Bob Rubin and principles of decision-making

Bob Rubin, former US Treasury Secretary, may have the most succinct set of principles for good decision-making. The following are excepts from his Penn commencement speech 20 years ago. It is hard to add to his four principles. The hardest part may just be following the rules.

 I have been guided by four principles for decision-making.

1.     First, the only certainty is that there is no certainty.

2.     Second, every decision, as a consequence, is a matter of weighing probabilities.

3.     Third, despite uncertainty, we must decide and we must act.

4.     And lastly, we need to judge decisions not only on the results, but on how they were made.

First, uncertainty… If there are no absolutes then all decisions become matters of judging the probability of different outcomes, and the costs and benefits of each. Then, on that basis, you can make a good decision.

Second, a healthy respect for uncertainty, and focus on probability, drives you never to be satisfied with your conclusions. 

Third, being decisive in the face of uncertainty. In the end, all decisions are based on imperfect or incomplete information. But decisions must be made — and on a timely basis — whether in school, on the trading floor, or in the White House.

Fourth, and finally, judging decisions. Decisions tend to be judged solely on the results they produce. But I believe the right test should focus heavily on the quality of the decision making itself.

Time and again during my tenure as Treasury Secretary and when I was on Wall Street, I faced difficult decisions. But the lessons are always the same: good decision-making is the key to good outcomes. Reject absolute answers and recognize uncertainty. Weigh the probabilities. Don’t let uncertainty paralyze you. And evaluate decisions not just on the results, but on how they are made.

Treasury Secretary Robert E. Rubin Remarks to the University of Pennsylvania Commencement Philadelphia, PA

5/17/1999 

History has not been kind to the troika of Greenspan, Rubin, and Summers. Rubin did not see the technology bubble coming. His leadership at Citibank did help the bank prepare for the Financial Crisis. He was good manager with an immediate crisis but perhaps not at seeing the potential for a crisis. However, that does not diminish his framework for decision-making. The framer may not always be effective following their advice.