Past Decisions Don’t Have To Haunt You
It’s very important to us to appear to be consistent and reasonable folks, but this is your brain tricking you again.
There are a couple of important elements of being a consistent person: being reliable, responsible, and predictable.
These are qualities that mark our character, which is an important part of building trust and confidence when working with people.
Often though, we put consistency above doing the right thing, or changing course before it is too late.
Our commitment bias locks us into ideas, mental frameworks, and opinions. Worse still, we end up holding positions on topics even in the face of evidence to the contrary.
Unless you are willing to be wrong then you’re risking being a fool.
It doesn’t feel natural to want to be wrong, but we have to accept it will happen. If we recognise that others aren’t infallible then we must see it in ourselves.
When starting, growing and running a business you need to convince people at all times that you are right. You need to give confidence to others that they ought to follow you, back you, or join you. Other people are taking a gamble by believing in your gamble.
But you need to hold this feeling with the expectation and preparedness that you’re wholly wrong, and everything that comes with that.
This is especially important for running or launching a business. You have to be prepared to be wrong, and to take a position in the future which may have been inconsistent with a previous position.
This is another one of those “seems obvious but we never actually do it” things. You will learn things from speaking to clients, getting feedback from the market and from the skilled people you bring into the team.
But you will also want people to believe you had a plan all along, and that you were right from the start.
We want to appear consistent, and we think it’s a good sign of leadership, but it has a risk of backfiring.
One factor behind this is the sunk cost fallacy. The idea behind the sunk cost fallacy is that we tend to keep plugging away at things even when they’re a lost cause, because we’re not ready to accept that we’re not getting the cost (time, money, or other resources) we’ve sunk into the project back.
A good example of the sunk cost fallacy is the following: if you bought £100 shares in 2 companies, and then six months later one was worth £50 and one was worth £150, you’d be more likely to sell the £150 while you’re ahead and hold on to the £50 shares while waiting for them to recover the ground. Even though all of the evidence to date points at one being a far better performer and more likely source of future success.
We believe that the poorer performer will come good, because we’re committed to the original decision and don’t want to accept that we could have got it wrong.
The sunk cost fallacy is linked to bad decision making when we are doing something in the present because we feel indebted to an investment from the past.
One thing I have learned as we have grown, and with the privilege of a decade behind us is that we can now start to shift this approach to one which is less of convincing people we know the answers and we are right, to being able to talk about when we’ve got it wrong and what we were able to learn as a result.
Giving people confidence that we have the skills to innovate in a managed and less risky manner can in turn create space to be wrong and learn the lessons.
But you will also want people to believe you had a plan all along, and that you were right from the start. People love a visionary, whether they should or not.
Do you have examples of any previous commitments that have come back to bite you?
Apologies to everyone who felt seen by last week’s edition! I’ve had a few folks write saying it felt like I was talking about them, I’m glad to know some of these are hitting a nerve!
Give me a shout with your views, thanks for all the shares and love.