Entrepreneurs do not fall from the sky but they build skills of entrepreneurship within them. To be an entrepreneur, you have to...
figure out how not to make bad decisions.
We did a factor analysis of the behaviors that made the most statistical difference between the best and worst decision makers. five factors emerged as the most common paths to poor decision making. Here they are in order from most to least significant.
This showed up as a failure to check facts, to take the initiative, to confirm assumptions, or to gather additional input. Basically, such people were perceived to be sloppy in their work and unwilling to put themselves out. They relied on past experience and expected results simply to be an extrapolation of the past.
2. Not anticipating unexpected events.
It is discouraging to consistently consider the possibility of negative events in our lives, and so most people assume the worst will not happen. Unfortunately, bad things happen fairly often. People die, get divorced, and have accidents. Markets crash, house prices go down, and friends are unreliable. There is excellent research demonstrating that if people just take the time to consider what might go wrong, they are actually very good at anticipating problems. But many people just get so excited about a decision they are making that they never take the time to do that simple due-diligence.
At the other end of the scale, when faced with a complex decision that will be based on constantly changing data, it’s easy to continue to study the data, ask for one more report, or perform yet one more analysis before a decision gets made. When the reports and the analysis take much longer than expected, poor decision makers delay, and the opportunity is missed. It takes courage to look at the data, consider the consequences responsibly, and then move forward. Oftentimes indecision is worse than making the wrong decision. Those most paralyzed by fear are the ones who believe that one mistake will ruin their careers and so avoid any risk at all.
4. Remaining locked in the past.
Some people make poor decisions because they’re using the same old data or processes they always have. Such people get used to approaches that worked in the past and tend not to look for approaches that will work better. Better the devil they know. But, too often, when a decision is destined to go wrong, it’s because the old process is based on assumptions that are no longer true. Poor decision makers fail to keep those base assumptions in mind when applying the tried and true.
5. Having no strategic alignment.
Bad decisions sometimes stem from a failure to connect the problem to the overall strategy. In the absence of a clear strategy that provides context, many solutions appear to make sense. When tightly linked to a clear strategy, the better solutions quickly begin to rise to the top.