How do you take risks?
Ellsberg paradox
If you're an entrepreneur, you must often take risks simply because you create something new, be it a newsletter, a business model, or a product. And building up new things implies that you make an effort now but will be able to evaluate the results only later. And these results will not necessarily be positive.
A cognitive bias makes us believe that some risks are somehow "better" than others, which isn't true. We tend to take these risks more often, and this isn't the best strategy.
Learning about this bias and how to overcome it will help you make better strategic decisions.
A wall panels case
Many years ago, I was a CEO of a company that manufactured wall-finishing materials. Among them were wall decorative panels. And the business unit responsible for panels was the worst in the company from the point of view of financial results. Only a handful of our distributors bought these materials, and the unit remained loss-making for several years.
It was evide…