This week we take a little different approach.

As I saw the market dipping early this week, I couldn't help but notice two things:

1. Most people had no idea anything was happening
2. Historically, the worst decision you could have made is to sell

Today we're going to talk about number one and how it impacts decisions in your business.

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3 ways to leave your echo chamber and improve your decisions

On Friday afternoon an ​unexpected jump in US unemployment​ resulted in a market dip, which caused an uncertain weekend to kick off.

Over the weekend, the Japanese markets experienced ​their worst day since 1987​.

On Monday morning, the markets were primed and ready to see another fall off the cliff.

And sure enough, it came. The market fell 2.6% in a single day, which was the ​worst single day since 2022​.

And then log-ins quit working.

Grant Cardone @GrantCardone Unbelievable the biggest trading platforms in the world are being manipulated. How convenient. Institutions able to make trades but not the people. Control the damage. 6+ trading platforms down: • Citi • Fidelity • E-Trade • Vanguard • TD Ameritrade • Charles Schwab 11:9 AM • Aug 5, 2024   934 Retweets 2806 Likes Read 318 replies

 

For a period Monday morning, all things appeared to be falling apart.

 ​$1.3 trillion of market value​ evaporated.

But then the falling market slowed and has since slightly recovered.

During the panic that set in Monday, I couldn’t help but sit back and reflect on two things:

1. Most people had no idea anything was happening
2. Historically, the worst decision you could have made is to sell

Let's start with the first.

Being in my corner of the world, it seemed everyone was talking about the market movements.

But in other areas of the internet, outside that bubble, the market was never brought up.

Did you see that sports news? What about the Olympics? How crazy was this politician's quote?

This is known as the Echo Chamber Effect.

Most of our interactions take place inside a small circle of people and accounts, driven by the things we’re interested in. Have you ever stepped back and looked at all the conversations you have going on social media, text messaging, and in person at one time? Each of those conversations is driven by the interest intersection of the individuals involved.

These interests and intersections drive our feelings and actions.

This bias is ingrained even deeper by the internet and what has become known as the Filter Bubble.

 ​Shane Parrish defined​ filter bubbles as “any time we’re only surrounded by views and opinions we agree with, while being sheltered from opposing perspectives.”

By being in a filter bubble, we come to believe that the view we’re exposed to is the only one, which distorts are relationship with the world around us.

The combination of the Echo Chamber Effect and Filter Bubbles leads to our worst attributes: confirmation bias, polarization, and rash decisions.

It’s so easy to be driven by these narratives and react in ways that have a negative impact on both you and your business.

While in the market echo chamber, it’s so easy to see the market crashing and assume your business will be directly impacted.

You then decide not to invest in that new equipment. You don’t give your employees the raise you’d planned on. You underprice a new contract, assuming you’ll “need the business.”

But each of these actions, while they seem prudent in the moment, have potential long-term impacts and fall-out.

The equipment starts breaking down, lowering your output, creating idle time, and ultimately reducing revenue and profit.

That raise you don’t give your employee erodes trust, which means they interpret future actions more negatively, resulting in them listening to that recruiter they’d previously ignored.

The new contract works for a time, but the costs go up and you’re underwater and faced with the decision of ending the contract or asking for more money.

Let me be really clear: these biases are the default. We don't avoid these biases by not thinking about them. These biases happen whether we're aware of them or not.

So how do we avoid them?

Only through understanding and acknowledging these biases can we begin to combat them.

To avoid both the echo chamber and filter bubble, we have to be proactive in seeking out new information sources:

1. Widen your circle of regular interaction
2. Seek out new and different perspectives online
3. Consistently ask yourself: what potential bias could I have here?

Widen your circle

In the rhythms of our day-to-day life, it’s easy to see the same people over and over again. It’s easy to never experience that new person with a different perspective.

So, to have those experiences, we have to intentionally seek them out.

This means entering new spaces that will make you uncomfortable.

For me, an introvert, this is hard.

But over time, I’ve come to enjoy joining peer groups and organizations.

If you’re an electrical engineer, don’t just join the Electrical Engineers of Oklahoma, join organizations that will put you around people with different areas of expertise.

For me this was joining organizations that had a specific focus (such as one geared to Christian business owners) but that exposed me to a wider array of business types.

As I saw my circle getting too saturated with the one type of owner, I started seeking out online communities that offered a wider diversity of opinions.

Through this diversity of opinion, I’ve been forced to question my default opinions, which has resulted in me implementing real things in the businesses I work in. The right questions for the “ignorant” person can open up new possibilities that help you improve your business.

Seek out new and different perspectives online

As I mentioned in the last, online communities are a goldmine for new and different perspectives.

These will expose you to more religious, political, and business ideologies than are often available to you at a local level.

These communities also allow you to niche down and find something for a really specific need.

Early on in my online business journey, I found others who were seeking the same thing. Joining these communities allowed us to learn at a much faster pace, as we shared successes and failures with each other.

Many of these people I would have never “found” in my city, or potentially even wanted a relationship with. But because we were chasing a common goal, it gave us a platform to work together and learn from each other.

Ask: What potential bias could I have here?

Maybe it’s just me, but I find we’re really bad a reflecting.

In the busyness of life, it’s easy to just move from one thing to the next.

But if we don’t pause to reflect on what we could be missing, these sort of biases (echo chamber and filter bubble) can run rampant in our decision-making.

It can narrow our perceived list of possibilities, making our decisions worse and worse over time.

By setting aside time to reflect, we allow space for these to surface.

Based on your personal and business experience, create a list of questions that’ll “draw out” these biases for any new project you’re looking to adopt.

Here are a few questions I’ve asked:

1. Why do I believe that?
2. What would Person A do in this situation?
3. What is my desired outcome? What are 3 other routes to get there?

—

Understanding these biases is a good way to avoid making decisions without complete information.

We can never guarantee good decisions, but with the right guardrails, we can reduce the probability of bad ones.

And we’ll dig into that takeaway next article.