Decision making – idea generation

“when you have eliminated the impossible, whatever remains, however improbable, must be the truth” – Sherlock Holmes “Sign of the Four”

I am a Sherlock fan but I am afraid this statement is nonsense and reflects a common error in how we make decisions. The statement above is incorrect because what is left after eliminating the impossible is not only the improbable ideas you have, but also all the ideas you did not come up with. It is more likely that the answer is something you did not think of because you limited your possibilities too early in the process.

I saw a good friend of mine this week who has been very worried for the past two weeks about a business problem. He had put a lot of time and energy into preparing a space to display artwork, but now it seems the lease might fall through due to issues beyond his control. He appeared stuck in a loop, thinking he had no control of this situation. I suggested we use an approach that I use all the time when looking at investment ideas.

  1. Write down all the things that could happen.
    This is an exhaustive list of all the possibilities you can think of. Include items which you think are “impossible” but are in fact just ones you dismiss because they seem too hard. I lead the way by insisting on putting an idea down he has previously told me is ridiculous. With that as the benchmark for how bad an idea can be and one that still makes the list, he came up with a dozen ideas in less than 10 minutes.
  1. Go back to each one and write 2 or 3 sentences about why this outcome would be good.
    Do not evaluate them, do not mention any potential obstacles or negatives. I refused to listen to them and cut him off every time he starts. I kept telling him that we would get to the negatives next and then he could explain to me why this idea was stupid. I call this stage “suspension of disbelief”. Once he released his imagination, he became very animated about many of the ideas. Including the ones he did not want to even put on the list because they were “impossible”.
  1. I lied. We are not going to look at the negatives now. Make Action points!
    Instead, go back over each of the items and work out what the action point is (AP) to take it forward. This is the information gathering phase. After you have done each of these, write down what you have discovered and let’s talk again and start to evaluate the ideas.

If you go back to my first 2 posts you can see the same basic idea.
To be creative you need to separate the idea generation phase from the analytical evaluation phase.
I hope to use this blog over time to share some of my investigations of ideas which even I may think hard to justify. But to come up with really good ideas, you have to be willing to entertain a lot of really bad ones.

“It is a capital mistake to theorize before you have all the evidence. It biases the judgement.” Sherlock Holmes “A Study in Scarlet”.

Well said Sherlock.


The advice I always give to my analyst team is to send their work BEFORE they had completely finished it, especially before they have polished it. I want to see the spreadsheets, their workings and their ideas before they had settled on an answer.

The advantages of sharing early

  • I get to see all the underlying data.
    Given time they will clean it up and only present the “relevant” data. Seeing all the data and associated thoughts, I may assign different importance to information they have discounted or draw different conclusions
  • I get to see a variety of possible ideas and views
    If they are given time to polish it, then only one view will be presented
  • We can have a vigorous, enjoyable and creative conversation.
    At this stage, other people’s input and ideas are useful as the answer is not fully known.

If I get the final product later

  • The final version will be well argued and compelling
    After all, my team are smart! It will be full of supporting data and information. The best analysts may also present some counter-arguments but no-one seems to represent the messiness of reality or admits they have no idea what is going on.
  • They will be proud of the work they have done.
    This means they will be protective, taking comments as criticism and most likely personal criticism. This leads to a conversation which will likely be professional, non-creative and pretty dull.

How I like to work

In the context of my previous piece on writing, I like work where there is an active response but no evaluation or criticism from allies and peers (middle-centre box in the grid); not a piece that has been written for evaluation by the boss (top-right box). I understand that this may not be standard, in fact it is the cultural opposite to how Ray Dalio describes Bridgewater in his “Principles”. This perhaps shows that many different approaches can be successful but it is important to know which one works for you and make sure you stick to it.

In this blog, I will try to follow my own advice. The posts may not be analytically perfect, well-footnoted or accurately referenced. The views presented will be ones that are liable to refinement and even complete reversal as more information and better analysis is included.

I hope this does not turn out like Charles Foster Kane’s Declaration of Principles.