Helping Entrepreneurs make better decisions

Written by  Nathalie Laplanche
Executive coach and advisor at www.gem-exec.com

Nine out of ten start-ups fail. It doesn’t have to be so. Success rates can be boosted by using certain techniques to help make better decisions.

Any visionary entrepreneur can make bad choices. Some of them result from a product nobody wanted, key operational aspects being ignored or a business growing too fast. But many more are caused by cognitive biases. A cognitive bias is a generalised thinking mistake. What does this mean?

It means that we are systematically irrational. For example, there is a generalised discrepancy between people’s self-confidence and their real abilities. Studies show that 95 percent of MBA students think they are amongst the best 50 percent students. Most drivers think they drive better than average. These biases make way for systematic failure, through lack of preparation, wishful thinking and accident prone behaviour.

How does this apply to entrepreneurs? Self-confidence is required to successfully fulfil a vision. An excess of confidence is even necessary when launching a start-up project and pushing through with an original idea. The big risk is that entrepreneurs become over-invested in their idea and so carried away that they become over-confident to the point of risking the future of the whole project.

Are you ready to make that decision?

Certain behavioural techniques based on mitigating cognitive biases and excess of self-confidence are especially helpful for start-ups where resources are often strained and mistakes fatal.

#1 Understand what you control
The starting point is to be aware of what it is that is within your control when starting a new project and what is not, and to focus on the former whilst being aware of the latter. Delivering the best product possible is something you have control over, but how your competitors react to your offer is generally not.
#2 Have an alternative option
The number of alternatives that leadership teams consider in 70 percent of strategic decisions is exactly one. Yet there is evidence that if you get a second alternative, your decisions improve dramatically. It is slightly more complicated than having just one option, involves more due diligence and ultimately requires you to step back and make a choice, but is well worth it.
#3 Develop prospective hindsight 
Pre-mortems help identify reasons for future failures before they happen. They are the hypothetical opposite of post-mortems, which enable medical teams to determine the cause of patients’ death – obviously too late to help them. Pre-mortems operate on the assumption that the patient is already dead or that failure has already happened when it has not. Participants are asked to think about the possible reasons for failure.Pre-mortems engineer prospective hindsight by liberating thought around reasons for a decision to fail. They free resistances and enable doubts to be expressed. This is because it is easier to think about something that has already happened rather than about something that has not. However, since it has not really happened, there is no guilt, finger pointing or fear of being impolitic at that stage.

Verbalising risks also enables teams to pick up early signs of problems instead of ignoring them before they become too big to solve. They may altogether significantly increase an early stage project’s chance to succeed and avoid the need for painful post-mortems.

ABOUT NATHALIE
I help you achieve your goals and optimise your performance by teaching you relevant psychological tools. That is my expertise. I enjoy it and work with you based on your personal and unique needs. 
Want to know more? Find me at  www.gem-exec.com