Business is booming. You’re enjoying good growth and profitability. Do you really need to keep track of the small details? After all, if your company is currently operating like a well-oiled machine, the tendency is to not be a through checking check the nuts and bolts, right?
Sadly, the above statements couldn’t be further from the truth. It’s important to keep tabs on your business at all times, regardless of whether it’s underperforming or soaring in profts. Here’s why.
Is Business Better When You Don’t Notice?
Max H. Bazerman, who wrote the book The Power of Noticing, identifies an interesting phenomenon amongst businesses. Companies that are in the process of enjoying a period of high profitability often experience what he terms ‘motivational blindness’.
“Motivational blindness,” he states, “is the tendency to not notice the unethical actions of others, when it is against our own best interests to notice.”
At the back of your mind, you might suspect that your employees aren’t doing their jobs in quite the way you’d choose them to. However, as things are going well, it’s all too easy to adopt the familiar attitude of ‘she’ll be alright, mate’; focusing on the bank balance, instead of the business behaviour.
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 on the role of chief investment officer. Drew got to work immediately, increasing company profits by a significant margin, which on paper, looked excellent. However, this was achieved by making highly risky trades.
Dimon was aware of these risks, but chose to overlook them. After all, profits were high, so what could possibly be the problem? However, by the time Dimon finally took the time to look closely at Drew’s investment strategy, it was already too late. He discovered that a succession of risky trades 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’s happening to make it perform so successfully? Is that level of success sustainable? Are your employees acting ethically and responsibly in order to achieve it?
Always know the risks involved with success, and take them into full consideration in every business decision you make. Burying your head in the sand won’t make any issues disappear, regardless of how effectively success can mask them for a while!
It is advisable to be accountable to someone else. After all, we are human and it has been proven that accountability can bring out the best in people. Make it your responsibility to report back regularly to your business advisor, partner or board of directors. This helps to ensure that you’ve got your eyes firmly fixed on the details of your business operations, and haven’t got a case of terminal motivational blindness.