Let Your Business Decisions Mirror the Best Investment Behaviours

We are past the mid-point of 2020, with little clarity of what the future holds. We can expect global borders to remain closed or at least restricted for several more months, with some travel restrictions extending into 2021. New protocols for restaurants, office building elevators, hotels, bars, doctors’ offices, manufacturing sites, call centres, airports, salons and others may become permanent. Lockdowns, restrictions, homeschooling and unemployment are impacting business, our economy and our mental health.

Recognize that while many are waiting for this to be “over”, on the other side of this bridge we will encounter a different world, one that will require us to adjust, adapt and run our businesses in potentially markedly different ways. Acknowledging this now and considering what it may mean for you and your business is a sound first step. In the months and years ahead, you will be required to adjust to a post-pandemic world with changed societal expectations, e.g. defund the police, changes to long-standing names, greater regulatory oversight, disruptive activism, record levels of unemployment, staggering government debt, employees and consumers experiencing heavier financial burdens and perhaps preferring government assistance over paid employment.

The biggest threat to your leadership ability is yourself – your mindset and ability to cope with the tremendous amount of negativity in the media and everyday conversations.

I am advising my clients to apply the same mindset and discipline to their businesses as the best investors do to managing their portfolios.

Be the eye of the storm.
Make decisions based on logic, not emotion.
Gather the facts. Retain expert advice.

Our mindset has always been our greatest potential asset and one of our largest potential risks. Remaining cognizant of this, while paying attention to your responses – to new information, to setbacks, to negative news – will enhance your leadership and affect your company culture, more than anything else.

Sustain clear thinking. Remove yourself from the negative economic news, unemployment stats and political mudslinging as much as possible.

Set aside your strategic plan, this year’s KPIs and your financial reports. Pick up a blank notepad and think fresh:

If we achieved nothing else this year, what would be our single most important outcome?
What is the greatest risk to achieving this goal?
What are three opportunities for us in this changing and ever-changed world? Think boldly! Be patient. Your initial responses may not represent the game-changers.
Who do you have on your team who can best help you in this remaking?
What skills or experience do you require on your team or in your company that you do not have today?

While this is not a new idea, it still holds true. Who are the five people you spend the most time with? Are they positively or negatively influencing your mindset?

Consider the following comments and information pertaining to investments and financial decisions.

“Now it’s all diseases of abundance. We’re over-exposed to everything. So the way to survive in modern society is to be an aesthetic, it is to retreat from society. There is too much society everywhere you go, society in your phone, society in your pocket, society in your ears … everyone is trying to program everybody. The only solution is to turn it off.” Naval Ravikant, chairman of AngelList.

Nassim Nicholas Taleb, in his book, Fooled By Randomness, shows that increasing the frequency of how often one checks their portfolio changes the probability of seeing a negative result.

In his example, a portfolio that yielded a 15 percent return and 10 percent volatility, the odds of seeing a loss increase from seven percent to 33 percent just by shifting the time frame from yearly to monthly. It gets even worse to 50 percent if looking at it on a daily basis. As a result, “over the short-term increment, one observes the variability of the portfolio, not the returns. In other words, one sees the variance, little else.”

Of course, I am not advising that you stop monitoring customer satisfaction, quality, profitability, employee satisfaction. I am advising that you remain aware of your mindset and the effect it has on you and those around you.

Once you have reflected on and responded to the questions I noted above, review your plans. Are you addressing the biggest risks? Are you able to identify the biggest potential opportunities? If not, involve others to help you. Then, evaluate your plan to ensure it is aligned to the most important outcome, even if and particularly if it is simply, having a profitable business this time next year.

“I give you this to take with you: Nothing remains as it was. If you know this, you can begin again, with pure joy in the uprooting.” ~Judith Minty

During these challenging times, we need each other. Reach out to discuss how I may support your success. Contact me today.