Navigating The Era Of Analysis Paralysis

We live in an age of financial hypochondria.

Several times a day economists, analysts, pundits, modelers, advisors, executives and a host of others, take the temperature of the economy by analyzing every available balance sheet and piece of economic data.

Powered by the latest technology, they input every scrap of information, turn it sideways and upside down, quantify, qualify, extrapolate, shake and bake. With the constant bombarding of data and headlines presented as affecting one’s financial future, we have now reached the point where the constant poking and prodding of data does more harm than good.

If you are always looking for the perfect prognosis to make a commitment, set a course, or take an action, an obsession with data can fatally delay and derail you. Just because you have the means to indefinitely crunch the numbers and try to anticipate every speed bump does not mean you should do so. Take the upcoming U.S. Election for example. We see headlines daily about which candidates’ policies could move markets and how policies could have long-term consequences, but many campaigns promises go unfulfilled. Since the stock market has increased under every political combination in Washington, providing an annual average return of over 10% per year since 1970, it would be a futile to try to time or trade on election data.

Ultimately, while no one has a crystal ball, history tells us that wealth is created by being bold, early and right. If you take a long-term view, all that short-term data will have minimal impact on the soundness of your decision.

The drive to measure and quantify every crumb of data will only paralyze you before you get started. Instead, that same effort should be focused on figuring out if your fundamental business plan makes sense and will stand the test of long periods of time.

Most entrepreneurs who have been successful over the long term also factor in their gut instinct, a great ability to identify trends, and a refined ability to identify and capitalize on emerging opportunity.

As a passionate entrepreneur in residential real estate re-sale, self-storage and wealth management, here are my four considerations to successfully navigate the analysis paralysis regime:

1. Ventures never succeed because of perfection, but because of good strategy and outstanding execution.

Excellent execution beats brilliant strategy every day of the week. It is imperative to understand that where you start is almost certainly not where you will end up. Along the way you will pivot, shift, triangulate, and switch direction at least once. Nothing is static and all markets are constantly changing. Opportunity is most often embedded in imperfection.

As early entrants in the self-storage business, we pivoted quickly to enhance services and capacity to meet a sudden demand surge through the pandemic. In large numbers, people re-located or re-configured their homes to create space for in-home work and school. At the same time, supply chain disruptions also created unexpected commercial demand as retailers moved from bricks and mortar stores to on-line sales, shifting their inventory.

2. The best bet when contemplating any new business venture is adhering to the 70 percent rule.

If roughly 70 per cent of your fundamental assumptions can be considered correct, that is usually good enough to get started. Getting to 90 per cent is not worth the delay or the related cost.

When we began to acquire the North American realty brokerage network that became Peerage Realty Partners, we could not anticipate rising interest rates would cause an abrupt change in residential real estate markets. Nor could we predict a class action suit that would disrupt the established flow of buy-side commission revenue.

The fact that Peerage Realty was built on strong and experienced leaders and prudent financial forecasts, has allowed us to strengthen and grow our business in the face of sectoral headwinds.

3. The worst consequence of waiting for perfect launch conditions is the potential to lose the opportunity altogether.

It is common to stall in the quest for ideal conditions and indicators, but it is better to take “very good” now instead of six months down the road. In the face of lower sales volumes and higher interest rates, we are continuing to roll our mortgage, title, and insurance business, confident in the return of market momentum. Furthermore, by framing this initiative in more challenging times, it will be a highly focused and lean operating unit.

4. People are indecisive because they are terrified of being wrong.

That reality often leads to another common mistake: Crowdsourcing a decision and seeking affirmation from various sources. While it is always prudent to listen, broadly soliciting and considering the opinions of others will stall any progress and exacerbate the tendency to overthink. Ultimately, only you know your assumptions and your appetite for risk.

While data analysis is crucial to a company’s strategic planning and success, it is the grit, determination and discipline to stay with an enterprise and adapt execution to capitalize on shifting opportunities that separates the winners from the losers.