Sometimes, when navigating tough decisions, you make mistakes that can dramatically affect the health of your company. If you learn about and avoid the most common pitfalls, you can set up your business for ongoing success.
The sunk cost trap keeps you focused on how much you’ve already invested in a project. It causes you to worry that you have nothing to show for your previous efforts. As a result, you may continue on an unprofitable course of action.
Make better decisions by realizing that money already spent is gone. You need to make the right choices for your business based on an objective performance analysis of your current activities as well as the possible returns on investments.
Deep down inside, you know what you want to do, so you seek out facts and statistics that support your belief. However, because of this confirmation bias, you might ignore important warning signs along the way.
Defend yourself against bias in decision-making by forcing yourself to seek and consider different perspectives. This will help you step away from a situation and make objective decisions.
Feelings such as anger and frustration can cloud your judgment and cause you to make poor decisions. Even positive emotions such as love can have a detrimental effect. You need a calm, clear mind to make good decisions.
Avoid this trap by staying in touch with your emotions. This way, you can block yourself from making decisions until you know that you can think straight. After recovering, you may recognize how close you came to making the wrong choice.
Sometimes you spend so much time with people whom you admire that you overlook their flaws. You can also experience a negative halo effect where you fail to consider the positive attributes and ideas of the people and projects that you dislike.
Self-awareness will help you avoid the halo effect. Learn how you feel when the attractiveness of a person begins to influence your decisions. Also, recognize that you can learn from everyone, including people whom you dislike.
In summary, by avoiding the above decision-making traps, you can make better choices in every part of your business. As a result, you will give you and your team the best possible chance of success.