Every founder, whether they’re in the very early stages of their startup’s development, contemplating scaling their business or taking on fresh investment to fuel a growth phase in a maturing business, will at some time come across challenges that cause them to question the viability of continuing with an initiative or consider bailing out.
And every entrepreneur will have a burning passion for what they’re doing and an overarching desire to see it succeed. These characteristics are the driver for success but sometimes they cloud the decision-making process and cause initiatives to be pursued that really should have been dropped.
How do you guard against this and bring objectivity to the process while maintaining your conviction? The first step is honesty and humility.
Park Your Ego
A founder's ego can be both a blessing and a curse in the decision-making process. On the one hand, a healthy ego can give founders the confidence and drive to make tough decisions and take risks. On the other hand, an unchecked ego can lead founders to make decisions that are not in the best interests of their business.
How can your ego be channelled positively?
Confidence and Determination
These facets of ego can drive you to persist and maintain belief in your vision where others might give up in the face of adversity.
Resilience
A strong, positive ego can provide a buffer against setbacks and criticism and make you better equipped to handle rejection and failure.
Vision and Conviction
Every entrepreneur needs a robust sense of self-belief to convince investors, team members, and customers to buy into their vision.
However, it's essential to balance the positive aspects of ego with the many potential drawbacks:
Stubbornness
An overly inflated ego can lead to calcified stubbornness and an unwillingness to adapt or pivot when needed. It may hinder your ability to recognize when an idea isn't working and needs adjustment.
Resistance to Feedback
Excessive ego may cause you to resist or dismiss valuable feedback from team members, mentors, or customers in their belief that you know best. Don’t become the boss that says “There are only two ways of doing this, my way and the wrong way”!
Tunnel Vision
If ego is dominant and you become fixated exclusively on your own perspective and ideas, you’ll potentially miss out on alternative solutions and opportunities.
Team Dynamics
Excessive ego will almost certainly result in disrupted team dynamics, creating an unhealthy working environment and possibly leading to conflicts or a lack of collaboration.
Risk and Fear of Failure
If you allow your ego to get in the way of making difficult decisions, such as pivoting from a failing idea, it can significantly increase the risk of persisting on a flawed path to avoid "failure" and the associated blow to the ego.
Bias and Blind Spots
A large ego can lead to blind spots, confirmation bias and cognitive dissonance where negative signs are ignored. Allowing the ego to dominate can cause you to become overly attached to the original idea and vision.
Overconfidence
Confidence in your own abilities and judgement is a prerequisite to success but when this tips into overconfidence it prevents evidence being evaluated objectively which can lead to making decisions without sufficient rigour or consulting with others.
Hesitation to Change
Slavish attachment to the original concept can prevent pivoting or iteration since the ego-driven decision making can reinforce the view it is compromising the vision.
Emotion-based Decisions
Emotion that presents as conviction can be a very powerful component of the overall decision making process but if deployed in isolation can lead you to make decisions to prove yourself right instead of objective, logic-driven calls.
Reluctance to Admit Mistakes
You may find yourself in a situation where you are reluctant to admit when you are wrong. This can lead you to stick with decisions that are clearly not working and make changing that decision more difficult in the long-run. Don’t allow ego to stand in the way of calling out your own errors.
Difficulty Delegating
Many entrepreneurs have an extreme independence streak which can make it difficult to delegate tasks to others. This can then lead you to make decisions without input from others, even when those people around you have expertise in the relevant area.
As you can see a founder's ego is a double-edged sword with potentially many more pitfalls than positives. Some level of ego can be beneficial in terms of motivation, resilience, and vision, but it must be balanced with humility, openness to feedback, and a willingness to adapt. The best leaders understand when to listen and revise their thinking, and when to assert their vision. They learn to tame their ego and use it as a tool, not a hindrance, in the decision-making process, and they prioritise the long-term success of their business over personal pride.
Of course, this is easier said than done, especially if it requires you to un-learn some deep-seated behaviours. The key to harnessing your ego lies in developing your emotional intelligence.
Develop Your Emotional Intelligence
Using emotional intelligence (EQ) in the decision-making process is essential for founders and entrepreneurs. EQ involves recognising and understanding your emotions and the emotions of others, and using this awareness to make better decisions and manage relationships more effectively.
Here's how you can ensure you are using your EQ to improve your leadership style and decision-making along with some tips on how you can develop your emotional intelligence.
Self-awareness
This is the first step to using EQ in building better relationships and improved decision-making. It means understanding your own emotions, triggers, and biases. Once you are aware of your own emotions, you can better manage them and prevent them from clouding your judgement.
Take time to identify your own emotions related to the situation before making decisions. Ask yourself: are you feeling anxious, excited, or frustrated? Consider how your emotions align with your core values and long-term goals. Understanding your emotional state can help you make more balanced decisions in both your business and personal life.
Self-regulation
Learn to manage your emotional reactions by practising emotional control. This means not making impulsive decisions when you are upset or overly excited. Take a step back and allow yourself time to calm down before making important choices.
For many people, using mindfulness and meditation helps them become more aware of their emotions, thoughts and feelings and improves their ability to regulate them. These might be techniques that work for you.
Empathy
Try to see situations from the viewpoint of others, whether it's your team, customers, or partners so that you fully consider their emotions, motivations and needs in your decision-making process. A lack of compassion can lead to downstream impacts on others that take you by surprise.
Use actively listening to pay close attention when others are trying to express themselves and demonstrate that you have understood their point of view by validating their emotions. Listen more and talk less in conversations.
Social Skills
Cultivate healthy and productive relationships with team members, investors, and customers. Strong relationships and effective communication will lead to better decision-making, collaborative problem-solving and inspire the people around you.
Develop Resilience
Embrace failure as a learning opportunity rather than a personal setback. Resilience is a crucial aspect of emotional intelligence, and it can help you bounce back from setbacks.
Reflection
Regularly assess your EQ by reflecting on your interactions, reactions, and decision-making to identify areas where you can improve.
Imagine you had no personal attachment to the idea or past decisions; strip away the emotionally-driven subjectivity and take an objective outside view and see if it still makes sense.
Be comfortable accepting failure and imperfections by separating your self-worth from the company's outcomes.
Adopt a growth mindset and accept that mistakes and course corrections are learning opportunities, not causes for ego blows.
Consider All Perspectives
When making a decision, you should consider all perspectives, including those of your team members, customers, and other stakeholders. This will help you to make more informed, well-rounded, better quality decisions. Surround yourself with team members who have complementary strengths and will challenge your biases. We all have them!
Diversity of thought is powerful so seek counsel from mentors and advisors who will provide honest feedback and different perspectives.
Get Feedback
Regularly ask for feedback from trusted colleagues, mentors, or coaches. They can provide valuable insights into your emotional intelligence and suggest areas for growth. Be prepared to listen to feedback that you might not like or want to hear and be honest with yourself to accept what comes back and be willing to act on it.
Journaling
For many people this is a great way to reflect on their thoughts and feelings, and to identify any patterns or biases in their thinking. Journaling regularly can also help you to develop your self-awareness and empathy. This type of self-reflection builds emotional intelligence over time.
Study and Learn
Consume content on emotional intelligence to improve your own. There are a multitude of sources including books and articles, enrolling in face-to-face or online workshops and courses and from highly self-aware peers.
Remember that developing emotional intelligence is an ongoing process that requires application in everyday situations. It takes time and practice, but it can significantly improve your ability to keep a check on your ego to harness the positive aspects of it.
Having understood the need to reign in your ego and hone your EQ, how do you then use this more balanced and rational ability to navigate the decision-making process to stick with something or quit?
Go Back to Basics
Deciding whether to completely drop, pivot or persevere with an idea in your startup, scaleup, or growth business is a critical decision that requires careful consideration.
Here are some suggestions for establishing reliable, (mostly) fact-based criteria to maximise the chances of making the best decision. (See also my more in-depth blog 12 Proven Strategies to Test the Strength of Your High-Growth Business).
Reassess Your Target Market
Talk to customers and objectively gauge if the product or service is truly solving a compelling pain point. If not, it may need a major pivot or indicate a flawed idea.
Analyse market trends to assess whether it is growing or shrinking to determine if there is a viable demand for your product or service. Changes in the market can signal the need for adjustment.
If the exercise suggests the idea has a lot of potential, it may be worth pursuing even if it is not working right now.
Financial Viability
Revaluate the unit economics; if customer acquisition costs and other overhead are higher than revenue per customer, the business case likely doesn't work in the short-term at least.
If the data suggest the financial viability will stack-up in the medium- long-term then you need to establish the runway and burn rate. However, if the runway is too long and the burn-rate is too high, it will be necessary to reconsider your approach, including further investment.
This will require you to assess the additional time and capital needed and for it to be weighed against the likelihood of success based on the other criteria.
Amongst these criteria is the opportunity cost of following a particular course of action. Consider your team's core competencies and evaluate if their efforts and your financial resources could be better deployed toward more promising ideas.
Key Metrics
Evaluate your business's Key Performance Indicators (KPIs), such as customer acquisition cost (CAC), customer lifetime value (CLV), conversion rates, active users, revenue growth and so on. (See my blog KPIs: Track Your Progress and Achieve Your Goals for a more detailed discussion on KPIs). If these metrics consistently fall short of expectations, it may indicate the idea isn't resonating.
Competitive Landscape
If competitors are outperforming you or entering the market with similar offerings, it's essential to adapt or differentiate your business to maintain a competitive edge.
Research the competition and evaluate if there are better solutions out there or if the market is saturated. This could mean limited opportunity.
Team and Resources
Evaluate your team's skills, motivation, and adaptability. They may be key to turning the idea around. Consider if you need to bring in new talent or make changes to the existing team.
Iteration History
If you've already made iterations to your idea or business model and haven't seen significant improvements, it may be a sign that the core concept needs reevaluation.
Strategic Alignment
Consider whether the idea aligns with the long-term mission and values of your business. A drastic pivot may require you to redefine your purpose and goals.
Gut Feeling
Sometimes, an entrepreneur's intuition can be a valuable indicator. If you have a strong gut feeling that the idea is worth pursuing, even if it is not working right now, it may be worth listening to your gut instinct and sticking with it. Conversely, if you've lost conviction for the idea, or if you believe in the potential of a different direction more strongly, that can also influence your decision.
Scalability and Growth Potential
Assess whether the idea can be scaled efficiently and profitably and that it has long-term growth potential. Some ideas may require too much time and effort to grow compared to alternative opportunities.
Timing
Sometimes the idea may be ahead of its time or too late to the market. Evaluate whether the timing is right for your concept.
Consult Advisors and Mentors
Seek wise counsel from experienced advisors, mentors, and industry experts who can provide an objective perspective and share their insights.
The decision of whether or not to pursue an idea is a difficult one. Unfortunately there is no single scientific approach that will categorically determine the guaranteed best course of action; the best decision will vary depending on the specific circumstances.
However, by comprehensively assessing the criteria above, and with a willingness to adapt where necessary, you can make a more informed decision about whether or not to pursue an idea.
You should be cautious about abandoning an idea prematurely, especially if having done an objective appraisal you remain convinced the concept is sound. If you have invested a significant amount of time and resources into the idea, it may be worth varying several parameters and pursuing it for a little longer to see if you can get it to work.
Alternatively, if you have established that timing is the primary obstacle then take a break from the idea and come back to it with fresh eyes when the timing feels better. However, if you have already sunk a lot of time and money into the idea and it is still not working, and objectively fails against one or more of the criteria discussed above, it may be time to cut your losses and move on.
Remember, it is okay to fail. Failure is a part of the entrepreneurial journey. The important thing is to learn from your failures and keep moving forward.
Conclusion
An inflated ego is a dangerous blindspot. A degree of ego helps drive relentless execution, but unchecked ego is a recipe for failing to adapt when necessary.
The best entrepreneurs have strong self-awareness. They check their ego, objectively evaluate a wide array of evidence, and make data-driven decisions, even if it means changing course from the original vision. Advice from mentors and investors acts as a valuable counterbalance.
By being more in tune with your emotions and those of others, you can make more empathetic and well-informed decisions, build stronger relationships, and create a more positive and productive work environment.
Developing emotional intelligence takes work but is critical for entrepreneurs to maximise their chances of success and a worthwhile investment in time and energy.
Ultimately, choosing whether to persevere or quit comes down to diligently and objectively appraising the quality of the concept, where it fits into the competitive landscape and its financial viability; business basics. However, to be truly effective in doing this you have to channel your ego positively and be the most emotionally intelligent version of yourself.
Image attribution: Free Stock photos by Vecteezy
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