Overcome your tendency to loss aversion
Identify your loss aversion pattern
In a journal, write down answers to the following questions: Where have I fallen for loss aversion in my professional activities? How has doing so harmed me? Where have I seen others in my professional network fall for this bias? How has doing so harmed them? Your answers will help you identify the patterns of loss aversion within you and your organization.
Think about the available options before making a decision
Make it a habit to slow down your decision-making process when making long-term decisions. For example, when shopping for computer equipment, take a minute to think before accepting an offer to buy an extended warranty. Is it worth it to buy an extended warranty if you can afford to replace the equipment when it wears out?
Evaluate the probable outcomes of an uncertain situation
Let’s say your business is facing stiff competition from a larger competitor who wants to poach some of your client accounts. You can use probabilistic thinking to identify which client accounts to protect. For example, calculate the cost of retaining current clients versus acquiring new ones. Then use your data to estimate how many of your current clients are likely to jump ship to your competitor. Identify your biggest and most valuable clients and focus the bulk of your resources on keeping them happy instead of trying to keep all your existing clients equally satisfied.
Reflect on the outcomes of past decisions you made
Let’s say you’re struggling to decide whether to attend an hour-long networking event. Before making a decision, ask yourself how productive past networking events have been to your business or career. How many long-term connections did you make during the last event? How valuable were those connections? If prior events didn’t yield much fruit, then attending may not be a good idea.
Consider what your future may look like if you avoid making a decision
Let’s say you’ve been passed up for promotion for years. But you’re reluctant to seek a new job because you’re afraid of risking your current perks for an unknown opportunity. Ask yourself: How will I feel if this company doesn’t give me a promotion in 2 years? What are my chances of being promoted in the next 2 years? If you’re not happy with your answers, then seriously consider launching your job search immediately.