Is your practice anchored by the past?
By Kathran J. Martin
Elite Advisor Group, LLC
It's easy to say that someone else has their "head in the sand." But without knowing it, we all run the risk of holding our businesses back with this decision-making bias.
It’s not news to you that competition is really heating up. There are more advisors competing in your space every day and there are fewer affluent clients looking for advisors. The phone doesn’t ring like it used to. Strategic alliances don’t work like they used to.
But Mark Hurley says that as business leaders, we don’t think these headwinds impact us because we are anchored in the past.
One of the more brilliant insights uncovered by Daniel Kahneman, recent winner of the Nobel Prize for Economics, is that the mechanisms used by the human brain in processing new information make it is almost impossible for any decision maker to easily adapt to changes in his or her organization’s operating environment.
More specifically, Kahneman found that the brain’s decision making processes do not rationally consider all available information (both new and old) with equal weight. Instead, it relies on a hardwired processing mechanism that begins with a pre-existing reference point tied to one’s earlier experiences — the “anchor."
All of the new information is then compared against this reference point, with a strong bias against moving away from the anchor. It is extraordinarily difficult for the brain, even with the new information, to “un-anchor” itself from its reference point.
Here’s the application. Remember, don’t drop the anchor.
You find margins getting squeezed by the rising cost of your team, technology and competition.
Organic growth rates are slowing across the board.
Where do you find a competitive advantage? How do you change your growth trajectory in the face of these headwinds?
Unfortunately, once you figure that out, the market shifts, products change, new competitors enter and you have to evolve.
It was made really clear at the recent LIMRA conference in New Orleans just how quickly this retirement market is changing.
You have to be more nimble today. This is why many organizations are turning to marketing consultants for a fresh perspective.
Innovation, while the most overused word applied to the most non-innovative concepts, is the answer.
Mike Harris, builder of five multi-billion dollar brands, has criticized the idea of companies hiring consultants to teach them “best practices” instead of helping them innovate and differentiate. He pointed out how dull and boring businesses can become and how that stagnant attitude eventually rubs off on the people who work for them.
Instead, look for consultants who can bring true innovation based on real world connections to the market.