It is a tragedy that business opportunities are missed because entrepreneurs overanalyse risk factors. This is the very reason businesses grow at a slow pace, while others are phased out.
I’m not encouraging ignorance; I’m just disappointed by entrepreneurs blinded by small details rather than being decisive.
The same applies to investors who, thinking they knew too much, did not invest in Uber when their founders approached them.
In an ever-changing world, you can’t make decisions that are only informed by the past. Rather than dismissing what you don’t yet understand, consult those who do to help you make an informed decision.
A gigantic problem faced by most of us entrepreneurs at some point in our businesses is analysis paralysis. Basically, it is over-analysing, or overthinking, an opportunity. It often results in a decision not being taken, and can lead to your business underperforming.
Analysis paralysis is worse than red tape. With analysis paralysis, things don’t move slowly, rather not at all. Decision makers are paralysed by their inability to make a decision, afraid of what could or could not come to pass. Ultimately, not deciding is the same as deciding against.
As an entrepreneur, you have probably dealt with corporate clients and stakeholders. This disease is within their structures, whether it is the personnel dealing with your proposition not being entrepreneurial in their approach, or the committee under-evaluating your proposal.
- Harv Eker, the author of Secrets of the Millionaire Mind, says it better: “One step in the right direction is worth 100 years of thinking about it.”
One of the reasons Nokia went down the way it did, after a decade of leading the mobile sector, was due to analysis paralysis creeping as the company was getting complacent. Around 2006, Nokia was more concerned with staying where it was, instead of pursuing new opportunities.
It’s not as if Nokia wasn’t working on new stuff, they just lacked a sense of urgency. Developing cutting-edge new products was put on the backburner. Former employees observed that Nokia’s operating system team split into two and started to battle for the attention of top executives, resulting in internal politics. In 2008, Paul Jacobs, CEO of Qualcomm, also voiced concern that Nokia devoted too much time to strategy.
From one decade to another, we have seen how the mighty have fallen. Now we are aware of the danger of analysis paralysis.
Entrepreneurs can learn a thing or two from a married couple. A husband comes back from few meetings, excited about a business opportunity. He tells his wife that the family’s finance could improve, but, because the wife was not in the meeting, she will do the responsible thing of interrogating the validity of the offer.
Often, with many businesses, these opportunities are not discussed and considered in the same manner. This should be compared to the processes at successful start-ups. Here the co-founders will debate the merits of each deal.
There is a danger of approving every offer that is made; it will likely end up in bankruptcy. I’m an advocate of being cautiously optimistic.
In a competitive business environment, analysis paralysis is the worst thing that can be allowed to emerge; it is a culture that needs to be kicked out of the system.
No matter how big a company becomes, it need to maintain an entrepreneurial approach. Don’t become a big truck that turns around after driving two blocks down the road.