Walking in Circles

Just like people, businesses who get lost tend to walk in circles.

Jan L. Souman, a German psychologist, wanted to determine scientifically if this was true. He took participants of an experiment to a large forest area and to the Sahara desert and used a global positioning system to track where they went. They had no compass or any other device. Instructions to them were simple: walk in a straight line in the direction indicated.

Dr. Souman later described what happened. “[Some] of them walked on a cloudy day, with the sun hidden behind the clouds [and with no reference points in view]. … [They] all walked in circles, with [several] of them repeatedly crossing their own path without noticing it.” Other participants walked while the sun was shining, with faraway reference points in view. “These … followed an almost perfectly straight course.”

This study has been repeated by others with different methodologies.  All returned similar results.

Without visible landmarks, human beings tend to walk in circles. (source)

Businesses without a three-year plan, a one-year budget, and a quarterly forecast (i.e., “visible landmarks”) will tend to manage themselves in circles.  Lenders, investors, and possible buyers expect businesses to have and update these “points of reference” on a regular basis.  If your finance team does not have the process in place today, get help from a trusted advisor.  Don’t waste your precious time walking in circles as your competitors pass you by.

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