The ability to make good decisions in a repeatable way is vital to your success as a leader of teams of people in sales.
Too often, however, there’s a tendency to focus efforts on collecting evidence to support our preferred choice while giving us outcomes that avoid risk.
That’s a pair of mistakes. Let’s look at each one.
Don’t be so sure about what you think you know.
Experts in human behavior tell us we’re all prone to cognitive biases: blind spots in our thinking.
Among these experts is psychologist Daniel Kahneman. He’s devoted much of his life to the study of decision making and wrote a great book about it, called Thinking Fast and Slow. “We’re generally overconfident in our opinions and our impressions and our judgments,” he says. “We exaggerate how knowable the world is.”
Be wary of your assumptions about the business problems you are seeking to solve, and of the information you collect to back those assumptions.
The worst thing data can do is show that your assumptions are right, but the best thing it can do is stop you from making the wrong decision.
Here’s an example. Once, a Sales VP of a fast-growing company whom I was coaching told me how his team was struggling with how to tackle a competing firm that they believed was winning-over a large number of their customers.
I asked: “Specifically, how much business are you losing to them?”
He went looking. The results were surprising. Quarter after quarter, the competitor they were so worried about was responsible for no more than one in ten losses. Realizing this, they averted spending what could have been 100% of their energy to solving 10% of their problem.
Don’t just think of risk management as a hedge against loss.
Risk is commonly defined as the potential of losing something that is valuable to you. While it’s true that good decisions minimize risk, it’s a mistake to think you can make choices that avoid risk altogether.
What is valuable to you, your team and your business? Answer that first and you get the answer to what should be your next question: is this decision worth the risk?
When Apple considered entering the mobile phone market, it could have been tempting for them to look just at the risks: the technology challenge was huge, there were well-entrenched competitors, and building a smartphone could cannibalize iPod sales (it sure did).
They understood that being innovative was more valuable to them than other factors. And that decision has paid off big time! With record sales and profits.
Take time to think through your choices and correctly define the risk at stake.
The partners at renowned investment firm Berkshire Hathaway have valuable insights on this subject. Here are two. First, CEO Warren Buffett: “Risk comes from not knowing what you’re doing.” Equally astute is Vice Chairman Charlie Munger’s observation: “People calculate too much and think too little.”
You can’t avoid bad decisions entirely in business and in life.
You can, however, do a better job of equipping yourself to quickly recognize the defective reasoning that can lead to bad decisions, and be more capable of responding in a way that keeps you on-track to accelerate your sales.
So go back to my original two questions: What is valuable to you, your team and your business? And is the decision to implement or remove this worth the risk?