What Happened to Common Sense in Business?
Updated: Oct 17
Common sense is often touted as an important part of successfully running a business or leading a team in a company. Business leaders see this as a given, and yet it's a trait that seems to be slipping away both in the workplace and our personal lives. This shift is having a real impact on how we run our businesses, and how we interact with our customers.
Take, for example, the well known case where a restaurant chain was sued after a customer burned themselves with a cup of coffee they were holding in their lap. Common sense tells us holding a hot drink in your lap is a good way to get burned. From a business perspective, however, common sense says making your coffee so hot that it can cause third degree burns and permanent disfigurement is a bad idea. The chain now warns customers its coffee is hot, but didn't lower the serving temperature to a safer — and industry standard — level. From a common sense perspective, it's easy to point to both sides and ask, "Why did they do that?"
Common Sense in Business
Common sense in business has its roots in time-tested principles and practical wisdom. It's the ability to make judicious decisions based on experience, reason, and an astute understanding of the market and industry dynamics. Common sense is a key element in guiding businesses through both smooth operations and stormy challenges.
The Decline of Common Sense in Business
While it's easy to blame a decline in common sense on people being lazy, or a lack of interest, there are other factors at play. The rate of technological change, changes in education and culture, and psychological factors are all changing how people make decisions.
The digital age has ushered in unprecedented access to data, but the sheer volume can overwhelm decision-makers, leading to information paralysis rather than informed choices.
In the age of big data, it's easy to prioritize quantitative data over qualitative insights, sacrificing long-term vision for short-term metrics.
Shifts in Education and Culture
The emphasis on standardized metrics and quarterly earnings reports can create a myopic focus on short-term gains, undermining a broader, more sustainable vision.
Pop culture's glamorization of rapid success and overnight sensations may divert attention from the steady, strategic growth that often underpins lasting business success.
Cognitive biases, such as confirmation bias or the sunk cost fallacy, can cloud judgment and lead to irrational decisions.
The frenetic pace of modern business often pressures leaders into snap decisions without due diligence.
Common Sense Failures
Common sense can be used as an excuse or crutch to justify poor decisions. In business, common sense has historically been an excuse for artificially limiting the roles women play. The ideas that women aren't leaders, aren't as smart as men, or will pull back from their job responsibilities if they have children have all been justified under the guise of common sense. In reality, women-owned business owners can be very successful. Forbes backs that up noting women-owned businesses showed higher earnings growth in 2022 compared to male-owned businesses at 27% versus 22%.
Failing to appropriately use common sense has other issues for businesses, too. Making poor decisions, issues with marketing and customer relations, and poor financial management are all issues businesses can face.
Polarization within organizations can stifle innovation and collaboration, hindering strategic decision-making.
A rush to embrace the latest trends without careful evaluation can lead to poor investments and wasted resources.
Marketing and Customer Relations
Misaligned marketing strategies can alienate customers, causing a loss of trust and revenue.
Neglecting customer feedback and trends can lead to missed opportunities and competitive disadvantages.
Ignoring long-term financial health for immediate gains can jeopardize a company's stability and long-term viability.
Over reliance on financial metrics without considering broader market forces can lead to financial crises.
The Ripple Effects of Business Common Sense Erosion
Your TV's remote control is a great metaphor for businesses failing to use common sense, ultimately giving their customers a poor experience. Lindstrom Company founder Martin Lindstrom shared an experience where he ultimately unplugged the television in his hotel room because the remote was so complicated he couldn't figure out how to turn it off. He later had a conversation with one of the engineers who designed the remote. The engineer proudly explained how they designed the remote to accommodate the desires of every department in the company, but didn't see why the overly complicated design was so frustrating for customers.
Common sense tells us TV remotes should be designed so they're easy for customers to use, and not as a series of compromises to meet internal company desires. Lindstrom's experience, however, shows that businesses have to deal with internal dysfunction, potential financial consequences, and reputation damage.
A lack of common sense within an organization can result in miscommunication, inefficiencies, and conflicts among teams.
Poor decision-making can lead to employee disengagement and turnover.
Ill-informed business decisions can result in significant financial losses, jeopardizing a company's sustainability.
The erosion of common sense can contribute to market volatility and economic instability.
The failure to adapt to changing customer needs can lead to a tarnished reputation and a loss of market share.
Ethical lapses stemming from a lack of common sense can irreparably damage a company's brand.
Finding Common Sense in Business
Common sense isn't a you-have-it-or-you-don't situation. It's a trait that can be refined, much like any other skill. Businesses can help grow a common sense culture by encouraging strategic thinking, encouraging innovation, promoting ethical business practices, and ensuring your business supports diversity, equity, and inclusion. Overcoming imposter syndrome can help people feel more confident in their decision making process, too.
Re-emphasizing Strategic Thinking
Encourage leaders to prioritize long-term vision over short-term gains.
Foster an organizational culture that values informed, data-driven decision-making.
Promoting Innovation and Adaptability
Encourage teams to embrace diverse perspectives, fostering innovation and adaptability.
Create an environment where experimentation and learning from failure are encouraged.
Ethical Business Practices
Promote ethical behavior as a core business principle.
Instill a sense of corporate social responsibility to build trust with consumers and stakeholders.
Bringing Back Common Sense
The decline in common sense is a problem for businesses, but it isn't a one-way path. Fast paced technology advancements, the need to make critical decisions quickly, social pressures, cultural bias, and a lack of experience all play a role. Overcoming these issues and building a healthier business requires education, identifying and correcting the misconceptions and stereotypes that lead to bias and poor decisions, promoting innovative thinking, and remembering customer needs. It is, as they say, common sense.
If you’re concerned about a lack of common sense in business decisions, or need help strategizing for a business sale or purchase, iKadre can help. Schedule an appointment to learn more.