Is it time to remove your rose tinted glasses? Are personal biases holding your business back?

Posted on March 5, 2012 by

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Personal biases and history shape the way we view the world and shape our decision making abilities. How we approach and frame situations largely determines what type of interaction and outcome we can expect. If we go into a negotiations aggressively and looking for conflict – we are no doubt going to be met by a counter party that feels the need to defend themselves and conflict will most likely eventuate. On the flip side, if we genuinely approach a situation focused on creating value for all parties involved we may get a co-operative approach.


So how do we keep our personal biases in check? You can start by being aware of some of our inherent personal biases and start observing how they play out in your life. You can then start to adapt your behavior accordingly. This blog post looks at a few common biases we have.

Big Egos – The need to be right (most of the time)

The problems with egos are that everyone has one (only some people manage them better than others) and by nature they are stubborn and resilient. When we make a decision or a statement we quite often get wrapped up in being right or not proven wrong we can loose sight of what we objectively should be doing. Think about all those frivolous lawsuits that people undertake where the dispute resolution amount is far less than the legal costs – does this make sense? At what point should you stop the lawsuit to save on legal expenses? Or when you have decided to launch a new product or company? After 12 months the product has not sold and you have a bunch of inventory in your warehouse.. You boost advertising and reduce the price but it still doesn’t sell. What do you do?

Being able to play your own devil’s advocate (or have someone else do) to maintain objectivity and a healthy skeptism in regards to your decision and reality will keep your ego in check. And better yet, it will help you become more effective and agile when leading and growing your business.

Just because you want something doesn’t mean you should have it…

Yes – I sound like your mother, but there is an element of truth in this statement. Often we get caught up in what we want from a situation rather than what we should get from the situation. For example, consider the want to be right in a legal dispute revolving around wrongful termination. You are struggling to make ends meet, and, the company has offered a large sum of money but will not admit wrong doing. Will you accept the money? Or your business is going through hard times and you need to cut staff. You really like your loyal secretary but you just can’t afford her? Do you fire her?

Since situations like these can’t be avoided, you will need to find a way to maintain your objectivity when deciding what to do. A suggested approach to this dilemma is to  create a list of ‘wants’ and ‘should dos’ and critique them objectively to see whether there are any overlaps or better outcomes than others.

Overconfidence and overly optimistic about the future

Confidence and optimism are healthy elements to our lives as they drive many of us towards goals and achievements beyond our current state/capabilities. As entrepreneurs we require these two qualities just to get out of bed and survive some days. So when does overconfidence and over-optimism become a problem? They become a problem when they cause us:

  • Not to learn from our mistakes – This occurs when we hold ourselves in such favorable light even when we make a mistake or recieve feedback that we don’t get the chance to learn from the situation. Instead of asking what did I do to contribute to this situation we deflect the blame onto other or 3rd parties. As President Kennedy said ” Victory has a thousand fathers, but defeat is an orphan’. If we are never to blame, we will never learn and grow.. this will limit your effectiveness a  leader and your business will suffer.
  • To make decisions about what we ourselves can deliver- Since we have this bias to being overconfident/overly optimistic we often forecast performance and results way above those that are realistically possible. This can lead to subsequent decisions being made based on false assumptions. One of the most common examples of this is a start up forecasting sales growth – then building a business plan and financial decisions around it.  While forecasting and decisions are required you need to remove your rose tinted glasses and come up with multiple possible scenarios to give you an objective view. Having a devil’s advocate is essential and will make for better contingency plans and forecasts.

I missed out on what? Regret Aversion

Do you wait until you have as much information as you need to confirm you are not making a mistake or there are no other options? By waiting did you miss out on an opportunity or fail to capture all the value you expected? If you didn’t win – would you want to know why and by how much you lost? Would you prefer to come 2nd or 3rd in a competition? People tend to live their lives not wanting to regret anything – this can lead to a bias of holding out for what could possibly be… after all when you make a decision, that is a final outcome – what if there was a better outcome just waiting to occur?

When making a decision it is important for people to reference what their desired outcome or objective is – not the optimal ‘or better’ alternative is. If the criteria or requirements have been meet then maybe you should think about taking that option or making a decision. There will always be ‘what could have been’ and ‘wow that was better’ but focusing on getting what you need from a situation will make you a winner no matter what (and a quicker one at that).

 

Remaining objective in situations and decision making will make you a more effective and influential leader in life and the business world.

Happy Monday

-L

FYI This post was inspired by  ‘Negotiation Genius’  by Deepak Malhotra, specifically the sections of the book where he points out how personal biases of the brain and heart affect negotiations.

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