 So now brings us to the final presentation, the formal presentation today and the art of decision making. Really important, we all make decisions every day, but sometimes the worst decision we can make is not to make a decision. I would suggest, but I'd like to welcome Cam Nicholson to the stage from Nikon Rural Services to present on the art of decision making or the skills of decision making. Welcome. What I'm going to talk about doesn't involve 3G or 4G networks, doesn't involve batteries or solar panels, doesn't involve any of that sort of tech sort of stuff. So if you like it might be considered low tech, but it might actually be the bit of tech that you need to take home because it'll actually make a difference to your business. I got interested in decision making about 10 years ago. I've been consulting about 35 years now and about 10 years ago I just got fascinated why there were always some farmers I dealt with that seemed to make good decisions at the right time and kept doing it over and over again. And I wanted to understand why, what was the difference between them and others. And so that's what's led me down this path of decision making. My background is really in agronomy, but I was just interested in why people made different decisions than others. I want to start by posing you a simple question. When were you taught to make a good decision in the same way that you were taught to read and write and do arithmetic? Do you remember going to school and being taught how to do maths? Yep, good. But it's pretty few and far between. And if you think of the years that you've spent learning how to read, learning how to write, doing all that sort of stuff. And you think how often have I actually been taught how to make a good decision and how to work through a process of a good decision. Most people would say I know much less about that than I do about the others. I've underlined good decision because what I want to differentiate between a good decision and a right decision. We all want to make right decisions and we want to make them all the time. The bottom line is, and particularly in farming, that sometimes things don't work out the right way. But the important part of it is you've got to make a decision, then you roll the dice and then you see the consequence of it. So in my mind, while we want right decisions and we see those in hindsight, it's actually what we've got to do is concentrate on making a good decision. The best decision that we possibly can before we roll the dice and hopefully we've got the odds in our favour. Now, this is what I've learnt around decision making. I'm going to run through just four quick points, four bits of theory, I suppose, before I'm going to show you an example. First of all, complex decisions are influenced by three things that I've learnt. What I call the head, heart and gut. You've heard an enormous amount today related to the head about facts, bits of information, bits of stuff that are going to come in that you can look up to supposedly help you make a better decision. But I also heard today, and I'm not sure how many people picked up on it, there were other things that are actually going to influence that decision. And I heard a beautiful one when Andy said, oh, from a head point of view, I'm looking at the pros and it says I need the water such and such, but then I can't remember the farm manager's name there. He said 40 years experience, he might think something a bit different. Why would he think a bit different? Because his gut or his past experience that we've got down here is also going to influence that decision. So it's not just the tech, it's the tech and something else. And also in a lot of decisions that we make, the heart has an influence. And by the heart, I'm talking about your preferences, your values, your beliefs, the things that you reckon are important. When I was reflecting on the comments about being able to have all these senses in troughs and in tanks and things like that, so you don't have to do the drive around as often. And I did one of these in Queensland, exactly the same thing and the fantastic advantage of not having to do the ball run once a week. And a farmer came up to me afterwards and he said, you know what, there are two things I really enjoy in doing the ball run. One is I get a sense of what the country is like and how things are tracking. And I can relate that to my past experience. So I relate it back to my gut of what I know. And the other one is I'm a mad birdo. And I just love doing the ball run and watching the birds. So the decision, you know, look how wonderful this tech is. Yeah, it's useful, but just think of it in the context of other things that we've got to take into account as well. And also important in that, I'll only just flash it up there. The pointer doesn't seem to work. It's this idea of temperament. Your personality will make a big difference about how strongly the head, the heart and the gut influences the decisions that you're going to make. Okay, so different people because of their temperament will do things differently. Second thing I want to talk about is understanding risk and how important risk is in the decisions that you make. I bet you you've been sitting there and you've been hearing some of this technology thinking, oh, there's a bit of a risk with that. What happens if this breaks? What happens if such and such happens? Risk is just this underlying thing that's going to influence some of these what I call more complex type decisions. Okay, risk by definition is likelihood by consequence. That's a definition if you looked it up on or you Googled it. How often does it happen and if it happens, what's the consequence? What's the impact of it if it does occur? And importantly, what I've learned around risk and all the risk management stuff that I've done is that you think differently about a decision as the risk or the odds change. There will be a certain point where you'd say, yep, I'll have a go at that, but all if it's this risky, no, I won't. So it's what I call a tipping point. There's a point where you say, yes, I'll jump that way or yes, I'll jump that way. And I want to explore this a little bit further with you. But before I do, the final point there is risk is personal and it's mainly informed by your gut. It's mainly informed by your past experience. I've been doing quite a bit around risk analysis and I can't believe how little, if you like, head risk analysis we do and how much of our analysis is based on our gut feel and our past experience that's informed it and our intuition, our feeling that, oh gee, I reckon that's a bit risky or I did that 10 years ago. I've heard a lovely one about what happens, you know, 10 years or 20 years ago when it was really wet. How do you reckon that country is going to perform when you've ripped it a meter deep, when it gets really wet? That's gut talking to you, okay? And it's personal and it's based on, risk is based on your informed by your gut and your past experience that you've had. So let's just test this out a bit. Let me give you a quiz and you're going to have to join in on this one. You're farming and you're running a particular operation. It doesn't matter what operation that is. Your farm profit last year was $200,000. So imagine the profit you made last year was $200,000. And next year you're going to make a choice or you're going to make a decision to either keep the same operating and get a certain farm profit of $200,000 or you're going to make a different decision. And if you change it, you change your operation where you've got a 50% chance of making $400,000 and you've got a 50% chance of making nothing. Okay? So you've got two choices. Okay? Choose the same operation which is choice A and get $200,000 or change the operation 50% chance of $400,000, 0%. Which one do you choose? Who chooses A? Which hand up? God, about 80% of the room. I do some lecturing at Marcus Oldham, the Farm Management College. I put this up with the students. About 80% of them go for B. You know? Go home with their parents. And what are their parents? Parents put their hand up with 80%. Why? What's that? Oh, okay. So there's a lot of things that underlie that very simple statement about what choice you might make. Because if you looked at that simply on the surface, in the long run, they'll work out exactly the same. We know because of the circumstances that maybe for us, if in the first year we get a zero, and the year after that we get another zero, we're really in strife. But someone else that may have a lot of financial backing behind them, a year or two of zeros, having that punt, doesn't matter. We can still cope with it. So that's what I'm saying, risk is personal. Okay? Let's just move on a little bit further. For those that chose A, which is most people in the room, what if we change the enterprise mix, but there was a 60% chance of getting $400,000 and a 40% chance of getting nothing? Who'd change their decision of those that had chosen B? One, two, possibly three? What about a 70% chance of $400,000, 30% chance of zero? Yeah, a few more. Oh, okay, majority do. Those rusted on, 90% chance of getting $400,000. All right, so we get a few moves. Lesson out of that. People jump at different times. The tipping point is different for different people. And that will be based on your experience and based on a whole lot of other stuff that you take into account. Do I have to educate the kids? Do I have to do this? What debt have I got? All of those other things are going to influence where your tipping point is. But the bottom line is there is a tipping point. There is a point from where you say no to a point where you're saying yes. Okay? Third point in the theory. Commonly, when we're making what I'd call complex decisions, there are many things that you've got to weigh up. It'd be really lovely if there's only ever one or two things you've got to think about. But if you've got a complex decision, there's usually lots of things that you've got to weigh up. Okay? Ideally, we should be making these decisions on balance. You know, what's on the pros side of the equation and what's on the cons side of the equation. And hopefully, if the pros outweigh the cons in your mind, then that's a good decision to make. Okay? But importantly, we know, even though we could list a whole lot of critical things that we should think about, they're not always of equal importance. We will know in our mind that some things, some of those critical things, are more important than others. And therefore, if you like, the weighting of them or the importance of them changes. They're all useful to put down, and they all should be in your considerations, but not everyone is necessarily of equal importance. Okay? With that bit of theory, how do you bring all that together to actually make a good decision? And this is a bit that I've worked on probably over the last five or six years. I'm going to take you through a process that includes the head, heart, and gut, because hopefully I've established that is important. You just think it's all about the brain and all about just technology and it's all just about numbers and calculations. You're kidding yourself. You're kidding yourself. But let's make sure, and I used to do that. When I started off in consultancy, I'd just do great numbers for people and here's the evidence that you should change your landing time. Okay? Guess what? Come back a month later. I'm not changing my landing time. Why? Because there's a whole lot of other issues associated with that that they know about that I don't know about. Okay? So how do we bring those influences together? How do we incorporate the risk bit that was established as pretty important and that it's personal and that people will jump at different times? And how do we weigh up multiple things that might be of equal importance? And I'm going to chuck a fourth one in here. Which is what I call balanced timeliness against time to think. Has anybody heard of a fellow by the name of Daniel Canemann? Yeah, Sally has. A couple of people have. Okay. Daniel Canemann is a professor of Princeton UD in the US. He won a Nobel Prize for his stuff around thinking and decision-making. And if I summarise that book, it's not a holiday read. That one I can tell you, but if you want to summarise what that book says, it basically says we make decisions too quickly. And if we just slow down our thinking a bit and spend a little bit more time on it, we would make much better decisions. Just because we make decisions all the time doesn't mean we're any good at making them. So his premise is that just slow down a bit. So how can I combine those four bits and pieces together? I want to show you a process I first learnt from this farmer. It's Barry Mudge. He's a farmer north of Port Germain in South Australia. A very clever person. Farms near the Goitoline. People know what the Goitoline is. Farms near the Goitoline. Farms about 6,000 hectares from memory. One of his biggest decisions is how much crop does he sow each year? Marginal rainfall. He can grow a good crop 110 mill of rain. But he has a big decision every year how much of that crop do I actually sow? Just because you've got 6,000 hectares doesn't mean every year so 6,000 hectares. He's been very good and he showed me a process that I've sort of developed a little bit further and it's called a decision matrix. And there are eight steps associated with it. I'm going to rip you through one of these really quickly because I know where the time sits. I would have loved to have done one on a bit of technology but it was a little bit hard to put together so I'm going to show you one that I've used or that we use at home. We've got a farm at home. We're just out of Geelong. I've down about 200 cows. I've got about 1,000 used as well. This is one of the decision matrices that we use every year and have for the last six years. And it's a decision matrix around... It's a decision around do we reduce stock numbers carried through spring and summer. Okay, now it's a common one that we have each year. So in putting together what I call this decision matrix, the first thing we've got to be clear about what's the decision we're trying to make and I think that was emphasized a number of times with some of the technology. Be really clear what you want that technology to do because if you can understand it and understand the decision you're trying to get that technology to help you with makes the job a lot easier. Okay, so that's a decision we've had that we have each year. Whoops. The second one which I've got as optional is you can define when that decision is made. Every year, my wife and I, mid-September pull out this decision matrix and we go through it. If it's a dry year, if it's a good year, we don't care. We go through it every year and it's a discipline of going through it every year and doing this that helps refine the decisions that we make. So in our case, it's mid-September when we pull that out. The third step in this eight-step process is to talk about or list what are the major considerations or what I call the critical factors that should influence that decision. So just sing out. What do you reckon might be something that we would consider of whether we need to reduce stock numbers going into late spring and summer in mid-September? Early mid-spring. What do you reckon is something we might consider? Dry matter. Okay, so how much for you it might have on offer? Okay, tick. What else might? Okay, seasonal forecast. Okay, someone else have a go. What else? Stocking. Well, tell us a bit more. Stocking rate, was it? Yes, stocking rate. Okay, how many animals are actually running? Yep. Okay, so I reckon if you spent five minutes with that decision, you'd come up with a list of what I'd call the critical factors, the things we need to think about. Okay? In our list, this is them. What's our current feed supply? Which is suggested. What's the seasonal forecast going forward? How much stored soil moisture have we got? So even if the seasonal forecast might look pretty average, if we've grown a lot of feed and we've got a full profile, we'll feel far more comfortable than if we haven't got a full profile and haven't grown much feed. Irrespective of what the seasonal forecast is telling us. Okay, so we're trying to balance up these different critical factors. Weight and condition of the stock. What are prices, both current and future? Things around our ability to supplementary feed or our desire to supplementary feed. So they're the ones that we've put in. Now you might look at that go, I wouldn't include that one. I'd include another one. That's fine. This is not about being the right answer for you. This is about a process that you use to create these decision matrices. So they're our critical factors. The fourth step that you go through then is to take each of those critical factors in turn and try and find that tipping point. Where is it where we think differently about our decision in relation to that critical decision? So if I take the first one, and I'll come back to that hint there. If we take current feed supply, what would be in our mind the greatest description or the best description that we could have that would support that we don't reduce stock? We wouldn't reduce stock numbers in our mind if our whole farm pasture cover is 2.5 tonnes in mid-September. We can define that. We can think about that and we can define that quite easily. The hint that I've got up there is you describe the most favourable and the least favourable. So in our mind, the least favourable one for current feed supply is if in mid-September we were below 1500 kilos. If we were below 1500 kilos mid-September, we would think differently about do we reduce stock numbers than if we had 2.5 thousand feet across the whole farm, kilos' feet across the whole farm. And then obviously, because we've got what I call these two bookends, you've got one in between, which is between 1500 that should be, sorry, 2.5 thousand, not 2,000. That one there should be 1,500 to 2.5 thousand. So we've got three points around that critical factor that we've got. And we just go through each of those reasonably quickly. And we end up with something like that. Now I'm happy to share these and I'll show you right at the end where you can get copies of that. I've done about 50 of these. Done everything from buying land, selling land, financing stock, leasing land, spraying paddocks. I did one last week on do we reduce our nitrogen inputs in our cropping system because you read as 1,200 bucks a ton. You can create them for anything. Just be clear on what the decision is. And so in our mind, this is what we've come up with. So you'll see things like stored soil moisture, close to field capacity, typical or below for that time of year. So it can be pretty easy descriptions. They don't have to be fancy numbers. Seasonal forecast, I'm just saying it's a DSL7 or better season of forecast. Don't have to know exactly how many millimetres, just as at high end or low end. That'll do me in splitting up those sort of decisions. I won't go through all of that, but I can give you a blink to where you can find this example. Once we've got that, we assign values to it. Remember, I made that comment about some of those critical factors might be more important than others. So how do we weight them? So we assign values. And the hint that I start off with is I just put another column down here on the right. Just down there. And I put all of my least favourable descriptions as zeros. That makes it really easy to put together. Less than 1,500 gets a zero. Dry, below typical for this time of year, gets a zero. What have we got here? Seasonal forecast. DSL3 or below gets a zero. So all of the worst ones, you just bang zeros in. Thanks for 10 seconds to do. Then you assign the values for the highest ones relative to each other. So in this case here, I've said that our current feed supply, because this is what we know we've got, is three times more important in our considerations than the current price of livestock. Now you might argue with that and go, no, I reckon they're the same. That's fine. You change them, the weightings so that they're the same. The important thing is that you're putting these weightings on the various critical factors that you think and the relative importance of them. And I'll come back to how we can adjust these a bit later on. Then once we've done that, we can rip through pretty quickly and add values in between. And the values in between aren't necessarily always halfway in between. You'll see that one there. It's not a six, it's a zero. It's a six, four and zero. So again, putting that bit of a relative weighting on each of them as you go through. And if we get all of those maximum values, so if we've got six plus four plus four plus six plus two, it'll add up to 27. So the maximum score if all I could get is 27. All right, next step is to say if the decision is do we need to reduce stock numbers carried through spring and summer, the method that I go through is to read all the best descriptions and then all the worst ones. So I'm going to jump back a little bit. Hopefully this makes me go backwards. Yeah. So what do I mean by that? I would say just think in your mind and I'll read them out to you. What if the current feed supplier was two and a half tonnes? The seasonal forecast is a desolved seven or better. So they're basically saying seasonally it's going to be wet. I've got stored soil moisture already. My stock are ahead of target. The current price is below average, but in the future it's going to be higher. And I could easily supplementary feed if things went wrong. What decision would you make? Would you sell stock? Yeah. Would you reduce numbers? No, you wouldn't. Pretty buddy obvious, isn't it? Okay. And then you do the exact opposite. You say if I read all the worst ones, less than 1,500 kilos of feed, below average, you know, soil moisture is down, livestock prices are currently high, but in the future they're going to be worse. What would you do? You'd probably offload something. Those two descriptions that you've just given, so I'm going to jump to this now. So our decisions is no retain all stock, but consider buying more stock, offering adjustment, pasture manipulation, or photo conservation. So in September we are now planning for what we're going to do the next two or three months. The other one is yes, offload some stock as soon as possible and reassess again in December if we need to offload the next slot. The next slot, I'll give you an example where we've used this. Okay? And then one if it fits in between, we just say no, we're sticking, sitting along the right, we just keep ticking along the way we have. Okay? Next step is then when in these decision descriptions, you add up the maximum value, which is 27, and we put some numbers associated with that. And in this case here, we've said if it's more than 20, so if when we went through all of those critical factors and we gave them different scores, if it was more than 20, then we'd make this decision. If it was between 14 and 20, it would make that decision. If it was less than 14, it would make that decision. Question comes up, how do you get to these values? These values about how much risk you want to take on. If you're very risk averse, you might say, I would sell stock. I'd offload some stock if that score was say less than 18 or less. In other words, it weren't as many things stacking up in my favour. Therefore, I'll sell them. And I'm sorry I'm going through this really, really quickly. The last step is in scenario testing. And in scenario testing, I use historic examples where you can find them. And I reckon in something like this, we've had 30 years of selling, skeers, selling stock. We've got some idea what combinations work and what combinations don't work. So we run through it. And so in this case here in 2021, last year, this is the way the whole thing scored. 22 out of 27 when we went through it. So this is last year. We retained all stock, which is exactly what we did. And we actually did quite a lot of fodder conservation. And we did pasture manipulation as well. So we sprayed top some paddocks. Okay, to clean up some weeds. And what the beauty about this was, is by making that decision in mid-September, I could get my grazing right. I could get even seed head emergence. I got a fantastic spray-topping job done as well. I didn't work out my spray-topping job the last week in October. I've got a lot of feed here. I might spray-top that paddock because I'd have uneven seed head emergence. I picked the paddocks. I set everything up six weeks beforehand. Okay. Contrast this one to 2018. That's how we looked in 2018. We got in the 11. Came down to less than 14. Offload some stock as soon as possible. We sell steers to the long-fed market 200, 300 days on feed before they get their heads cut off and go over to Japan. We contacted them in mid-September and said, we're going to have to move these steers on earlier. And so they booked us in for that time. And they went in late October when usually they go in December. So they went off a bit lighter, but they went off six weeks earlier. Mid-late October, everybody else has gone, jeez, I'm running out of feed. I better book these and move these stock on. Feedlot said, sorry, we're full. Where am I going to sell my stock? Put them on the market. Went on the market. Right, started coming down. Because it was an oversupply. Well, they had good decisions, but I thought they were good decisions. Did it take the stress out of our farming? Absolutely. Absolutely. Now, in 2021, you would have looked at it. We had feed coming out our ears, Il Nino, all of that sort of stuff. Why would you bother with something like that? Because it helps us refine these matrices. It gives us that peace of mind. It gives us that confidence. And it gives us the discipline and we keep doing this. We've got four or five of these throughout the year. Okay? And we use them every year. We use one on the 30th of May to know whether we've got to grow more feed over winter. It just comes out every year. Now, if we've had an early break, it's a no-brainer, but we still go through it. And it's really helpful in those iffy years. Well, I don't know if I should put more nitrogen on the other. Nitrogen's $1,200 a ton. I use gibberellic acid. Do we sell a few stock? What do we do? Okay? It helps you with those sort of decisions. All right. Now, this is my last slide. The decision matrix. Now, I talked about Daniel Kahneman and slowing down your thinking. Do one of these. It slows down your thinking. It is exactly what he says you should do. That took us about 45 minutes to put together. Okay? That is enough time to do that. We'd probably saved 30 or 40 grand on those hundreds of years we pushed off by getting him in early. Is an hour's work 45 minutes worth, you know, that money? Absolutely it is. Absolutely it is. Okay? Second one. It makes it transparent so other people can follow it. And so instead of trying to do it yourself, you can have other people contribute to it. Oh, have you thought about this factor? You know, why do you think that's more important than that one? I remember doing it. We'd start teaching this now at Marcus Holden. I do some lecturing at the Farm Management College in Geelong. And we've started teaching this as one of the subjects we now teach students. Because coming back to that first one, when we were taught to make a good decision, they weren't teaching a miss. So they're full bottle on this when they come out the other end. One kid went home, and he came back in second semester, and he sent me an email, and then this was during the time he was away, and came back again and said, I did one of these with my folks. And it was the first time in my life I understood why the hell they make the decisions they do. Because half of these were hidden. Didn't know what I was doing. They just did it. What the hell is Dad doing that for? Well, we just do it, because Dad knows some stuff, from past experience. Things he'd learned. So it makes it transparent and other people can see it. I have clients now that if they've got a big decision to make, they do a decision matrix and send it to me before they even want to have a conversation. Because they're so good at it. And they value what it brings to them. And the last one, and this is an important one to tie in what all of today's been about, is it narrows down what information you need and what skills you need. I've heard today an enormous amount of stuff about what technology can do and what data it can bring in. If that data doesn't inform this, then why the hell do we want it? It's just noise. And we've been equally guilty, as I reckon a number of people will have been, seen a bit of technology, subscribed to it, bought it. And then at the end of the day, what the hell is this actually adding to the key decisions we need to make? If you do this first, then you know what you need to chase. So what do I need to chase here? At the moment I do that with a ruler and we've got 48 paddocks on our farm. It's a big job. What Sally was talking about, what we're going to cover in mid-September, is going to be a great bit of tech to us. Okay? Really, really useful for this. You know, Storbs or moisture. I know why we have a moisture probe. We have a moisture probe so we can answer this. That's why we have a probe. Not because of fun. Oh, isn't that curious? No, it's because it helps inform a good decision. That's why we do it. Okay? That's why we worry. That's why we like weighing animals and condition scoring animals. Because how do I know whether I give it a 6 or 4 or 0? I don't unless I do that sort of stuff. Unless I've learnt that skill of condition scoring. How do I know what to do? So I think this should drive what we do rather than the other way around. And quite often we get bombarded with technology and new things that can happen. But how do they inform the decision? I think though they can go hand in hand because everybody will have a different matrix. And therefore the bit of technology that you need might be different to what I want. So it's not dismissing that any of it is worthless. It's just you've got to find the right niche for the working. Now, that's the end of it. Two resources I'll just point you to. One is a thing called Decision Wizard that we put up. So if you're really worried about those 8 steps that I ripped through really quickly it takes you through those 8 steps in a disciplined way. So you've got to answer one before you can move on to the next one. It's free. Just type in Decision Wizard in Google and it will come up. It's on the Southern Farming Systems website. But just type in Decision Wizard and it just takes you through the process. There's a login on it. I've logged in there in my name. You can put Decision Matrices in there. Create them yourself only you can see them unless you want to share them with the public but you can go into that and you can change them over time as you tick along. And the second one we did a video my wife and I did a video on Building a Decision Matrix which takes you through that example. It's about 10-12 minutes. One of us is really good in it. One of us is pretty average. I'll let you make the decision on who's good and who's not. But that's a useful way of just hearing the same steps and how we actually work through and use that type of a process. So if you want a bit of a refresher to do it, there are two resources that I think you might find useful.