OUR IRRATIONAL MINDS
WHY DO WE MAKE THE DECISIONS WE DO?
Too often we look at the failure of businesses and even economies in terms of the measurable and analytical reasons for such failures. Unchecked growth. Excessive costs. Borrowing and spending beyond one's means. Dishonest even fraudulent transactions. Failure to understand and manage tax, especially for small businesses. Yes, these can't be ignored as they are the the catalyst for failure. However, more fundamental than this is why the owners and leaders of businesses make decisions that even at the time were questioned but were still carried out - with devastating consequences.
Why do all of us make decisions that those around us can see will not end well for us or those who rely on us? All the failed businesses that are discussed in this book had only one thing in common - decisions were made by the owners or leaders of those businesses that led to the failures.
Such decisions were irrational, were impacted by unconscious biases, were impacted by the emotions of those who made them and, even when things were looking grim, were still defended right up to the time of failure.
To understand why businesses fail and in fact why all of us make decisions that we often realise we're pretty unwise after the event, we must journey into the workings of or brains.
In understanding the limitations of our minds, accepting those limitations, and then ensuring things are put in place to manage such limitations, the chances of bad decisions being made that lead to the failure of businesses are reduced.