from the customer that they lose sight of the importance of keeping their existing clientèle.
HERE’S AN IDEA FOR YOU …
You don’t have to be a supermarket or an airline to introduce a loyalty scheme. They can be scaled to suit the size of your enterprise and could be as simple as theatre tickets or a bottle of wine sent to anyone who makes a repeat order or spends a certain amount.
42 DON’T GET TOO COCKY
There’s a fine line between confidence and arrogance in business. Or, as Franklin put it, ‘Great estates may venture more, But little boats should keep near shore.’
Confidence often provides the ‘get up and go’ that is essential to success, but if it tips over into arrogance it is likely to lead to bad judgement, taking on more than you are truly capable of and overestimating your abilities.
DEFINING IDEA …
Action and reaction, ebb and flow, trial and error, change—this is the rhythm of living. Out of our overconfidence, fear; out of our fear, clearer vision, fresh hope. And out of hope, progress.
~ BRUCE BARTON, AMERICAN AUTHOR, ADVERTISING EXECUTIVE AND POLITICIAN
A recent study by the University of Leicester and the Economic and Social Research Council found that those business people most confident of their ability were also the most likely to fail. Dr. Pulford, from the University’s School of Psychology, said, ‘When success depended on skill, overconfidence tended to cause excess entry into a marketplace…market-entry decisions tend to be over-optimistic, with the inevitable result that new business start-ups tend to exceed market capacity, and many new businesses fail within a few years.’
The commonest reason for this was that the overconfidence led them to leap into new ventures without sufficient research or respect for the opposition and the hurdles to be overcome. In particular, they overestimated the capacity of a market to support a new player, and the attraction that their novelty would have for existing customers.
Overconfidence is more common than you think. Consider these figures from investment advisors The Motley Fool:
• 82% of people say they are in the top 30% of safe drivers.
• 86% of Harvard Business School students say they are better looking than their classmates.
• 81% of new business owners think their business has at least a 70% chance of success, but only 39% think any business like theirs would be likely to succeed.
So what can we do to ‘keep near shore’?
The first step is to honestly admit our own limitations. That means being realistic about what we really think we can do and not confusing it with what we dream of being able to do.
The second one is to remember that we are always learning and we simply never know enough. There is no substitute for good research and the tools for researching a market have never been better or more easily available—but all the tools in the world are of no avail if we don’t bother to use them.
The third step is to beware of presumptions. Never presume that competitors are wrong simply because they don’t have your forward-thinking attitude. It’s tempting to dismiss the established opposition as being slow-moving, entrenched dinosaurs and, who knows, maybe they are. But if you allow yourself to work on that assumption without examining the reasons for their behaviour you may be missing a major hurdle to market entry.
HERE’S AN IDEA FOR YOU …
Picture your own company from an outsider’s point of view, and try to be objective about the likelihood of its success. You will need help, so ask an unbiased third party about the chances and the risks. Now for the tricky bit—listen to them.
43 PREPARE FOR THE WORST
We’re often so busy getting on with business that we don’t really have time to learn from our mistakes but, as Franklin would have been the first to point out, learning is what distinguishes the smart from the stupid: ‘ wise men learn by others’ harms, fools scarcely by
HERE’S AN IDEA FOR YOU …
You don’t have to be a supermarket or an airline to introduce a loyalty scheme. They can be scaled to suit the size of your enterprise and could be as simple as theatre tickets or a bottle of wine sent to anyone who makes a repeat order or spends a certain amount.
42 DON’T GET TOO COCKY
There’s a fine line between confidence and arrogance in business. Or, as Franklin put it, ‘Great estates may venture more, But little boats should keep near shore.’
Confidence often provides the ‘get up and go’ that is essential to success, but if it tips over into arrogance it is likely to lead to bad judgement, taking on more than you are truly capable of and overestimating your abilities.
DEFINING IDEA …
Action and reaction, ebb and flow, trial and error, change—this is the rhythm of living. Out of our overconfidence, fear; out of our fear, clearer vision, fresh hope. And out of hope, progress.
~ BRUCE BARTON, AMERICAN AUTHOR, ADVERTISING EXECUTIVE AND POLITICIAN
A recent study by the University of Leicester and the Economic and Social Research Council found that those business people most confident of their ability were also the most likely to fail. Dr. Pulford, from the University’s School of Psychology, said, ‘When success depended on skill, overconfidence tended to cause excess entry into a marketplace…market-entry decisions tend to be over-optimistic, with the inevitable result that new business start-ups tend to exceed market capacity, and many new businesses fail within a few years.’
The commonest reason for this was that the overconfidence led them to leap into new ventures without sufficient research or respect for the opposition and the hurdles to be overcome. In particular, they overestimated the capacity of a market to support a new player, and the attraction that their novelty would have for existing customers.
Overconfidence is more common than you think. Consider these figures from investment advisors The Motley Fool:
• 82% of people say they are in the top 30% of safe drivers.
• 86% of Harvard Business School students say they are better looking than their classmates.
• 81% of new business owners think their business has at least a 70% chance of success, but only 39% think any business like theirs would be likely to succeed.
So what can we do to ‘keep near shore’?
The first step is to honestly admit our own limitations. That means being realistic about what we really think we can do and not confusing it with what we dream of being able to do.
The second one is to remember that we are always learning and we simply never know enough. There is no substitute for good research and the tools for researching a market have never been better or more easily available—but all the tools in the world are of no avail if we don’t bother to use them.
The third step is to beware of presumptions. Never presume that competitors are wrong simply because they don’t have your forward-thinking attitude. It’s tempting to dismiss the established opposition as being slow-moving, entrenched dinosaurs and, who knows, maybe they are. But if you allow yourself to work on that assumption without examining the reasons for their behaviour you may be missing a major hurdle to market entry.
HERE’S AN IDEA FOR YOU …
Picture your own company from an outsider’s point of view, and try to be objective about the likelihood of its success. You will need help, so ask an unbiased third party about the chances and the risks. Now for the tricky bit—listen to them.
43 PREPARE FOR THE WORST
We’re often so busy getting on with business that we don’t really have time to learn from our mistakes but, as Franklin would have been the first to point out, learning is what distinguishes the smart from the stupid: ‘ wise men learn by others’ harms, fools scarcely by
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