Improve the decision-making process by leveraging an attorney’s (or other counsel’s) advice.
Sometimes, business is tough.
Entrepreneurs and startups routinely face the undeniable realization that something drastic needs to change, also known as The Pivot, in order to help ensure their enterprise’s survival…
By necessity, entrepreneurs must be confident in their vision for their startup. But such confidence may inhibit exploring alternatives that cause discomfort to the entrepreneur. The theory underlying the notion that humans tend to avoid things that cause discomfort is called Cognitive Dissonance, developed by Leon Festinger. The basic premise of cognitive dissonance is that people want their beliefs to be supported by facts so facts that challenge the beliefs tend to be rejected whereas facts that support the beliefs are accepted.
Options that could materially improve to lifespan of the business could be rejected when those options run counter to the entrepreneur’s preferences. Less-powerful solutions that don’t challenge the entrepreneur are supported by a confirmation bias- i.e. this answer is right because it aligns with their values. By foregoing the best solution for the “comfortable” solution adds friction to growth and progress. But there is a way to solve this decision problem.
A entrepreneur or startup should leverage 3rd-parties to help fight notions, such as confirmation bias, that impede the honest analysis necessary to obtain the best solution for the startup. Trusted 3rd-Parties, such as attorneys, accountants, advisors and other consultants (formal & informal), serve a valuable role in a business’s decision-process. True, startup entrepreneurs often can’t afford to burn their limited cash to call an attorney every time they face a difficult choice, but the long run cost-benefit of the 3rd-party’s input gives the entrepreneur a powerful tool to make an informed decision.
I was inspired to draft this post after reading an interesting blog called “Why businesses have a hard time fixing what’s broken.” In Paul Jun‘s well-written blog post, the tension between the expected benefits of change and the reluctance to change is well articulated.The notion of “the known evil is better than the unknown” may explain the data suggesting that when humans are confronting with a decision, their confirmation bias carries significant weight. Entrepreneurs should be cognizant of cognitive dissonance and how using advisers leads to better informed decisions.