it and read it with fresh eyes in the morning. Often you’ll find that what you wrote doesn’t make sense. Catching mistakes before you make a decision saves you time and money.

A Decision Journal Template

The key question is what information to include in your decision journal. Here’s the template we use at FS.

Whenever you’re making a consequential decision, either individually or as part of a group, you take a moment and write down:

1. The situation or context
2. The problem statement or frame
3. The variables that govern the situation
4. The complications or complexity as you see it
5. Alternatives that were seriously considered and why they were not chosen (think: the work required to have an opinion)
6. A paragraph explaining the range of outcomes
7. A paragraph explaining what you expect to happen and the reasoning and actual probabilities you assign to each projected outcome (The degree of confidence matters, a lot.)
8. The time of day you’re making the decision and how you feel physically and mentally (If you’re tired, for example, write it down.)

You have to make this part your own. I’ve seen others include:

• What’s the primary thesis
• What is the expected outcome(s)
• What are the second and third-order consequences
• What is the worst-case scenario and why that’s ok
• What is the potential upside beyond the core thesis
• What emotions am I experiencing
• What is the opportunity cost (by doing this what am I not doing)
• What unique advantages or insights do I have in this situation
• Who is the best person to make this decision
• What does this look like in 5 weeks, 5 months, 5 years?

An Example Decision

Perhaps an example will help illustrate. Here’s a real decision that I made using the FS decision journal template.

Tips on Using a Decision Journal

Here are some tips to keep in mind as you implement your decision journal.

Your decision journal can be tailored to the situation and context. Specific decisions might include trade-offs, second-order effects, weighting criteria, or other relevant factors. These examples are only to get you started.

We can’t improve our thinking if we can’t see it. Don’t spend too much time on the brief and obvious insights. Often our first thoughts represent the thinking of someone else and not our own thinking.

Any decision you’re journaling is inherently complex and may involve non-linear systems. In such a world, small effects can cause disproportionate responses whereas bigger ones might have no impact. Remember that causality is complex, especially in complex domains.

Two common ways people wiggle out of their own decisions are hindsight bias and jargon.

It’s hard to remember what we knew at the time and what were thinking. Hindsight makes things far more explainable and changes our story. A decision journal helps combat this by recording what you knew and what you thought at the time. When you look at your own handwriting you come face to face with the person you were when you made the decision. There is nowhere to hide.

The words we use are also important. When we use vague terms, we give ourselves wiggle room. If we want to get better at making decisions we can’t give ourselves wiggle room. Be clear. Be direct. Be simple. An 8-year-old should understand what decision you’re making and why.

***

A decision journal that sits on the shelf is less useful than one that gets reviewed. Every six months or so pick it up and look at your past decisions, update entries with what actually happened, and spend time thinking about your process.

Realizing where you make mistakes, how you make them, what types of decisions you’re bad at, etc., helps you make better decisions going forward. When you start to identify patterns, you can change your decision process to help account for the things you miss.

Just because you had a bad outcome doesn’t mean you made a bad decision. You might have made the right decision (which, in our sense, means that used a good process) and still had a bad outcome. We call that a bad break.

When you use a decision journal, you’ll discover two things right away. First, you’re right a lot of the time. Second, it’s often for the wrong reasons. Discovering how lucky you are can be somewhat humbling. This is where the learning begins.