Reflecting on the last couple of months, many of our thinking styles, choices and actions are likely to be the result of intuitive, flash decisions made quickly. It triggered a comparison to the book by Daniel Kahneman, Thinking Fast and Slow.
The book talks about the conflict between your intuitive, fast brain and the slow, analytical brain. You may currently be experiencing some conflict, what you’re having to do within your business, how you meant to be thinking and what the external forces are doing as well.
This blog draws three ideas from the book, discussing how they relate to business owners thinking about their people and their business in the context of COVID19.
1. Fast brain vs slow brain
This is the crisis management that business owners have been in over the last month or two. You have the intuitive brain thinking, ‘I need to make these fast decisions, make sure that I’m on my toes and making the right call for my business’, whereas many of these decisions require a slower, analytical brain and need a lot of thought behind them.
Decisions around redundancies or standing people down, moving to part time, whether to go onto Jobkeeper… For some businesses, it’s not simple. You’re thinking about whether to use the Jobkeeper enabling directions or not, thinking ‘What’s going on with my staff, how are they feeling?
These questions are seemingly intuitive decisions, but actually when you stop and consider the implications, they require slower and more analytical consideration.
The example in Thinking Fast and Slow gives this idea of the bat and the ball.
The bat and ball cost a dollar and 10 cents together. The bat is $1 more than the ball. Therefore, what does the bat cost and what does the ball cost? The answer, of course, is the bat costs a dollar and the ball costs 10 cents… or does it?
For many of us who haven’t read the book and who aren’t mathematical geniuses, we will come up with the same result. However, the difference between a dollar and 10 cents is, of course, 90 cents so that’s not correct. The correct answer is a dollar and five cents. A dollar and five cents for the bat is a dollar more than five cents for the ball.
It’s time to slow down your thinking
Think about the business decisions that you’re making now.
If you use our intuitive brain, you might be coming up with the wrong decision whether to do something or not do something. A question to ask yourself is, do you have space in your calendar, in amongst all of the craziness that’s going on out there, to slow down your brain and to be able to think analytically about some of these really big decisions?
Whether you decide to do something or not, you need to be able to slow things down amongst the crisis.
2. The path of least resistance
The second idea is around cognitive ease. This is when the brain takes the path of least resistance to conserve energy. In the Stone Age, cave men and women would survive better if they were in a familiar environment, which makes sense.
It’s a similar concept when a new starter joins an organisation. Typically, managers tend to talk at them on their first day. The fact is, the new hire is not taking in anything the manager says. Giving them important information is a waste of time because they’re taking in the fact that there’s a photocopier by the wall and a coffee machine in the open plan kitchen.
They’re not listening to you because they’re processing the unfamiliar surroundings.
However, once they realise that these things are all there and they’re familiar with their environment, then they’re ready for you to talk to them about strategy and their role.
High value activities for business owners
Similarly for business owners right now, there’s so much information coming your way. Whether it’s the stimulus package announcements from the government and Jobkeeper, or information coming from your business about revenue performance and how your people are feeling.
Even having more video conference meetings is more tiring than normal meetings because of all the things you need to set up and plan for. It can sap your energy and drain your brain.
You may find yourself doing the equivalent of sitting in the corner doing a crossword puzzle or whatever that looks like in your job because your brain is saying, ‘I’m just going to focus on this because I can’, when there could be other things you should be working on.
So my question to you is: Do you have a list of five to seven high value activities for your job as a business owner that you should be spending time on, scheduled in your calendar at a time when you have the most energy? Because if you don’t, you will find that you spend that time on those trivial tasks that don’t create value.
3. Sunk cost fallacy
There’s an example in the book about a conference. You book the flights, take the time away and spend your energy to attend this two day conference. You get there and day one is terrible, the speakers are no good and the content is not useful.
You think, okay this was a bad decision, but you’ve gone all the way there so you might as well go to the second day and see what happens. Lo and behold, the second day is just as bad as the first.
That’s a sunk cost fallacy.
You knew Day 2 was likely to be just as poor as Day 1, but because you spent all that time and money, you decided to attend anyway.
What you should have done is look at that second day and go, how should I best spend that day to create the most value to myself and my business?
Similarly, right now we’re making decisions to change our businesses to deal with this crisis. You may have gone down a particular path but at some point, your environment is going to change again and the business will have to adapt.
If you succumb to the sunk cost fallacy or the fact that you’ve invested all this time and effort in one direction, you might not make the right decision based on what is right at the current point in time.
Maybe this isn’t something you’re faced with right now but we’re flagging that this could be the case down the track and to be aware of it when it does occur.
We always welcome questions, so send any our way through here.