By | David Klaasen | Helping You Create Clarity, Inspire Your People & Drive Performance | Retain your best people | Changing Management Mindsets and Behaviour | Practical Behaviour Analytics
I was recently speaking to the leader of an investment network specialising in providing capital to small and medium-sized businesses, which need money to invest in growth. I was discussing with him the importance of a good leadership team in a business and how a poor leadership team with a great product will probably lose money, when an excellent leadership team with an average product will probably make a lot of money.
A shocking answer
All the statistics show that the average return on investment in small businesses is quite low. This is because only one in ten will succeed and make a lot of money for investors. When I asked the Investment Group Leader what the investors do to assess the leadership team of the businesses they are about to invest in, I was quite shocked by his answer. He told me that they use gut feel because they think they know how to spot a winning team.
So while these investors will use lots of analysis and statistics for the finances of the business and probably assess its marketing strategy in great detail, they use one of the most unreliable forms of assessment for the management team who are running the business: their gut feel. While gut-feelings have their place, the trouble with them is that they are plagued by unconscious biases, and if you think you don’t have any biases, you simply don’t realise how biased you are!
The chap I was speaking with went on to tell me that the investors pride themselves on being able to pick a winner. When one of their businesses succeeds, they tell everyone how brilliant they are because they could see it from the beginning. For all the others that don’t quite make it or fail altogether, it is due to the inadequacies of the leadership team and nothing to do with them.
