A lot of business success comes down to decisions made by management, whether “management” is the owners, founders, or managers within the company. Maybe that’s not so surprising.
But what you might find surprising is the number of decisions we make that are influenced by our unconscious thinking, and our unconscious biases.
What do I mean by an unconscious bias?
- Confirmation bias
- Baader-Meinhof phenomenon
- Sunk cost fallacy
- Group attribution error
- … and many more
As a business owner or startup founder the danger is your decisions will be unconsciously swayed by one or more bias without you realising it. That doesn’t necessarily mean your decision will be wrong, but will it be the best decision?
Bias examples in real life
In a recent article on Smart Company, startup founder Teresa Lim gave three real-life examples of confirmation bias she has experienced in her business.
Confirmation bias is when we give more weight to information that is congruent with our existing beliefs (that is, it confirms our thinking) and discount, downplay or ignore information that challenges our beliefs, as these examples demonstrate:
- Early-stage investors invest based on their personal belief about a team, business model and market. This often means that once an investor becomes sceptical, there is no data that can really correct course.
- I was sure having anchor enterprise accounts and pilots would grow quickly to other enterprise accounts and across the new customer organisation, and did not adequately consider the buyer in the customer organisation may not have the right KPIs to motivate them beyond the initial pilot.
- In a wide-ranging survey of US startup founders polled by venture-capital firm First Round Capital, 37% said age is the strongest investor bias against founders (most likely from a belief that younger founders are more in tune with technology, or mass market).
In their book Decisive, authors Chip and Dan Heath provide a simple framework to avoid falling prey to these biases. Their framework (called WRAP) encourages slowing the decision-making process by making conscious decisions to put your thoughts/solutions through a number of steps to widen your options and end up with a more effective decision.
Create a pathway for making decisions
No matter which process you use it is highly recommended to create a pathway for your decision-making process. Especially when you’re making serious decisions with long-term impact (like many business decisions are).
The reason for creating that pathway is to enable yourself to recognise when you might be making an ‘automatic’ decision which could be affected by unconscious bias, and therefore take a more considered approach to interrogate your thoughts and preferences, look at options, and consider realistic outcomes.
Ask: Am I aware of what I’m doing?
The act of making decisions often looks easy. It can be immediate. You just do it! But it’s a wise person who takes time to slow their thought process and force themselves to ask “Am I really aware of what I’m doing?”.
If you’d like help to create a decision-making pathway for your business you’re welcome to contact us.