Communication

72

Today I’m Going to be an Entrepreneur!

 

DNA blog

Yes, there are times individuals wake up with an amazing idea and are convinced they are the next Sir Richard Branson, Bill Gates or Mark Zuckerberg. They persuade themselves that they are an entrepreneur. They may even attract investment for their idea. The market might be excited by this new offering BUT the truth is that most entrepreneurs fail to get their businesses off the ground. Even if they do, building and sustaining a successful business is rare.

The 2015 US Census Bureau reports that 400,000 new businesses are started every year in the USA but that 470,000 are dying, a worrying statistic.

John Chambers, Cisco’s CEO of 20 years, says this – More than one-third of businesses today will not survive the next 10 years. Shikhar Ghos, in his recent Harvard University study, claimed that three out of every four venture-backed firms fail.

The strengths that make people entrepreneurs are counterbalanced by struggles that can get in the way of success. Without this self-understanding, decisions will be made that can cause the enterprises to fail.

Much research exists now to confirm that entrepreneurs are born and not made. Having conducted extensive research to validate these findings, DNA Behavior International has identified the top five (5) genetic traits that are to be found in entrepreneurs.

  1. Resilience (Measured by the Fast-Paced trait) – they achieve results, manage setbacks and rationally take quick action.
  2. Risk Taker (Measured by the Risk trait) – confidently take risks and tolerant of losses.
  3. Creativity (Measured by the Creative trait) – innovative with ideas and seeks to differentiate.
  4. Work Ethic and Focus (Measured by the Pioneering trait) – pursues goals and is often ambitious and competitive.
  5. Charisma (Measured by the Outgoing trait) – outgoing, connects with a lot of people and influences people to follow them.

Having these genetic traits does not guarantee success for entrepreneurs. Learning to be behaviourally smart in using the powerful genetic ingredients they were born with is more likely to deliver success.

Of the 5 identified entrepreneurial traits listed above – resilience leads the pack. Building a business, handling the enormous pressure of setbacks, rejection of ideas, sustaining a business, managing staff, and dealing with market expectations, will never be plain sailing. If you are ever to see blue water, understanding the importance of resilience is a key factor.

Through their DNA Behavior Natural Discovery Process, the entrepreneurial genetic traits can be measured. The graphic below highlights, in order of strength, from the top down the behavioral factors (genes) which an entrepreneur exhibits:

FactorsPerformance

 

The resilience gene is measured by the fast-paced trait. When this trait measures more than 55 – results will be achieved, setbacks will be managed and the individual will be able to rationally take quick action in any given circumstance.

Success in business is rarely about how many challenges you face so much as it is a matter of how you respond to the challenges. Entrepreneurs who are behaviorally smart, and understand their personality and genetic makeup, will have a level of resilience which allows them to face an almost constant barrage of challenges without ever weakening their resolve or losing their passion.

Interestingly the DNA Behavior Research program found that when comparing entrepreneurs who had built a $10 million turnover business as against a $1 million turnover business, that all the key DNA factors do not measure differences in an overall sense, but they do measure stronger.

Do you see yourself as an entrepreneur? Are you heading up a business you founded? Have you taken over a family business? Whatever the situation that brought you to this season of life, if you don’t know your entrepreneurial traits and understand how to manage them, and perhaps more importantly, how to fill the gaps in your talent, you may be heading for the failure statistic graveyard.

To learn more, please speak with one of our DNA Behavior Specialists (LiveChat), email inquiries@dnabehavior.com, or visit DNA Behavior

Playing it Safe (#96)

Last week, I wrote about how having the freedom to fail is an integral part of growth and how many parents are failing this test. In response to last week’s post, a friend sent me an article titled, “The Fragile Generation.” The author opens with an anecdote of a teen boy who was chopping some wood to make a fort with his friends. An onlooker notified the police who arrived at the scene and “took the tools for safekeeping to be returned to the boy’s parents.”

The author writes, “We told a generation of kids that they can never be too safe—and they believed us.”

This need to be “safe” has evolved part and parcel with the explosion of the internet and social media.  Many of the things that have a very low probability of bringing us harm are sensationalized online and in the news; because we see it happening on the internet and how horrible it is, we start to question our safety. For example, the leading cause of death in the US is an unhealthy diet, not any of the things we read about in the news. Yet … we aren’t blocking the doors to McDonalds.

Our inclination to seek “safety” removes a degree of risk-taking in our lives that is necessary for getting us out of our comfort zone, such as travelling to new places, trying new foods and interacting with people of different background and beliefs.

Our physical need for safety has also evolved into an emotional need. This comes at a very high price.

One emotional cost is that more and more people today are delaying – or altogether missing – adult milestones; landmarks that come with a certain degree of risk, such as buying a home/living on their own, getting married or having kids.

If we try to ensure that we, or those we love, will never get physically or emotionally hurt, it’s unlikely that we’ll lead fulfilling, prosperous lives.

This is a big problem; one that is not easily solved. That being said, I believe one area where we can all start to be more growth-minded and a little less safe is in our communication and feedback. Often, we don’t say what we really mean. It’s either safer not to or it helps us (or the recipient) maintain the status quo.

One of the best frameworks I’ve come across around feedback is from Kim Scott’s new book, Radical CandorBe a Kickass Boss Without Losing Your Humanity. Radical Candor, she argues, should be the default form of both personal and professional feedback.

One of the quadrants in the Radical Candor graph that gets less attention, but is often our automatic form of commutation, is “Ruinous Empathy.” This is when you care about the other person and their perspective, but you don’t tell them what they really need to hear, which is likely to be a tough message and/or the truth as you will see in this sample video.

According to Scott, Ruinous Empathy comes from our desire to try and control other people’s feelings, something we should not and cannot do. While it may come from a good place, it is also a misplaced, misguided effort. It’s about being safe.

This week, let’s encourage open and vulnerable communication. We may get our knees skinned – we maybe even get rejected outright — but at least we’re living authentically, growing and working toward empowering ourselves and others.

Quote of the Week

“A ship is safe in harbor, but that’s not what ships are for.”

John A. Shedd

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We Cant Agree on Anything.

We Can’t Agree On Anything

Nothing is more exasperating than watching a group of smart, qualified, intelligent executives deliberate about a key strategy, and fail to reach an agreement. In frustration, the team turns to the CEO to make the decision. Yet this is counterproductive, as whatever the CEO decides, some of the team will resent – and that resentment leads to a lack of a commitment to delivering an outcome.

It’s even more frustrating when attempting to reach a forward-thinking strategic plan for the business.

How you might ask, can this be so? These people are our leaders. They set the direction of the organization. We rely on them to make sensible decisions that can impact our careers. So, how come they are in disarray?

The CEO, after a few attempts to reach an agreement, called in a DNA Behavior facilitator to oversee the discussions.

These are just a few questions that went through my head as I watched, incredulous, as a significant group of executives began the process of planning for the next stage of the company’s direction.

As I sat to one side and observed their interaction, it was clear the room was heavy with bias, one-upmanship, egotism, and overconfidence pitched against compliance, indifference, and timidity. The assertive ones held their ground. The more vocal got louder. And the reflective and thoughtful seemed to be brooding.

Nothing was being resolved. Every stake put in the ground took the team further away from making decisions.

The DNA Behavior Solution

Each member of the team completed the Communication DNA Discovery Process, an assessment predominantly focused on revealing individual communication styles. Patterns quickly emerged showing the relationship gaps and areas where communication was breaking down, and why.

Independent research shows that Communication DNA leads to solving 87% of business issues, which are hidden as they are communication-related.

Once the team understood how their communication style was getting in the way of bringing their talent and behavioral smarts to the table, outcomes began to change.

As the Goal Setting individuals encouraged input from the Information and Stability individuals and the Lifestyle individuals used their approach to encourage everyone of the importance to reach a solution – suddenly everyone felt they had a voice. And rather than chaos, a solid structure began to take shape.

The team was then able to focus on their task. Egos, bias, and intolerance were replaced with listening, acknowledging input, and intelligent suggestions – a lively, but meaningful debate.

CDNA

As the task proceeded, the Lifestyle individuals suggested a flow chart to capture ideas. The Information individuals populated the flow chart, carefully catching ideas and suggestions. And the Goal Setters captured the key milestones for taking the organization into the next season and all agreed that it was a job well done.

From my perspective, the lesson learned for them as a strategic planning team of executives was the importance of understanding how to communicate with each other. Without the Communication DNA Discovery Process, this team would have failed to meet its obligations to set out the strategic plan for the next season. Important skills and talents would not have been brought to the table. Individuals would have left frustrated, and the business would have suffered without a cohesive sense of direction.

CDNA 3

To learn more, please speak with one of our DNA Behavior Specialists (LiveChat), email inquiries@dnabehavior.com, or visit DNA Behavior.

Acting on Feedback (#70)

Giving and taking feedback is a popular topic these days. Companies are going to great lengths to solicit more feedback from employees and customers – especially those regularly turning to social media.

In my many discussions with high-achieving individuals and companies, one thing that consistently sets them apart is their willingness to not only receive candid feedback, but to then act on it.

Acting on feedback is harder than it seems. It means that we need to first accept what people are telling us about how we can improve and overcome our inherent cognitive dissonance. It also means admitting that we don’t always have the best ideas and be comfortable giving credit to others. These are hallmark signs of a great leader. Individuals who want to do and be better don’t care where the best ideas or suggestions come from.

Here are two examples of CEO’s who have recently accepted and acted upon customer feedback:

If you want to be an effective leader, it’s vital that you demonstrate a willingness to act on feedback. Doing so conveys that you are approachable, solution-oriented, and are looking for the best ideas—regardless of where they came from and irrespective of credit.

When people see and experience this positive feedback loop, they will be even more open and honest with you or your company; it’s that open, honest communication that leads to major breakthroughs within an organization, and it costs you nothing.

To do for next week: Act on someone else’s suggestion, let them know, and see what happens.

Quote of The Week

“I think it’s very important to have a feedback loop, where you’re constantly thinking about what you’ve done and how you could be doing it better. I think that’s the single best piece of advice: constantly think about how you could be doing things better and questioning yourself.”

Elon Musk

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De-Mystifying The Multi-Dimensional Nature of An Investor's Risk Profile

What Is The Misunderstanding Of An Investor’s Risk Profile?

In my journey as a wealth mentor over the last 20 years, and developing a rigorous scientifically based behavioral finance approach for the last 15, I have watched the risk profiling discussion seriously evolve from denigration to one that is being more intelligently embraced and applied. From advisors, clients, compliance departments, and regulators: what is the misunderstanding of an investor’s risk profile?

The problem is a combination of factors:

  1. Lack of clarity in the terminology as to what defines risk profile. For instance, interchanging risk tolerance, risk perception, and risk capacity although all have different meanings.
  2. Regulators worldwide have created principles based laws around risk profiling. But the legislative vagueness leaves too much open for interpretation leaving many firms doing virtually nothing.
  3. Compliance departments allowing “tick-the-box” methods of risk profiling along a broad array of approaches from doing nothing, to guessing, observing, or 3-to-5 hacked together questions.
  4. Applying the risk profile in a linear way based on a single measurement.
  5. Lack of understanding risk profiling at a deeper level because many of the instruments and processes are slapdash and poorly constructed. Even the better tools are one dimensional but are used to measure all aspects of risk, which is wrong and misleading.
  6. The Inability of advisors/consultants to integrate risk profiling and behavioral discovery into the client onboarding process.
  7. An unwillingness to have the client invest time in additional questionnaires viewed as distracting from getting on-boarded.
  8. The plethora of online investing platforms leveraging a quick & dirty approach to “knowing the investor” without any real insights.

The positive development now is that there is a heightened awareness of the need to adopt a more formalized behavioral discovery process, recognizing that risk taking, tolerance, and loss aversion are separate and measurable personality traits. And it’s a combination of all the risk factors, along with many cognitive biases, that interplay in how decisions are made.

Further, the compliance environment is requiring a strengthening in processes because the #1 issue on the agenda of regulators is dealing with the increase in investor complaints from a lack of suitability. Suitable solutions will never be able to be satisfactorily offered with demonstrated client buy-in unless EACH of the multi-dimensional elements that make up the risk profile is understood by both the advisor and the client.

For the last 15 years in my role as a wealth mentor, I have been guiding advisors and clients to understand the multi-dimensional nature of their risk profile as highlighted in the table below.

Risk elementsA risk profile is not a single number determined in a vacuum. In fact, it is a quantifiable number made up of many measurable financial and personality based elements. Whether you use the Financial DNA Discovery Process or other platform, I suggest you follow these key steps to identify and apply risk profiling:

  1. Use the client’s long-term risk profile for building a long-term portfolio and predicting how they will intrinsically make decisions over the long term (this is what Daniel Kahneman refers to as the Level 1 behavior). The correct questionnaire structure is absolutely critical to getting this result. In my terms, this is the hard-wired natural DNA Behavior. The questionnaire should be designed and independently validated based on sound psychometric principles.
  2. Understand the short-term risk profile based on current situational attitudes and how the client manages themselves (Kahneman’s Level 2 behavior). This is what many risk tolerance questionnaires seek to measure with varying degrees of quality and accuracy.
  3. Separate the various calculations of the Risk Need to achieve the client’s goals and Risk Capacity being their financial ability to sustain losses from the various personality traits associated with risk, risk propensity (desire to take risks), risk tolerance (emotional ability to live with losses), loss aversion (emotional reaction to markets), risk and product perception (reaction to situations and products ), and risk preferences (personal evaluation of preparedness to take risk in a given situation or with a product).
  4. Know each client’s Risk Composure – how they are feeling during up and down market movements. Some will embrace down markets and others will fear them. Of course, added to this is knowing how to communicate with clients during these different times.
  5. When wealth mentoring the client, help them set purpose based goals that are clearly defined for keeping them focused on what’s important. An IPS can be used as the guide-stick and for getting the client’s emotional buy-in.
  6. Finally, as an advisor, know the influence of your own risk profile and behavioral biases. Your mindset can inadvertently play out with the client whereby over time they eat your risk profile.

Here are other good resources that support the steps highlighted above:

1. OSC Study on Risk Profiling
2. Adopting a 2-dimensional risk tolerance assessment process
3. The sorry state of risk tolerance
4. How to measure risk tolerance

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Dysfunctional Boardroom Behavior – 5 Steps to Manage

A dysfunctional board of directors can cause multiple challenges for any organization.
Industry leaders, celebrities, and subject experts often make up Boards. Many of these individuals are not accustomed to having their opinions challenged. So while they may add credibility, there’re not always a mutual fit.

Dysfunction arises when:

  • Individual behaviors, cognitive biases, decision-making styles and communication styles are not in sync.
  • Decisions are inconsistent or simply not made.
  • Board members have conflicting agendas.
  • There is lack of leadership from the Chair, no mutual respect and lack of trust.
  • Individuals react inappropriately under pressure.
  • Boardroom bullies are not managed or members just sit back and watch.

A 2009 Gallup Research paper revealed a 70% productivity gain when groups of people working together understood and were able to close the behavior performance gap. This study holds true today.

Every board plays an integral role in the success of the organization. When Board members are dysfunctional and not engaged, the flow on to the organization can be significant.

5 Steps to managing boardroom behavior.

  1. Commit to being behaviorally smart in the boardroom.
  2. Use a validated natural discovery process to assess key personality traits.
  3. Use the outcomes to build a balanced relationship between all players.
  4. Appoint a highly skilled facilitator to work with individual directors to understand communication and behavioral styles.
  5. Commit to building a culture of understanding, acceptance, and respect.

Understanding different personalities can lead to better decision-making. Directors cannot fulfill their responsibilities in a boardroom where a few dysfunctional members are allowed to control the meeting or obstruct board decision-making.