Over the past few months, one thing has become clear: As the coronavirus pandemic continues to affect nearly every facet of daily life, entrepreneurs everywhere are facing some of the toughest decisions of their lives.
Most business owners are currently operating out of a sense of survival. When you combine this with the raw emotions associated with letting employees go or potentially not having a safe and secure way to provide for their own families, it means that many entrepreneurs are making decisions out of emotional desperation instead of using logic. And they're doing it at a time when it could hurt them most.
How we really make decisions
Jeff Bloomfield, founder and CEO of Braintrust, is a neuroscience expert who uses his knowledge about trust and decision-making to help companies improve their marketing and messaging. Contrary to what you might think, Bloomfield has found that all the decisions we make are made instinctively and emotionally. He says, "Only after we've made our decisions do we justify and rationalize them by seeking the facts, data, and information that will best support them."
Even if you think you're making a completely rational, calculated decision--chances are, it's coming from a place of emotion. Only after we make the decision do we validate and justify it with logic.
In a normal environment, this "inside out" decision-making process actually works extremely well. Emotion can be a great driver for making decisions. But under duress, we become greater risk takers and allow emotion to activate decisions with little to no oversight by the logical part of our brain. And that's a problem.
To help guard against this, here are a few methods you can use to take emotion out of the critical decisions you need to make in your business during these uncertain times.
Step 1: Identify the emotions driving your actions
Before finalizing any given decision, it's important to identify the core emotion that is driving your perceived need to take action. Generally speaking, this is rooted in some form of fear or risk of loss--especially with the current climate. Bringing that emotion from the subconscious to the conscious helps you regulate the more logical pros and cons of the perceived action.
There is a simple exercise you can do to make this process easier. Simply fill in the following sentence:
"I feel like I need to [perceived action]. If I don't do [perceived action], then the outcome is potentially ______. And that makes me feel ______."
Knowing when your decisions are coming from a place of fear, risk, or safety can help you determine whether the perceived action is logical. Daniel Kahneman, the Nobel prize-winning psychologist and economist, found that humans feel twice the urgency to avoid a potential loss than they do to achieve a potential gain.
When I've used this test in my own life and business, I've found that most of my initial decisions are made to prevent some potential loss. The reality is that many of these potential losses aren't going to occur anyway, and I'd be better off focusing on some of the potential gains that are available to me.
But to truly understand what decision makes the most sense, you need to take it a step further.
Step 2: Implement the Cascade of Consequence
Bloomfield likes to use a technique he calls the "Cascade of Consequence" to help him and his team make better decisions--and, chances are, you're already doing something similar. Part of making a decision is envisioning what will happen after you make that decision, but getting extremely clear on what those outcomes will be and who or what they will affect is more difficult than it might sound.
For each decision you make, run through the following four questions:
What will happen in the next 30, 60, and 90 days if I take this action?
How will this action (or inaction) affect our cash flow?
How will this action (or inaction) affect our employees?
How will this action (or inaction) affect our customers/clients?
To start, these four questions will help you determine the true consequences of your decisions. Breaking it out on paper will help ensure you're making logical, rational decisions--instead of emotionally driven ones.
But the true benefit of this exercise comes when you start to tailor it to your business by adding more specific questions and getting clearer on what areas you need to look at for each decision. Once you've customized it to your needs, you and your team can use this tool to make better decisions throughout your business.