Narrator: In the early 1970s, the film studio United Artists had a two-picture deal with a young director named George Lucas. They had already passed on his film American Graffiti, which went on to become a massive hit for another studio. Now, Lucas was back with a new idea, a strange space fantasy filled with laser swords, alien creatures, and mystical forces. He called it Star Wars. United Artists, along with several other major studios like Universal and Disney, passed on the project. Twentieth Century Fox eventually took a chance, and Star Wars became one of the most successful and culturally significant films of all time, spawning a franchise that Disney would later purchase for over four billion dollars. The consensus is clear: the executives at United Artists made a colossal, history-making blunder.

But what if that conclusion is fundamentally wrong? What if judging their decision based on the film's eventual success is the very thinking that traps us in a cycle of poor decision-making? In her book How to Decide: Simple Tools for Making Better Choices, former professional poker player and decision strategist Annie Duke argues precisely this. She reveals that the greatest obstacle to learning from our experiences is our tendency to equate a good outcome with a good decision, and a bad outcome with a bad one. The book provides a powerful framework for untangling skill from luck and building a process to make better choices, regardless of the result.

Narrator: At the heart of Duke's argument is a cognitive bias she calls "resulting." As she defines it, "When people result, they look at whether the result was good or bad to figure out if the decision was good or bad." This is the mental shortcut that leads us to declare United Artists' decision to pass on Star Wars a catastrophic failure. However, this ignores the most crucial element of any decision: the information available at the time it was made.

Duke asks us to step back into the 1970s. At that point, science fiction was a niche genre, not the box office juggernaut it is today. George Lucas's previous sci-fi film, THX 1138, was not a commercial success. The script for Star Wars was unconventional and difficult for many executives to visualize. From the studio's perspective, they were being asked to invest millions of dollars in a high-risk project in an unproven genre from a director without a major blockbuster to his name. Given the probabilities and potential payoffs they were weighing, the decision to pass could have been an entirely reasonable, even prudent, business choice.

The spectacular success of Star Wars was the result of a high-quality decision by Twentieth Century Fox combined with a tremendous amount of luck. Duke defines luck as the uncontrollable element that determines which of many possible outcomes actually occurs. In another version of reality, the film could have flopped, and history would have praised United Artists for its foresight. By focusing only on the outcome, we learn the wrong lesson. The key isn't to try and predict the future perfectly, but to evaluate the quality of the decision-making process itself, independent of the lucky or unlucky result that follows.

Narrator: Compounding the problem of resulting is another powerful cognitive distortion: hindsight bias. Duke defines this as "The tendency to believe an event, after it occurs, was predictable or inevitable." It's the "knew-it-all-along" feeling that rewrites our own memories, making us believe the world is far more predictable than it actually is.

To illustrate this, Duke presents the story of a person who grew up in sunny Florida and is considering two job offers: one in nearby Georgia and a much better career opportunity in Boston. Their main hesitation is the infamous New England weather. To make an informed choice, they visit Boston in the middle of February, experience the cold, and decide it's a manageable trade-off for the superior job. They accept the offer and move.

From here, two scenarios can unfold. In the first, the person is miserable. The relentless cold and gloom wear them down, and they quit within a year. Their friends and family say, "Of course this happened! We knew you couldn't handle the cold." In the second scenario, the person falls in love with Boston. They discover a passion for snowboarding and embrace the changing seasons. Their friends and family say, "Of course this happened! We knew you were adventurous enough to love it."

In both cases, the outcome feels completely predictable in retrospect. Hindsight bias erases the memory of the genuine uncertainty the person felt when making the decision. It makes us feel like we should have known all along, which prevents us from learning anything useful. As Duke notes, "EXPERIENCE is necessary for learning, but individual experiences often interfere with learning." Hindsight bias is a primary source of that interference, leading to useless lessons based on a misremembered past.

Narrator: If we cannot reliably learn from outcomes due to resulting and hindsight bias, what is the alternative? Duke's answer is to shift focus entirely from the outcome to the process. A high-quality decision is not one that guarantees a good result; it is one that is made through a sound, rational, and well-considered process. The quality of our lives is not determined by luck, but by the sum of our decision quality over time.

Duke argues that a good decision tool must be reliable, repeatable, and teachable. It should be a structured system, not an emotional or gut reaction. The framework she proposes involves systematically assessing three key components: 1. The set of all possible outcomes. What could happen if this choice is made? 2. The payoff for each outcome. How much do I like or dislike each of these possibilities? This involves understanding one's own preferences. 3. The probability of each outcome occurring. What is the likelihood of each path unfolding?

By breaking a decision down into these parts, we move away from a simple "will this work out?" mentality and toward a more sophisticated risk analysis. This process forces us to acknowledge uncertainty and the role of luck. A great decision might still lead to a bad outcome 10% of the time. A terrible decision might get lucky and produce a great outcome 10% of the time. The goal is not to eliminate bad outcomes but to consistently make choices that have the highest probability of achieving our preferred outcomes over the long run. This disciplined process is the only thing we have control over.

Narrator: A critical part of a good decision process, especially in groups, is clear communication. However, we often undermine our own efforts by using vague and subjective language to describe probabilities. Words like "frequently," "rarely," "likely," or a "real possibility" feel intuitive, but they are dangerously ambiguous.

Duke highlights this with a survey conducted by researchers Andrew and Michael Mauboussin. They asked people to assign a specific percentage chance to common terms used to express likelihood. The results were staggering. For the phrase "real possibility," the responses ranged from a 20% chance all the way to an 80% chance. One person's "long shot" is another's "fighting chance."

This ambiguity can be disastrous for decision-making. If a project manager tells their team there is a "good chance" of meeting a deadline, some team members might hear 90% and relax, while others hear 60% and feel a sense of urgency. They have the illusion of agreement, but their underlying models of reality are completely different. Duke argues that the solution is to force precision. By using numbers and percentages, we eliminate ambiguity. It forces a conversation and exposes differences in belief. Agreeing on a "70% chance of success" creates a shared, concrete understanding that a vague term like "likely" could never achieve, dramatically improving the quality of the group's decision process.

Narrator: The single most important takeaway from How to Decide is the radical but necessary act of decoupling the quality of a decision from the quality of its outcome. We are judged, and judge ourselves, by results. But as Annie Duke powerfully argues, results are a messy combination of our choices and pure, uncontrollable luck. To improve, we must ignore the noise of the outcome and turn a critical eye to the one thing we can control: our process.

The book's ultimate challenge is to change the very way we learn from life. It asks us to stop looking back with the false certainty of hindsight and instead analyze our choices based on what we knew, what the possibilities were, and what probabilities we faced at the time. The next time a choice leads to failure, resist the urge to call it a "bad decision." Instead, ask if it was a good process that simply got unlucky. That shift in perspective is the first and most crucial step toward making truly better choices.