Paralysis by Analysis

in Analysis

I get to work with numbers and analyze a lot of businesses, business models, and opportunities based on their financial impact. My experiences have taught me that you can quantify just about anything. For example, a business is about to crumble. You can put the numbers together to figure out of the business is savable, and if it is, know exactly what you need to do to turn it around. Or, you may be considering adding a new partner or buying a new piece of equipment. Again, using the numbers you can put together a pretty good story about whether or not you should move forward with those plans. But sometimes entrepreneurs can fall into the trap of paralysis by analysis, or as others refer to it, analysis paralysis. It is possible, and it happens often, that we can spend too much time and effort analyzing and not enough time doing, testing, and trying. It can even be possible to become so overwhelmed with data and analysis that we can't move forward with a decision, stifled by too many options, assumptions, and conclusions. Here are some quick thoughts on how to avoid this happening to you. First, realize that if making the right decisions were easy, then everyone would be a successful entrepreneur, right? Too much and too little information are much more common than entrepreneurs getting just the right amount of information to make the best decisions possible. Second, feed whatever information and analysis you have into your intuition. Process it. Flesh it out, either mentally by yourself or verbally with your team (this is almost always the best option). Third, once you have a grasp of the options in front of you, put the data aside and listen to your gut. If you're still unclear on the best direction, go back and see if the analysis can answer any of your doubts or questions. Fourth, once your intuition is fed with data and analysis and your gut is telling you what you should do, follow it. Even if there is more data to process and more information to analyze. Entrepreneurs have a keen sense of what will be best for their businesses if once they gain clarity through the right amount of information and analysis. The reason paralysis by analysis happens is because entrepreneurs don't trust their intuition. So, they think they can replace needing to use their intuition with more data. And all that will do is keep taking you in circles. Get the data, analyze it, interpret and feed it into your intuition, or gut, and then pull the trigger. Your decision may be to do nothing, but that's probably the best decision if that is what your intuition is telling you. In an effort to avoid paralysis by analysis I have seen some entrepreneurs just make ‘from-the-hip' decisions without taking the appropriate amount of time to analyze, discuss, and let their intuition drive their decisions. Yes, there is a difference between making decisions on the fly and using intuition. So finding the right balance is the key.

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Kenneth Kaufman has 1 articles online

For more than a decade Ken has built a reputation as a leader who is respected for his integrity, work ethic, and commitment to lifting people and companies to new levels of achievement. Ken has served in several leadership roles, including CFO, COO, VP of Administration, and VP of Sales, in start-ups, mid-stage companies, and large multi-national corporations. His experiences cover a variety of industries, including construction, real estate, financial services, business services, medical/dental, manufacturing, telecommunications, distribution, retail, internet services & SaaS, market research, and outsourcing.

Ken founded CFOwise, a part time CFO Services Firm in 2006 and currently serves as its CEO.

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Paralysis by Analysis

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This article was published on 2010/11/25