When it comes to business decisions, taking an objective view is essential. But distinguishing your thoughts from the facts is easier said than done.
You must try to recognise your, personal, impact on your business and take action to limit this.
What is unconscious bias?
We each have a perception of the world which shapes the way we interact daily. Many factors build your perception, including societal norms, lived experiences, and your personality.
By relying on these, we often make decisions without conscious thought.
For example, a new restaurant owner will lack personal insight into their produce needs. To make an informed first order, they will need to research industry norms.
Whereas a seasoned restauranteur will be able to rely on their own experiences and how much they have ordered before in similar situations.
Making a snap judgment, such as the above, is sometimes necessary and the negative consequences may be minimal.
But should you rely on instinct for all decisions? The short answer is no. Taking a one-sided approach to business decisions can be detrimental to your strategy and success.
What areas of business can unconscious bias affect?
Your biases can impact any decision you’re involved in, but some of the key areas that you need to be aware of include:
- Risk assessment: If you’ve faced business setbacks before, it can be easy to err on the side of caution. But doing so can let golden opportunities slip by. On the other end, a track record of successes can result in you underestimating potential risks.
- Market expansion: Fearing the unknown can stunt your business’s growth. Staying where you feel comfortable risks missing out on the benefits of expanding your market share.
- Product development: Is your product or service for you? Or your clients? Don’t fall into the trap of building your portfolio for your wants. You must evaluate your consumers’ wants and needs and shape your product/service around them.
- Resource allocation: Unconscious favouritism can impact even the most rational leaders. You may invest in certain departments or projects disproportionately, at the expense of lower ROI.
- Mergers and acquisitions: Deciding to sell your business is one of the biggest decisions you will make. You may gravitate towards companies that resonate with you, leading to you dismissing other deals.
- Decision-making process: One of the biggest biases to address is who gets a voice in decisions. A lack of diverse perspectives can lead to biased inputs for decisions, resulting in one-dimensional outputs.
How can you mitigate the impact of unconscious bias?
Eliminating unconscious bias is impossible. Becoming self-aware of your impact on strategic decisions is an essential first step to challenge bias.
To take a holistic approach, you must take a step back and evaluate what you are basing your business decisions on.
For instance, a data-driven approach will give you the facts you need, but your personal biases can even skew the data you choose.
The best way to mitigate bias is to get a fresh perspective. By seeking advice from someone outside your organisation, you can unlock the insight you lack.
A business advisor can provide the neutral view you need, by taking advantage of their distance from the business’s operations.
Plus, you can benefit from their experience across other industries to elevate your business. With this diverse perspective, a business advisor can offer a breadth of knowledge to balance and refine your strategic approach.
Don’t let unconscious bias impact your business. Contact our business advisors today.