Most small business owners surround themselves with people they are comfortable with and who, most often, think the way they do. There are many advantages to this: ease of communication, speed of decision-making and reduced workplace tension. But there is a distinct downside as well.
Not having someone to challenge your thinking contributes to two significant problems. First, you miss the opportunities a different perspective can present. Second, your weaknesses as a leader are reinforced by not having people in your business who approach decision-making differently than you do, resulting in mistakes that could be avoided if someone with a different lens caught them.
Two recent experiences brought the devil’s advocate role to mind. One was a discussion between two business owners I work with. The first had no one on his team who challenged his decision-making, and he was lamenting a series of missteps in his company that were frustrating him and taking his time and attention from business development activities. The problems he described were a repeat of problems he had experienced the prior three years.
The second business owner pointed out to the first that if he had someone to challenge his decisions along the way, many of the problems he encountered could have been avoided. The second business owner had someone on his management team who filled this role. While he often disliked hearing the opinion of this devil’s advocate, he consistently found the guidance valuable.
The second experience was reading a McKinsey study of 180 companies over a two-year period from 2008 to 2010. The study divided companies into quartiles based on the amount of diversity on their boards of directors. Return on equity was 53 percent higher for the companies in the top quartile than in the bottom. Earnings before interest and taxes were 14 percent higher. Clearly, the broader the experience base and differing perspectives on the boards of these companies, the better the results.
While many small businesses don’t have boards of directors or don’t have access to the diversity of talent the companies in the McKinsey study have, you can gain a similar benefit by having people in your orbit you trust to challenge your thinking and tell you what you don’t want to hear. For many small business owners, this can be a spouse. Other options include joining a roundtable of business owners or setting up an advisory board for your business comprising people with talents and experience different from yours.
We are naturally wired as human beings to surround ourselves with people we can relate to and feel comfortable with. This tribal instinct is deep-seated and it takes effort to counteract it. Neuroscience research indicates that we consistently overestimate our ability to make good decisions and predict the future.
Having a devil’s advocate can help. Once you do, the second part is checking yourself to make sure you’re open to being challenged, considering opposing points of view and receiving negative feedback.
Eric Gundlach is a Maryland-based consultant who helps individuals and organizations successfully plan and manage strategic transitions.