The Rules of Balance
Blending Facts and Emotions in the Decision-making Process
When dealing with difficult business decisions, we tend to inject emotions into the situation and weigh our choices based on preconceived notions of what outcome we would prefer. I believe it’s time that we reevaluate the process.
The easy way out when making a decision is to give in to your emotions. As we all know, feelings are not facts. Facts are the non-negotiable lifeblood of any decision. Experience and intuition are also key factors, but you must not let them take full control.
It’s all about balancing facts and intuition.
We tend to look for the facts that validate what we already believe to be true. A simple example can be found on cable news. Generally, we seek out the channel that most aligns with our views and discount information from contradictory sources.
Suppose you are considering buying an advisory firm. To help you decide, they provide a balance sheet, profit and loss, cash flow, projected pro forma, etc. You are now inundated with files and have little understanding of how to properly to use them to conduct a thorough review. Some people, when put in this situation, will look to the bottom line, get a feel for it, and do a cursory review. I believe the reason for this is that once someone has decided they like something, in this case the firm they would hope to buy, their only focus is to confirm that emotion and get a “win”.
In fact, it’s not the bottom line that should be relevant, it’s all the other lines that got you there. Assume the data you were provided is wrong until proven otherwise and hire an accountant. In this example, it’s the only way you can truly discern fact from fiction and keep your emotions well away from such a crucial decision.
When making a decision, you must find your blind-spot and accept reality. This is not usually a pleasant process and will cause internal conflicts. The natural tendency is to try and resolve these conflicts as soon as possible, find “facts” that support your choice, and take control of the decision. Instead, when you see yourself in this scenario, don’t just pause, stop. Take control of your emotions, remove your sense of urgency, and be open to any possibility. Be a great listener, ask for proof, and talk with others; especially those that can provide a truly unbiased opinion.
Take some time, look at your business, and consider the decisions you must make. Focus on making decisions that are well informed and factual, using your business experience as a filter. Emotions should only enter the equation after a decision has been made.
Once you implement this process, you won’t have to make decisions anymore as the correct choice will naturally present itself.
CEO and Founder
Where Fiduciary Freedom is First
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Advisory services are offered through f3Logic, LLC, a registered investment advisor.