In the 1999 film The Matrix, Keanu Reeves’s character Neo is given a choice to take a blue or red pill. The blue pill will allow him to continue his life on its current course, while the red one will wake him up to the reality of his situation. Neo chooses the red pill and, as a result, gains a more accurate view of reality as he discovers he’s spent his whole life living in a simulation.
Though business leaders don’t live in a sci-fi fantasy, I’ve found many to be unknowingly blind to the reality of their circumstances just like Neo. While it’s easy to say and understand that the role of a leader is to assess and clarify reality to make decisions, in practice, it’s quite challenging because your reality is influenced by biases, habits, assumptions, past experiences, and all sorts of other baggage you carry around every day.
For example, your interpretation of events or circumstances might be shaped by your ego, preconceived notions about your team, a lack of prior relevant experience, or perhaps insufficient data and information. All of these elements (and more!) fog the lens you use to assess situations, circumstances, and results—that is, they prevent you from creating an accurate view of reality.
It’s second nature for start-up and early stage entrepreneurs to make rapid decisions by trusting their gut. Those decisions are usually okay when the stakes are relatively low because it’s better to keep moving than get bogged down by incessant deliberation.
But beyond the early stages, when your organization is scaling and making meaningful progress, you must apply more rigor to clarifying reality before making decisions—particularly high-stakes calls involving investment and/or risk.
Your role requires you to overcome inherent biases, tendencies, and preconceived notions to assess and define reality as objectively as possible. Here are four mechanisms that will help:
If you’re not making decisions backed—at least in part—by data, you’re operating the business like a blindfolded archer: You know the target is somewhere in front of you and you know how to shoot the arrows, but everything else is up to chance. Although I’m not a gambler, if I was, I’d never bet on a blindfolded archer to hit their target!
Without data, you can’t discern reality.
The first things that come to mind when we refer to data are numbers and statistics. But quantitative data is only one element. The other, qualitative data is just as important. This data might measure product quality, team morale, or suggestions to diagnose a problem—whatever can help give you an accurate picture of the reality you need for a particular decision. For example, periodic check-ins and conversations with your team to collect anecdotal data offers nearly as much insight as a performance dashboard. I call anecdotal data “color commentary,” as it adds significant color, depth, and value to otherwise “black and white” quantitative data.
Data should come from OUTSIDE your firm as well. Leaders should collect and reference information on the markets, economic activity, competitors, investment capital, and interest rate trends—all of which may play a role in determining the reality of your situation.
Key Questions for Leaders:
Even if you feel like you have a strong grasp of internal and external data at your firm, the inherent biases I mentioned in the introduction will inevitably color how you perceive things. One way to combat this is through crowdsourcing, wherein you collect diverse opinions about a topic and piece together a mosaic of reality.
One of my coaching clients in the financial sector crowdsources a rolling 12-month macroeconomic forecast each quarter. It’s a tool they use to clarify the reality of their operating environment and their assumptions. Each quarter, they produce an updated consensus forecast of the macroeconomic environment for the next 4 quarters—a version of reality that the executive team uses to make decisions.
When you tap into the crowd, you gain insights and perspectives that are impossible for you to perceive—or offer—yourself. This process fosters discussion and constructive debate that helps overcome individual biases and blind spots.
Key Questions for Leaders:
As I’ve written about previously, most leaders don’t ask anywhere nearly enough questions. Even when they do, I see many fail to dig deeper by asking follow-up questions that generate the most value.
One mantra I instill in my coaching clients is to “ask one more question.” More often than not, that extra “one” is the key to determining reality.
For example, one of my favorite things to do as a coach is ask leaders who they think is best suited to serve as their successor. Most balk at the question and say there are a couple of potential candidates. When you ask a question and the other person doesn’t know or provide a satisfactory answer, your natural instinct is to let it go and move on.
But the “one more question” mantra leads us to keep digging. In this case, I follow up by asking, “If you DID know your successor, who would it be?” Ninety percent of the time, they answer that follow-up question in a heartbeat!
Part of asking good questions is accepting that you don’t know what you don’t know. By asking that extra question, you’re allowing yourself to be inquisitive and curious. As a result, you shine a light on areas that would have otherwise remained in the dark.
By asking more and better questions, you’ll ascertain a clearer view of reality.
Key Questions for Leaders:
There’s no doubt that when you’ve embraced and implemented the first three mechanisms I’ve outlined, you’ll have a clearer sense of the reality that lies before you. But in some sense, using data, crowdsourcing, and asking more and better questions only gives you a hypothetical picture of reality.
The only way to truly clarify and solidify that reality is to test it by running experiments. Experiments are effective because they test your hypotheses of reality before you place big bets.
In his book, Great By Choice, Jim Collins brilliantly captured this concept with his maxim to “fire bullets, then cannonballs.” The thinking here is that results from rapid, low-cost, low-risk, low-distraction experiments help calibrate reality. Based on the findings, determine the path forward and consider concentrating your resources into firing that big cannonball (bet).
For example, let’s say your firm is considering opening a satellite office in Geneva. Rather than diving in headfirst and incurring all of the costs associated with opening a new office in a new country, think about the ways you can test the reality of your assumptions using experiments over the next 90 days. Here are three ideas: You could remotely interview prospective clients living in Geneva, you could speak with a friendly competitor already in the market, and you could contact your suppliers and ask them to simulate the effect of a Geneva office on your relationship.
All three of these potential experiments would cost very little in terms of both money and time. The more you run, the more useful information—and view of reality—you’ll have to help you make the best, right decision for your firm.
Key Question for Leaders:
It’s your job as a leader to clarify and define reality as objectively as possible as a precursor to decision-making, which sounds a lot easier in theory than it is to accomplish in practice.
Your version of events and circumstances is shaped by ego, preconceived notions, experience, information, and whatever other mental baggage you carry with you every day. ALL of these can fog the lens you use to interpret situations, conditions, and results, preventing you from accurately assessing and determining reality.
Use these four mechanisms to overcome your fog-inducing inherent biases, tendencies, and preconceptions to assemble a more accurate view of reality:
Lastly, for even greater effect, surround yourself with people who point out your weaknesses and provide direct, constructive feedback. Author, social scientist, and self-awareness expert Tasha Eurich aptly calls these folks “loving critics;” they care about you deeply and are able to confront you with the brutal realities you need to hear.
Just like Neo in The Matrix, it’s your choice to take the red pill!
Live Online Class – Building a More Accountable Culture
The best strategies and market opportunities in the world mean nothing if you’re not able to execute our plans and get things done. And yet, accountability remains a recurring, frustrating issue for business leaders around the world. Organizations with an accountable culture execute smoothly and without drama, retain high performers, and have an improved sense of collaboration, accomplishment, and fun at work.
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Expose the #1 mistake leaders make to destroy accountability and engagement
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Live Online Class – Create Independent, Empowered Employees
Imagine how great it would be if your employees were more independent, better decision makers, and did the “right things” more often without needing much guidance. Although we intuitively know that these attributes eliminate countless leadership headaches and set the stage to create scale, it’s shockingly easy to elicit the exact opposite behaviors from your team.
Together we will:
Class Date: April19, 2023. Learn more and register!
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