Unfortunately, the above statements couldn’t be further from the truth. It’s important to stay on top of your business at all times, whether it’s underperforming or increasing profits. This is why:
Is business better when you don’t realize it?
Max H. Bazerman, who wrote the book “The Power of Noticing,” identifies an interesting phenomenon among businesses. Companies in the process of enjoying a period of high profitability often experience what he calls “motivational blindness.”
“Motivational blindness,” he states, “is the tendency to not notice the unethical actions of others, when it is against our own interests.”
In the back of your mind, you may suspect that your employees aren’t doing their jobs the way you would choose them. However, when things are going well, it’s all too easy to adopt the familiar ‘she’ll be fine, mate’ attitude; focusing on the bank balance, rather than business behavior.
A case study
Jamie Dimon, the CEO of JP Morgan, learned about the dangers of motivational blindness the hard way and how it negatively impacted the company. In 2005, he hired Ina Drew to take over as chief investment officer. Drew immediately went to work, increasing the company’s profits by a significant margin, which on paper seemed excellent. However, this was achieved through high-risk operations.
Dimon was aware of these risks, but chose to ignore them. After all, profits were high, so what could be the problem? However, when Dimon finally took the time to take a closer look at Drew’s investment strategy, it was too late. He discovered that a succession of risky deals had cost the company $6.2 billion in just one month.
it’s your business
It’s tempting to overlook the details when things are going well. However, you should never stop asking questions. If your business is booming, find out why. What is going on to make it work so successfully? Is that level of success sustainable? Do your employees act ethically and responsibly to achieve it?
Always be aware of the risks associated with success and take them into account in every trading decision you make. Burying your head in the sand won’t make problems go away, no matter how effectively success may temporarily mask them.
Accountability to someone else is advisable. After all, we are human and accountability has been shown to bring out the best in people. Take responsibility for regularly reporting to your business advisor, partner or board of directors. This helps ensure that you keep your eyes on the details of your business operations and that you don’t have a case of terminal motivational blindness.
