January 01, 2022 by Clawdia
What kind of an entrepreneur are you?
So, do you consider yourself an active or a passive entrepreneur?
It would be safe to assume that most people would answer: “active, of course!”
This answer makes sense since our decision to become entrepreneurs indicates that we see some untapped potential missed by others, and we believe it is possible to use this potential to create something completely new.
The truth is, however, that most entrepreneurs who are just starting out, are very passive when it comes to making crucial decisions regarding their ventures.
What causes this to happen?
I’ll give you a clue.
In some countries, such as Denmark, Germany or Israel, it is necessary to sign an authorization for post-mortem organ donation (opt-in). On the other hand, there are countries where a person must sign a document if he or she does not agree to become an organ donor, such as, for example, Sweden (opt-out).
What do you think? Which countries have the highest rate of organ donation?
Now, imagine two hotels that maintain a safe environment.
Hotel 1: “The bed sheets are changed every single day. Please leave your card on your pillow if you do not want us to change your bedsheets.”
Hotel 2: “Unless you notify us, we do not change the bedsheets. If you do want us to change the bedsheets, please leave the card on your pillow.”
What would be your guess? In which of these two hotels are the bed sheets changed more frequently?
Two groups of people entered a pizza place.
The first group received one pizza with all 12 toppings for $11 and was asked to mark which toppings they would like to remove.
The second group received a $5 basic pizza with a suggestion to mark what toppings they wanted to add.
What would be your stake? Which group ordered more toppings on its pizza?
Why should there be a difference?
Basically, every set of questions or conditions suggested in each of these situations should have the same answer, right? However, depending on the way the question is presented, the answers differ drastically.
Studies in this area show that people tend not to take active decisions by default, since it is just easier to accept a passive decision, which is “encoded” in the way the questions or situations are presented. Hence, staying in the status quo is almost always the default choice of most people, and entrepreneurs are no exception.
What can we learn from these examples?
Now, where am I going with this and what relevance does it have to you?
As we enter the world of business, we are faced with making decisions. We must understand what motivates us in making a decision or prevents us from making it. Likewise, we need to know what motivates others in their decision-making.
Now, let’s be honest with ourselves. Let’s imagine a scenario where you received a business proposal. What considerations did you have in mind when reviewing the proposal? Were you thinking: “Okay, let’s talk about this deal and see what it is and whether I can work with it” or were you thinking: “What am I trying to accomplish with this deal?”
Due to the fact that we generally stick to our default “passive” decision-making without even realizing it, we are likely to have been influenced by the way this proposal was worded.
Getting back to the examples above: more organs are donated in countries with “donation by default”; more toppings were ordered with the pizza that included 12 toppings by default; a hotel that let guests leave notes if they didn’t want their bedsheets changed had to do much more laundry.
But let’s take a look at our business world, for example, when we prepare or receive a business proposal.
When I prepare the proposal, I become an active decision-maker and consider what “toppings” I want on my “pizza”.
As a recipient of a proposal, I would probably act according to the passive built-in default, i.e. I would have to answer the question, “what toppings do I want to be removed from my pizza.”
If so, I would probably make a passive decision and remove as few “toppings” as possible. And even worse, I would not ask for additional “toppings” that I do actually need.
So, from what we have learned so far: it seems quite possible that once we receive the proposal (or any other document) for consideration, we will become passive decision-makers. However, our decision-making features are immediately activated when we prepare the document.
This post follows my last one about the anchoring principle. I do recommend you read it if you haven’t already.
So what’s the takeaway:
First of all, when you receive an offer, be sure to pay attention to the decisions you make and be more active. Like we said – don’t just respond to the offer – think what you want to get out of the deal.
Also, try to be the one making the offer, as this will allow you to have the initiative on your side.
After receiving this tip, ask yourself, as honestly as you can, what kind of decision-maker are you really?
Always actively here for you,
*The article was inspired by Prof. Joseph Yassour’s lecture
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