The Real Reason Why Most Businesses Fail (And What to Do About It) The part of our brains with critical thinking skills is turned off - here's what you can do to activate it at will.
By Dr. Eugene K. Choi Edited by Russell Sicklick
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The Bureau of Labor Statistic published that 70% of business owners fail by their 10th year in business. What most people don't know is the underlying reason for why this is the case. It turns out that for about 70% of our adult lives, the part of our brains that is capable of our best critical thinking skills, revenue generation skills, and problem solving skills is actually turned off.
The reason for it is this:
Volatility, uncertainty, complexity, and ambiguity
In the leadership space, these elements are commonly referred to as VUCA. Your brain naturally likes to avoid VUCA at all costs. This is hardwired in us from our cavemen ancestors who avoided areas of uncertainty due to the risk of being killed by a wild animal. However, when it comes to entrepreneurship, we need to move through the uncertainty because the solutions to the problems we are trying to solve are not known yet. Hence the importance of being adaptable to iterate in order to move towards better outcomes.
But if VUCA is activating the survival state that prevents you from succeeding in business, then why is it on for so much of your adult life? Even though you're rarely in life-threatening situations now?
It's because the brain feels it needs not to just survive physically, but emotionally. Research has shown that emotional pain can be just as painful as physical pain. The amount of stress, frustration and anxiety entrepreneurs face on a daily basis because of VUCA tends to trigger the part of the brain that only knows how to be reactive. This is why emotions like fear, anxiety, and frustration trigger the short-sighted survival response. As a result, the brain's most needed functions for entrepreneurs are shut off. When your brain is in this reactive state, it cannot think.
When 86.3% of small businesses make less than $100K per year with a good chunk of that going right back towards expenses, it's no wonder the business owners are consistently in a survival state. The brain equates money with survival because it's what puts food on the table and a roof over your head, but when you're in this state trying to grow a successful business, you often make short-sighted decisions that you regret because the critical thinking and creativity centers of the brain are shut off. What's even worse is your empathy center in the brain is shut off when you're in survival, which ultimately prevents you from being able to keep your focus on the one thing that helps you generate revenue: the customer.
Related: The 6 Main Reasons Businesses Fail and How to Avoid Each
The two states of the brain
The brain is only ever in one of two states. The survival state or the executive state. Survival state is activated when the brain thinks your life is in danger. In this state, your brain goes ahead and reacts without thinking. And it can only react in one of three ways: fight, flight, and freeze.
Fight
This can be a straightforward reaction such as when one gets cut off on the road and they flip their lid and try to fight back by cutting the other person back off. Where this can cause a big problem for many business leaders is their overactive survival state causes them to fight hard and overwork themselves in an attempt to generate growth for the company. This counterintuitive approach actually severely damages the business in the long term. It leads to burnout and shortsightedness on what can help the company grow the most. When your brain is in survival state, it develops tunnel vision and looks for the nearest exit because it needs to survive from the threat. This tunnel vision hurts business leaders because they cannot see the bigger opportunities and solutions that exist around them and it constantly feels like they're putting out fires all the time.
Flight
In entrepreneurship, a classic flight response is procrastination. This often occurs as a reaction to not having full clarity on how to move forward. Another reason may be having a sense of not feeling ready or capable, which then triggers the survival brain to flee the task. This can also lead to fleeing by engaging in numbing behaviors to intentionally distract yourself, such as binge-watching television, comfort eating, or any other type of overindulgent behaviors.
Freeze
This plays out as inaction or indecision, and often occurs when you are overwhelmed from the amount of work you need to complete. This survival response comes from the strategy of playing dead, where if you pretend not to exist, perhaps the problem will go away.
This fight-flight-freeze response is what often occurs when we face VUCA situations in our business. This is why we often don't feel like working and procrastinate. Or, we don't feel like working on the most important action steps that will help the business thrive.
However, it's in the executive state that you are able to access some of your brain's most critical functions that will help you uncover the solutions you are looking for in your business.
The reason for this is because you're able to activate the following:
Critical thinking skills
You are able to take a look at all the variables involved with a particular challenge and come up with a solution. This experience where your brain can connect the dots and finally see the solution only occurs in an executive state.
Executive function
This is the ability to make great decisions.
Creativity
We need our creativity because it allows us to see things we normally wouldn't have paid attention to before. This helps our brain see new solutions and opportunities that are there, and that the survival brain would not have seen otherwise.
Empathy
Many business leaders often hurt team culture because they enter into survival state. It's hard for them to see all the needs that may be communicated to them, whether it's from the employees or the customers. This occurs because the focus becomes protecting yourself when you're in survival state.
Related:6 Lifelines That Could Save Your Failing Business
How to activate your executive state
Awareness is what will help you get out of survival state and into your executive state. You cannot change until the awareness of the real problem is there first. If you have a piece of broccoli stuck between your teeth, you don't have the power to remove it until someone points it out to you or you see it in the mirror. So the first and foremost step is to examine your own actions, and reflect on how many of them were a reactive fight-flight-freeze response.
This journey of self-awareness is the key factor to tapping into your executive state, so you can start seeing the opportunities and solutions that have always existed for you and your business. That's when you realize what you thought was the problem wasn't the real problem. And that realization is what helps you address the true bottleneck that may be affecting your business.
This is exactly why some of the most forward-thinking companies are implementing things like mindfulness meditation into their culture. There are also neurofeedback technologies that can sense whether your brain is in a survival state or executive state and train you to get out of survival on a more moment to moment basis.
These are all great starts to improving performance as we continue to find more scientific evidence around how to shift the parts of the brain that aren't serving you. So make time each day to simply observe. How often do you engage in the reactive fight-flight-freeze response?
Do you notice your triggers where it upsets you? That's a fight response.
Do you notice times you procrastinate because you don't feel like working? That's a flight response.
Do you tend to enter into indecision when you have too much work on your plate? That's a freeze response.
Whatever you notice, once you become more aware of these reactive survival reactions that significantly delay your progress, you've given yourself the power to start the process of change and improvement.
Related: 5 Reasons Why Businesses Fail (Infographic)
