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How Entrepreneurs Can Use Situational Awareness to Improve Decision Making

3 Mins read

Sometimes entrepreneurs make the wrong decisions even when clues to help them make the correct ones are right in front of them.

They just don’t know how to interpret those clues. But you can avoid such failures if you know how to decode the intricacies of your surroundings, understand the momentum of the world around you, and accurately evaluate people, situations, and trends. Armed with this situational awareness, you can make the right decisions at the right moments to reach your ultimate goals.

I call the ability to do this “reading the tape,” a reference to the old ticker tape that investors used to read stock prices.

“Reading the tape” is a critical skill for entrepreneurs because it allows them to understand the social dynamics, emotions, and unspoken cues in various situations. This skill is invaluable in making informed decisions, managing relationships, and effectively leading a team. Here’s why it’s essential and how entrepreneurs can put this skill to use:

Understanding the Environment

The atmosphere or mood of a room can influence negotiations, pitches, or team meetings. Understanding the environment helps you to adjust your approach accordingly.

Here are two ways you can put this to use right away:

  • Assess Non-Verbal Cues: Pay attention to body language, facial expressions, and overall energy in the room to gauge the prevailing mood. If you were at a restaurant, for instance, you would read the tape by reading the people and the overall environment. Is it busy or is it quiet? Is there a massive table your waiter is also trying to manage? Is your waiter rushed and anxious? Or, despite the situation, do they remain engaged? Whatever is going on with them, you will have a better interaction with that server because you took the time to observe their circumstances and acknowledge what they’re going through. You can do the same in any negotiation, sales, or other business situation.
  • Adapt Communication: Once you’ve assessed the situation, tailor your communication style, tone, and content based on the atmosphere to ensure your message is well-received.

Enhancing Communication

Effective communication is crucial in entrepreneurship and reading the tape can help you choose the right words and approach to convey your message more effectively.

Here’s how to make good use of communication to become a better leader:

  • Listen Actively: Focus on what others are saying and how they are saying it to understand their perspectives and emotions. People want to be heard and that doesn’t mean “heard” as in: “Repeat back to me what I just said.” They want to be heard as in: “I get what you mean; I understand where you’re coming from, and we see the same thing.” The best relationships are built on that kind of authentic communication.
  • Adjust Language and Tone: Align your language, tone, and mannerisms with the prevailing atmosphere to ensure clear and empathetic communication. Is the mood serious, or is there room for lighthearted banter?

Facilitating Decision-Making

In group settings, understanding the dynamics and reactions of stakeholders aids in making decisions that are acceptable and beneficial to all parties.

Here’s how to put this to use:

  • Identify Key Influencers: Observe who holds influence and understand their stance or preferences to strategize decision-making. Key influencers might not always be the people in an organization’s top positions.
  • Address Concerns Appropriately: Anticipate potential concerns or objections based on the room’s mood and proactively address them. If you can answer the concerns before someone else even brings them up, you have a better chance of influencing the outcome.

Building Stronger Relationships

Building and maintaining positive relationships is vital in business. Understanding the emotional states of others helps in fostering trust and rapport.

How do you do that?

  • Express Empathy: Acknowledge and validate others’ feelings and concerns to show understanding and build trust. One way to do this is to ask questions, which lets the other person know that you are interested in what they have to say and that you want to hear their views about what matters to them.
  • Adapt Leadership Style: Tailor your leadership approach based on the emotional climate to resonate with team members and motivate them effectively.

Navigating Conflict and Challenges

Conflicts and challenges are inevitable in business, and it’s important to identify potential conflicts early and address them constructively.

To do this, you can:

  • Detect Tension or Discomfort: Be alert to signs of discomfort or disagreement and intervene appropriately to prevent escalation. You are rarely going to resolve a difficult situation by trying to dodge it, so you need to have those tough conversations. Problems need to be faced with clarity and reason.
  • Facilitate Open Dialogue: Create a safe space for open discussions where concerns can be voiced and resolved.

Reading the tape allows entrepreneurs to use situational awareness to adapt their communication, decision-making, and leadership style based on the emotional and social dynamics of a given situation. This heightened understanding of the environment leads to better relationships, effective problem-solving, and successful business interactions.

Mike S. Shapiro, author of Read the Tape: Using Situational Awareness to Predict Business and Personal Probabilities, is an entrepreneur, investor, personal development coach, mentor, speaker, and Forbes podcast host.

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