When we hear the founding stories of wildly successful start-ups, we often hear of luck or serendipity. But is it good fortune that leads people to be in the right place at the right time – or can successful entrepreneurs “sniff out” these opportunities better than the rest of us?
I suspect it is the latter. I met one of those successful entrepreneurs recently; let’s call him Scott. Eight years ago, Scott was one of twenty people invited to hear a pitch from an up-and-coming software company. The pitch meeting resembled an episode of Shark Tank or Silicon Valley – a bunch of young hot-shots passionately describing how their disruptive technology was going to change the world, in this case the world of Human Resources (HR). “There was something about these guys,” Scott recalled. “Their passion was contagious and spread through the room like wildfire until it hit the back row where I was sitting. All of a sudden, I got this overwhelming feeling in my gut that I had to join them.”
At the time, Scott was employed in his father’s HR consulting business, which had five full-time employees, a few contractors, and steadily generated about $2 million in annual revenue. The firm offered mainly outsourcing services of the mundane parts of HR, like payroll and benefits, to a small portfolio of mid-sized companies. Scott’s father had built a solid business, and Scott had spent his early adult years preparing to take over when his father eventually retired.
Scott became convinced that the software he had just seen was the future of HR, and he couldn’t shake the feeling that he and his father needed to pivot their business to support it. It was a huge risk. Few people had even heard of the new software, and only a handful of companies were using it. Plus the software was competing in a mature market dominated by two behemoth providers, so gaining market share wouldn’t be easy. And yet, Scott convinced his father to get on board. Moving forward, their business would only offer HR outsourcing services that directly plug into this new software.
Scott’s intuition was correct. Today, the software Scott first saw eight years ago is a well-known player in the HR market. The once-small start-up is now a fast-growing, $1.5 billion publicly traded company. By joining forces with the company early on, Scott’s own business has grown to 800 employees and $500 million in annual revenue. Was it the luck of being at the right place at the right time? Or was Scott’s intuition the result of habit?
Scientific studies suggest that intuition is, in fact, nothing more than internalized expertise – a form of habit. For example, it has been documented that expert nurses can recognize when a newborn child is developing a life-threatening disease even before the child’s blood tests come back positive. If you were to ask these nurses how they knew that the baby was getting seriously ill, they wouldn’t be able to tell you specifically; many would simply attribute it to intuition. However, when researchers analyzed in detail what information the expert nurses paid attention to, they identified several cues and patterns about the baby’s medical condition, some of which were not even part of the educational curriculum in nursing. In fact, some of the medical indicators these nurses tuned into were the opposite of what would be expected in sick adults.
Similar to these nurses, Scott was an expert in his field. He had worked in his father’s HR consulting firm for 12 years, and he knew the industry inside and out. When he saw the new software at the pitch meeting, his brain was processing more information than he was aware of. And when all the right cues were present, Scott’s brain made an automatic decision – he needed to pivot his business and get behind this software start-up.
If you want to make the right strategic decision for your business, like Scott, you need to have the right habits. In our extensive research for my book THE LEADER HABIT, my team and I discovered that there are four behaviors that effective leaders utilize when making good decisions. And based on our finding that it takes 66 days to turn a behavior into a habit, we have created four simple exercises that will help anyone to enhance their decision-making skills. These exercises are:
Ensure that you understand the underlying issues.
Most problems consist of several visible symptoms caused by a hidden underlying problem, or root cause. The best decisions address root causes, but first you must identify these causes by digging deeper into the nature of the problem you are trying to solve. Practice this exercise: After learning about a problem, ask yourself, “What’s the root cause here?” Write down your answer. For example, two of your employees have gotten into an argument about an upcoming deadline. The deadline is the superficial problem, but you identify that the root cause is a lack of trust between these two individuals.
Select an objective course of action.
There is always a risk that a decision will inadvertently disadvantage a person or group involved in a situation. Good decisions avoid this risk by ensuring that a course of action is objective and fair to all parties involved. Make this a habit by practicing the following exercise: After deciding on a course of action, ask yourself, “Who could this action negatively impact and what would that impact be?” Write down your answer. For example, you could decide to implement a work-from-home policy for your team that could negatively impact employees with small children, because those children could be a distraction.
Explain your rationale.
Once you have completed your analysis and identified your solution, it is time to act. Show everyone that you are making a logical decision by explaining your rationale using this exercise: After you recommend a course of action, explain your rationale behind it by saying, “We should do … because …” Write it down. For example, you could recommend delaying a product release by saying, “We should delay releasing the product because our initial tests revealed many serious bugs. Releasing a buggy product could harm our reputation in the market.”
Take timely action even if not all information is present.
Don’t put off making a decision so you can collect more data in the hope of finding the perfect solution. If you fear making a mistake or feel uncomfortable making the big decision, think of it as making a series of smaller decisions instead: After noticing that you want to do more research to collect additional data, ask yourself, “What small decision can I make today?” Write it down. For example, if deciding on your entire annual budget feels overwhelming and you find yourself wanting to collect more information from your colleagues instead of finalizing the budget, you could think of it as making a series of four smaller decisions, and today you can decide on just your budget for the first quarter.
By developing the right habits, you will enhance your ability to make good strategic decisions for your business. And, like Scott, you will increase your chances of what will seem like “being in the right place at the right time.”
Adapted from The Leader Habit: Master the Skills You Need to Lead in Just Minutes a Day (Amacom) by Martin Lanik. Copyright (c) 2018. All rights reserved. This book is available at all bookstores and online booksellers.
Martin Lanik, Ph.D., author of THE LEADER HABIT, is the CEO of Pinsight®, a global leadership software-as-service company known for its disruptive HR technology. His leadership programs have been implemented by more than 100 companies – including AIG and CenturyLink – and have received awards from Chief Learning Officer and Brandon Hall. Lanik holds a Ph.D. in industrial/organizational psychology from Colorado State University. You can learn more at: www.pinsight.com