I’m sure there’s plenty of people out there giving you advice and opinions on your business.
They tell you to raise another round of funding, expanding into new markets, launch a new product, hire A-players, strike a partnership, hire, fire.
Everybody’s got an opinion and an answer to your problems.
But as someone said, somewhere, someday:
“An opinion is just like the flu. It’s not because you got one that you have to share it with everybody.”
Interested in superpowers?
So would you rather get answers that hopefully fit your unique situation or hone one of the most important management skills: make better and faster decisions?
Think about it. As an entrepreneur or business owner, making decisions is pretty much your day-to-day job.
While some are easy to make (e.g. a specific deal for a customer or hiring someone in an understaffed team), others can be daunting.
The competition launched a new amazing service, which is taking away some of your core customers. How should you react?
Your market entry in Europe is not going as expected. How can you fix the problem?
Growth has slowed and is threatening your company’s long-term viability, what initiatives should you launch?
Why are we making bad business decisions?
You are not the only one facing decision-making problems. The way our brain is wired often doesn’t help. In a way, we’re tricking ourselves. The uncool thing is, these are brain tricks that can cost your business a lot, if not everything.
Use our Decision Making Grader to see how strong you are at making decisions
Mental shortcuts or rule of thumbs
We use a lot of mental shortcuts or sometimes unconscious biases to make sense of what’s going on in and outside our business. While these shortcuts can be handy, they can also become harmful for your business.
Heuristics for instance is a mental methodology to come up with a good enough answer when we’re limited on time and have lots of data. We need to simplify and speed up decision making. Think trial and error, process of elimination, or past formulas.
For example, you’ve probably come up with a “guesstimate” on the cost of growing your team in a new market. You’ve already used anchors (reference points) to get an idea of what revenues you could expect on a new product based on previous similar experience.
Do you remember the last time you believed that a specific strategy was the right thing to do. Then you heard someone or read something that specifically supported your view. That’s what we call a confirmation bias.
Another bias is illusory correlation in which we see relationships between variables when there’s no relationship to be made. Two of your competitors based in very different markets who are doing well launched similar products at the same time. You feel that you also have to launch a competing product because you associate their relative success to that specific event.
The list of shortcuts and unconscious biases is long.
How can you start making better business decisions?
Start by becoming aware of your unconscious biases.
Use a standardized process to avoid making shortcut mistakes and make sure you’ve considered a few options.
If you make decisions with a group, make the process visible to help people understand it.
Log your decisions so that you can track them and review their quality later.