As a businessperson you accumulate experience over years of business activity, that experience becomes your inventory of knowledge that allows you to see patterns in what is happening in business. Those patterns that occur in a business situation allow you to analyze the pattern and make decisions based on a very few indicators, rather than have to mentally process a complex or even chaotic set of inputs.
Maybe you have encountered businesspeople who want to analyze every problem with a complete due diligence check list that ends up looking like an encyclopedia. At that point they have so much information that they become frozen, unable to make a timely decision because they cannot mentally process all that information and make a decision.
You have heard people call that paralysis by analysis. But it’s not a joke it’s a real thing that happens to companies all the time.
The real value to accumulating experience is to have sufficient experience in many situations that allow you to spot one or two indicators fairly quickly and analyze the pattern to come up with a satisfactory course of action. This is what is referred to as “SENSING”. In other words you can make a fast decision because you sense the right course of action while only seeing a small set of facts.
We have to add here that this kind of sensing we are talking about is not just a matter of experience. It also involves understanding what you were sensing. There’s a strong analytical component involving reading, research and applied intelligence. Without the background of knowledge and understanding that allows you to appreciate these “sensings”, you might undergo these experiences and miss everything they’re trying to offer you.
Maybe an analogy to football would help to describe Sensing in a very simplified way. Joe Flacco is a great quarterback Super Bowl winning quarterback who can come out of the huddle and up to the line of scrimmage and look at one or two defensive players and sense if he had to call an audible change of play or not. He knew from experience that if certain players on this opponent’s defense were in certain positions what the defense was.
There are a lot of less successful quarterbacks who come out of the huddle and try to view the entire defense. With multiple sets and constant movement of the defense they only have one or two seconds to process a huge amount of information. With so much confusion they often make no decision, or the wrong decision, and disaster follows.
When we look at what companies are the most likely to succeed we use our experience, intuition and whatever else you want to call it to make a fast decision. The vast majority of the time we make the right decision and know almost immediately if a company is worth the effort and the risk to work with. Once we are working with them we use the same Sensing powers to help them avoid the wrong play call.
At the Board of Directors/Top Executive level it becomes even more critical. Judging strategic relationships, making merger/acquisition decisions, hiring key executives and many other things all become part of the judging process where you need your Sense tuned to the right indicators. The due diligence process may look at everything, but it is so much information and requires so much processing of complex issues that may be contradictory or confusing. A strong executive must be able to “sense” the right answer from a few key indicators, particularly in an entrepreneurial company.