The Six Biggest Small Business Lies – A Countdown: #3

Growing a small business is the most complex activity a human being can undertake. This complexity breeds a hunger for comforting truisms.

This is a count-down of the top six deceptions trotted out in the business world.

Number 3: Follow Your Gut

One of the most heartbreaking moments in business is when a partnership dissolves and a friendship dissolves with it.

Wind that disaster all the way back to that imaginary “big bang” moment when the idea of a partnership first took hold.

In that moment one thing was true: everyone involved thought they knew everything they needed to know to proceed with confidence: they knew each other; they knew the business; they knew the market. And most of all they knew how they felt.

They went with their gut.

Daniel Kahneman in Thinking, Fast and Slow, in the chapter with the lovely title “A Machine for Jumping to Conclusions” calls it WYSIATI or “what you see is all there is.”

There is a whole class of thinking and advice in the small business that falls into the is basket. The basket of following your gut.

Your quick emotional intuitions/gut-checks are extremely important. They must be a part of every key decision. But to make decisions based just on how you feel is business suicide.

Relying on our intuition to make important decisions like which employee to hire (“it just felt right”) is inflated ego and laziness. And dangerous.

Ego? We tell ourselves if things go well it was because we have a great intuition and always listen to it. If things turn out badly we never blame our gut. We forget we ever relied on our instincts and blame money, the stress, a failure in character. Don’t believe me? When was the last time you had a conversation with someone after a failure or disaster who said “I followed my gut, and boy was I wrong”? Right? Ego.

It is laziness because it shields us from having to do the hard work of coming up with criteria and processes for making truly good decisions; the hard work of getting to clarity, to measurables, to good practices in marketing, HR, or management; the hard work of articulating what we want, how get there and how we will measure it when we have it.

It is dangerous laziness because poorly designed decision-making processes will kill your business. Every time.

So how do we make good decisions if our gut generally sucks at it?

1. Listen to your gut. That’s right: listen to the voices in your head and heart. Like any voice your intuition might be right or it might be wrong. But you reduce the risk of a bad decision to the extent you consider all possible inputs. Your gut is one voice at the table.
2. Feed the machine. Among the building blocks for good decisions are rest and blood sugar levels. Manage both well and the overall quality of your decision-making will improve.
3. Tolerate doubt. Certainty is the domain of fanatics and fools. The irony is often our intuitions and beliefs feel more certain than considered decisions. Just because you are certain doesn’t mean you are right.
4. Assume you don’t have all the facts. Because you don’t and never will. Proceed with the caution that comes from knowing you don’t.
5. Decorrelate errors. Don’t allow your decision inputs to influence each other. In a meeting ask participants to write down their positions before you discuss them. This avoids everyone lining up behind whoever spoke first or spoke loudest.
6. Use the back of the envelope. Forget fancy weighted-double-blind-research. Grab any piece of paper and write down 3 – 5 simple factors impacting your decision. Even the simplest checklist is quantum physics compared to the dartboard approach of relying on your gut.
7. Don’t smear. This is one of the surest proofs of the weakness of intuition: it is always seduced by the halo effect. It smears things like good looks, unrelated accomplishments, popularity, being articulate and other factors into one gooey feel-right mess. Liking Mustangs is NO reason to invest in Ford stocks, but that is exactly what our intuition does.

Our intuition is only one voice at the table. Bring your own present, well-rested mind to the table and invite three or four other voices for a lively debate and some dinner. Your intuition will find itself in great company and be part of a great decision.

For those of you still not convinced your intuition sucks as a business development tool, read Daniel Kahneman’s Thinking Fast and Slow. ‘Nuf said.