"What gets us into trouble is not what we don't know. It's what we know for sure that just ain't so."
– Mark Twain
It’s funny how quickly the world changes. As a high school photographer, I spent every spare dollar improving my beloved Pentax K100. Back then, developing film in a darkroom—transforming rolls of 35mm negatives into glossy prints—was the pinnacle of innovation. Kodak, the undisputed king of photography, was everywhere. But as I think back to those days, I can’t help but reflect on how swiftly Kodak's dominance faded, a victim of its own blind spots and biases.
Kodak’s story serves as a stark reminder: the things we’re most confident about often pose the greatest risk. It’s not just about what we fail to know—it’s what we think we know for sure that turns out to be wrong.
Whether you’re running a global corporation or managing your personal finances, blind spots can quietly undermine your success. Just as Kodak’s overconfidence in its film business blinded it to the rise of digital photography, countless individuals and businesses fall prey to biases that cloud their decision-making.
In this blog, we’ll explore overconfidence in business and how to avoid it. Through examples like Kodak’s downfall and lessons learned from my own career, we’ll uncover practical strategies to navigate uncertainty, avoid pitfalls, and thrive in an ever-changing world. Because in the end, success isn’t just about seeing the big picture—it’s about catching the details we might otherwise miss.
Overcoming overconfidence requires awareness, adaptability, and strategic guidance. By understanding the risks associated with blind spots and biases, businesses can position themselves to avoid costly mistakes. Below are three key strategies to help navigate uncertainty and maintain long-term success.
Anyone who took pictures in those days remembers the dominance of Kodak, but they don't exist anymore. Why? Because they had many biases and blindspots that eventually forced them into bankruptcy in 2012. Kodak believed that "film was here to stay" and that customers would stay loyal to the medium. They also had a status quo bias–a preference for keeping things the same even when change was needed.
Haven't you ever heard if it isn't broken, don't fix it? What happens when it is broken? And worse, too late to fix it? The Kodak executives had an overconfidence bias, overestimating one's ability to predict outcomes or succeed in uncertain situations.
Business owners must surround themselves with consultants and key advisors to see challenges from a different perspective. Sometimes, businesses take on too much concentration risk or look at all the cash in their accounts and feel comfortable, which can lead to overconfidence. Maybe they have been in business a while and don't see the point in changing. Change is hard, and we need to be pushed. Openness to feedback and ideas is key to mitigating this risk.
In today’s world, businesses have unprecedented access to key financial metrics, making it easier than ever to gain insights into their operations. These metrics, when properly analyzed, act as a compass, guiding decision-making and revealing critical trends before they escalate into major challenges. Identifying and understanding these trends early can serve as leading indicators of potential problems, giving you the opportunity to address them proactively.
However, merely having access to this information isn’t enough–you need to leverage it effectively. Quality financial statements, detailed forecasts, and actionable metrics form the foundation of sound decision-making. Tools like forecasting models provide a structured way to anticipate changes, allocate resources, and prepare for uncertainties. For example, as discussed in our blog "Forecasting Model: A Solution to Flying Blind," these models enable businesses to simulate various scenarios and evaluate their potential impacts, making it easier to navigate uncertainty and align efforts with long-term goals.
I have seen overconfidence in so many situations in my life. I worked at an Electronics Distributor in the early 2000s; they sold 100,000 SKUs of Electronic Parts and had an extensive catalog that they relied on for continual sales. Their business grew to record numbers in 2000. They were all patting themselves on the back until the Telecommunication industry busted in the early 2000s, and they saw a 30% decline in Sales.
At the same time, the internet was becoming more popular, and customers were searching online. The problem is that they focussed on the catalog and dabbled online. You would get a product description by pulling up a PDF of the catalog's black and white pages, which was very hard to read. The parts were not very searchable. I heard stories of our sales team visiting a competitor's website to get more information about a particular part.
Change is hard. I will not say I like it, but we have to adapt to what is happening. It is best to do this by educating yourself by learning what other people are doing--audiobooks, mastermind groups, and even AI can help. The power of Chat GPT to be a strategic partner and help you see challenges can be extremely powerful. I have recently had Chat GPT ask me questions as I work through Goals, Next Steps, and potential blind spots. Geoff Woods' book "The AI-Driven Leader: Harnessing AI to Make Faster, Smarter Decisions," was instrumental to learning about the benefits of AI in business.
We know that businesses fail due to biases and blind spots. At Bender CFO Services, we'll work with you to avoid this so we can continue to grow your business and navigate the ever-changing financial environment. If you don't have one, consider hiring a fractional CFO to help you identify key risks and opportunities and connect you with the right advisors.
Let's not be like Kodak and many other businesses that have not stood the test of time. We must be aware of our biases and blindspots so we can continue to grow and impact others. Contact us today to learn more about our Fractional CFO services!