The "Second Opinion": Easy for Patients, Hard for Managers

One day, your Doctor tells you that you have a health problem. A big one. You didn't have the problem last year but now you need surgery, a change in lifestyle, and twenty-five pills every day. What do you do? Follow every word of the Doctor's advice and change your whole world overnight? Probably not. You go get a second opinion. Easy decision.

Now, imagine your Balance Sheet tells you that you have a big problem that wasn't there last year. You are surrounded by experts in your company who know your business, but no one seems to have an answer that you can take to the Board, or your shareholders. On paper, it seems like an easy decision to hire an outside firm to give you a fresh perspective on your failing Balance Sheet, but in reality that is one of the toughest decision for a manager to make.

Recently, the New York Times published an article entitled The Failure Traps. THe article suggests that one of the central reasons that a manager can look at the statistics of their business without embracing their meaning is a problem called the "Confirmation Bias": Focusing on Data that supports your decisions, and de-emphasizing data that does not. Put another way:

"Smart people believe weird things because they are skilled at defending beliefs they arrived at for nonsmart reasons." -Michael Shermer, Sept. 2002 Scientific American

According to ChangingMinds.com, theConfirmation Bias is what most people naturally do to feel good about their decions. But they also attach a warning that this can easily lead to bad decisions and a dangerous pattern if you allow yourself to fall into this pattern.

Detach yourself from your business, then look at your numbers. If that does not work, contact experts who can.