How cognitive biases could affect your business strategy according to FileRepublic
Should you prioritise growing your business or protecting it?
There are actions you can take as a business owner or executive that proactively pursue development and growth, such as marketing, acquisitions, and partnerships.
And there are strategies that protect your business, like risk mitigation and building a strong brand reputation.
With limited resources what should come first?
Here’s where I see the problem with the answer, we most often hear.
– Growth is glorified by the media and our minds become biased toward chasing it at the expense of what might be more fundamentally important.
– Humans are wired to avoid losses, and conversations about potential loss can trigger negative emotions.
– We actively seek novelty as it triggers the brain’s dopamine system, which is why we see organisations chasing anything that mentions AI without fully understanding where and how it fits their business strategy and operational needs.
– Social status requires that we too need to be able to say we’re trying the new shiny thing and signal that we are important and not being left behind.
Should growth come at the expense of defence?
I’m not suggesting that focusing on growth is bad or wrong, just that it is often disproportionately represented in the boardroom.
+ Defensive strategies help businesses identify, mitigate, and prepare for risks before they materialise. Risks like data breaches, regulatory fines, operational disruptions, or economic downturns can be devastating if unanticipated.
+ Defensive strategies protect a company’s core assets—such as intellectual property, financial reserves, data, and customer trust.
+ Protecting reputation is another critical aspect. A defensive approach to risk management helps a business avoid scandals, recalls, or crises that could tarnish its image. Proactively protecting against these issues often builds customer trust and loyalty.
+ In some cases, having a robust defensive strategy can serve as a competitive advantage. For instance, businesses with superior data protection measures or contingency plans may attract more customers who prioritise security and reliability.
+ Competitors may not survive the impact of crises if they lack defensive preparations, allowing well-prepared companies to thrive or capture additional market share during or after disruptions.
+ Defensive strategies reassure employees, stakeholders, and investors that the company has prepared for potential challenges. This fosters a sense of stability and confidence, which can be invaluable in uncertain times.
+ Defensive measures often involve upfront investments in compliance, insurance, or risk management systems, but they pay off by lowering long-term costs associated with emergencies, lawsuits, or repairs.
How should I move forward?
I don’t believe it should be a choice between proactive growth and protective defence, but the boardroom discussion should be how to achieve both.
Focusing on defensive strategies doesn’t need to stifle innovation or growth, instead it strengthens a company’s foundation, allowing for sustainable growth that is resilient to risks.
A strong defensive position equips business to weather storms and emerge from them in a stronger position than competitors that didn’t invest in taking the same precautions.
All of which are fundamental platforms for growth.
Before you look at what’s new and get caught up in hyperbole, check how sturdy the base is from which you’re building.
Sean Conroy is File Republic’s Global CEO and leads a business focused on providing file management products and services to law firms that cannot and will not compromise their client’s Personal Identifiable Information.
