Biases are those sneaky little shortcuts our brains take when making decisions. These inherent tendencies influence our judgement; more often, we’re unaware of their involvement in our decision-making process. Your brain is working hard to simplify information to make quick decisions.
Biases impact the quality and outcome of business decisions. Such decisions can be considered flawed as they are generally made at the moment without a proper process.
When was the last time you got a gut feeling about a strategy because it’s what you’ve always believed works? You’re confident it will work again and so the decision is made. That’s confirmation bias in action, making you ignore anything that doesn’t fit your hunch. It’s like having blinders on, and you overlook useful information that would have altered your opinion.
And on a personal level, we’ve all been there, sticking with something just because it’s familiar. That’s the status quo bias. Fearing the effort required to change, you stick with what you know, even if there is a better way.
Have you ever stuck with a project that’s failing and continued to spend money on it because, well, you’ve come this far? That’s the sunk cost fallacy. Your money’s gone, but you pay more, hoping it’ll make the expense worth it. Sadly, it doesn’t. When it’s all over, most business owners find a range of excuses to write off the project before they look inward.
Biases can make us take some wild risks, too. Ever felt super confident about something going well, so you just went for it without thinking about what could go wrong? That’s optimism bias for you. You’ve made an overly risky decision you’ll later regret.
Loss aversion happens when we prefer avoiding loss as opposed to the potential to win. This bias keeps you safe within your comfort zone. It also means you miss out on potentially great opportunities. Businesses that consistently have photo-copy years favour this approach.
There are 188 biases that impact our behaviour and the decisions we make. I recommend you do more research and identify the biases holding you back from success.
Your job is to spot these biases and challenge them. Encourage different viewpoints, question the usual way of doing things, and don’t be afraid to change your mind.
Ultimately, it’s all about being aware and keeping an open mind. Sure, our brains love taking shortcuts, but sometimes, being open-minded and using critical thinking can lead to some amazing results in business.
