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【Graduation speech】Three Modes of Decision-Making in Life

Jul 16-2025   



*This article is adapted from a speech delivered by Huang Zhuo, Professor of Economics at NSD and Vice Dean of BiMBA Business School, at the 2025 Commencement Ceremony.

 

First of all, I would like to congratulate all the 2025 graduates of NSD — today is your proudest day!

 

Today, I would like to share with you some thoughts on human choice and decision-making. We have to make many decisions every day. Should I go to graduate school or go abroad? This is an undergraduate decision. Should I find a job or start a business? This is an MBA and EMBA student's decision. Pass or fail is the decision of the defence committee professors, who determine whether you can sit here today.

 

According to my summary, there are three types of decision-making.

 

The first is the decision-making process used by scientists, with which professors and doctoral students are most familiar. In academic research, we first formulate a falsifiable original hypothesis, then collect data and conduct a regression analysis. If the empirical results are significant at the 5% level, congratulations! You can reject the original hypothesis, which means a new scientific discovery has been made. This method is designed to ensure that the probability of making a mistake is less than 5%. The principles of scientific decision-making are critical thinking, bold assumptions and careful evidence because the purpose of scientific research is to discover general scientific laws, expand the boundaries of human knowledge and be widely applicable, so it must be very rigorous. However, applying scientific decision-making to life and the workplace may seem overly complicated and conservative. For example, it is difficult to have a project with more than a 95% probability of success, and all choices would fail the significance test.

 

At this point, we need a second type of decision-making: managerial decision-making. Students of economics, finance, strategy, marketing, organizational leadership and other subjects learn a variety of decision-making models. They basically set an objective function, list the constraints and resource endowments and choose the optimal option from the many feasible options. If an operational project has a success rate of more than 60-70%, the supervisor can approve it. When choosing between two investment projects, select the one with the larger NPV or higher expected rate of return. Of multiple options, choose the one that creates the most value for the customer. Managerial decision-making, where expertise, rational analysis and experience are combined to ensure consistent results, is the most common way in which decisions are made.

 

However, there is a third way of making decisions: entrepreneurial decision-making. True entrepreneurs don't primarily base their decisions on the probability of success or on maximizing profits, but rather on their vision, mission, insight and inner drive. When faced with major life choices, such as choosing a college, deciding on a degree subject, finding a partner, starting a business or changing career, we need to make entrepreneurial decisions and trust our instincts. Managers will give up on their inner choices if they have a 20% chance of success, but entrepreneurs won't. Once they recognize this, they will do their best to persevere, find support from like-minded individuals, gather resources and create the conditions necessary to raise the probability of success from 20% to 50% and then to 95%. It is only with enthusiasm that this can be achieved.

 

Graduates, your graduation is not the end, but the beginning of a new chapter with the imprint of NSD. I hope that you will face an uncertain world, embrace the changes brought about by AI technology and pursue your dreams with the rigour of a scientist, the professionalism of a manager and the courage of an entrepreneur in your future lives.

 

Thank you all!

【Graduation speech】Three Modes of Decision-Making in Life

Jul 16-2025   



*This article is adapted from a speech delivered by Huang Zhuo, Professor of Economics at NSD and Vice Dean of BiMBA Business School, at the 2025 Commencement Ceremony.

 

First of all, I would like to congratulate all the 2025 graduates of NSD — today is your proudest day!

 

Today, I would like to share with you some thoughts on human choice and decision-making. We have to make many decisions every day. Should I go to graduate school or go abroad? This is an undergraduate decision. Should I find a job or start a business? This is an MBA and EMBA student's decision. Pass or fail is the decision of the defence committee professors, who determine whether you can sit here today.

 

According to my summary, there are three types of decision-making.

 

The first is the decision-making process used by scientists, with which professors and doctoral students are most familiar. In academic research, we first formulate a falsifiable original hypothesis, then collect data and conduct a regression analysis. If the empirical results are significant at the 5% level, congratulations! You can reject the original hypothesis, which means a new scientific discovery has been made. This method is designed to ensure that the probability of making a mistake is less than 5%. The principles of scientific decision-making are critical thinking, bold assumptions and careful evidence because the purpose of scientific research is to discover general scientific laws, expand the boundaries of human knowledge and be widely applicable, so it must be very rigorous. However, applying scientific decision-making to life and the workplace may seem overly complicated and conservative. For example, it is difficult to have a project with more than a 95% probability of success, and all choices would fail the significance test.

 

At this point, we need a second type of decision-making: managerial decision-making. Students of economics, finance, strategy, marketing, organizational leadership and other subjects learn a variety of decision-making models. They basically set an objective function, list the constraints and resource endowments and choose the optimal option from the many feasible options. If an operational project has a success rate of more than 60-70%, the supervisor can approve it. When choosing between two investment projects, select the one with the larger NPV or higher expected rate of return. Of multiple options, choose the one that creates the most value for the customer. Managerial decision-making, where expertise, rational analysis and experience are combined to ensure consistent results, is the most common way in which decisions are made.

 

However, there is a third way of making decisions: entrepreneurial decision-making. True entrepreneurs don't primarily base their decisions on the probability of success or on maximizing profits, but rather on their vision, mission, insight and inner drive. When faced with major life choices, such as choosing a college, deciding on a degree subject, finding a partner, starting a business or changing career, we need to make entrepreneurial decisions and trust our instincts. Managers will give up on their inner choices if they have a 20% chance of success, but entrepreneurs won't. Once they recognize this, they will do their best to persevere, find support from like-minded individuals, gather resources and create the conditions necessary to raise the probability of success from 20% to 50% and then to 95%. It is only with enthusiasm that this can be achieved.

 

Graduates, your graduation is not the end, but the beginning of a new chapter with the imprint of NSD. I hope that you will face an uncertain world, embrace the changes brought about by AI technology and pursue your dreams with the rigour of a scientist, the professionalism of a manager and the courage of an entrepreneur in your future lives.

 

Thank you all!