When gut feel is no longer enough

The bigger your business gets, the less of it you'll ever see with your own eyes again.

Instinct only works on what you can personally observe. Once you can't watch it all yourself, some of what matters gets filtered before it reaches you, tidied up before you see it, or quietly lost to rework and discounting on jobs you're not involved with.

Some of that costs you before you see it – a customer's payment terms drift or renewal doesn't happen, margins shrink due to rework or delays, salespeople discounting because they’re dealing with the wrong prospects.

This episode explains what's required to support your instinct and keep you in control as your business grows (hint: it’s not another report, or more hours watching everything yourself). It's about how you make the shift from inspecting the business to deciding what needs your attention. Press play now.

Transcript

SPEAKER_00 0:02

Most owners trust their instincts, and most of the time they should. The trouble is knowing when they shouldn't. In June 1990, a British Airways BAC 111 took off from Birmingham Airport bound for Malaga. Shortly after takeoff, as the aircraft climbed over Oxfordshire, the cockpit windscreen separated from the aircraft. The sudden decompression partly pulled the captain out through the opening while the first officer managed to land safely at Southampton. The investigation later found the windscreen had been replaced before the flight by an experienced technician, but he'd used the wrong bolts. Most were slightly too small in diameter, the rest were slightly too short. To the naked eye, they were close, but in flight, under pressure, close was not enough. The point isn't that experience doesn't matter. It clearly does. The issue was that experience was allowed to stand in for a check that had to be precise. Owners apply a version of this all the time. They look at a pipeline, a longstanding customer, a key employee, a busy team, a full order book, a noisy month, a few late invoices, or a slipping forecast and decide whether it feels like a wobble or a real problem. A lot of the time their feeling is useful and accurate. So much so I'd be wary of anyone who tells experienced owners to ignore their gut. Because most owners have earned that instinct the hard way. They've sat across from buyers who were never going to buy, hired people who interviewed beautifully and damaged the business within six months, trusted customers who smiled warmly while slowly stretching payment terms, and learned which jobs will turn ugly before anyone else can see it. So today this isn't an argument against instinct, it's an argument against asking instinct to do a job it can no longer do alone. In the early years, instinct works because the owner's close to the work. They hear the customer conversations, they know which jobs are going well and which ones are starting to smell. They can see who's avoiding decisions, who's fixing problems quietly, which customers are becoming hard to work with, and where cash is getting tight. Business may be messy, but the owner can still feel their way through it because they're close enough to the action. They can walk into the warehouse, speak to the person on the phone, glance at the order book, look at the bank, ask a couple of questions, and hey presto, get a fairly accurate reading on what's happening. But as the business grows and the owner's distance from the detail increases, they find you know there are more people, more customers, more jobs, more handoffs, more suppliers, more layers, and more decisions made when the owner isn't in the room. And at first that feels a great progress because, well, it is, it's progress. The business is no longer just the owner and a few trusted people making everything happen through effort and memory and speed. The risk appears when the owner's view of the business doesn't improve as their distance from the work increases. They still have the judgment, they still have the commercial instinct, they still sense when something isn't quite right. But the raw material feeding that judgment has become patchier. Some information gets filtered before it reaches them, some problems are tied up in the update, or tidied up in the update, sorry, some people tell them what they think they want to hear, some customers seem fine until the renewal doesn't happen, and some margin loss hides inside work that still looks well busy. That creates a dangerous gap. The owner has enough instinct to sense problems, but not enough instinct to diagnose where the problems are coming from. And without that insight, all they can do is act on feeling. Sometimes they're right, but sometimes they make the wrong part of the business absorb the blow. A sales issue gets treated as a salesperson issue. A customer quality issue gets treated as a service issue, a handoff issue gets treated as a people issue, a pricing issue gets treated as a volume issue. The business works harder, but the underlying problems remain. The classic here is sales. I've seen this a lot in sales. The month end number keeps slipping, even though the forecast still has plenty of names in it, and everyone has plausible explanations of why their opportunities haven't closed yet. The owner's gut says there's something wrong. And often, and I've seen this quite a few times, the owner's instinct says the team isn't hungry enough.

SPEAKER_01 5:00

That might be true, but it might not be.

SPEAKER_00 5:12

The offer may have become harder to explain because competitors have sharpened their positioning. The sales team may be discounting more heavily because the prospects they're speaking to don't value the thing the business does best. The proposal may not be the problem at all. The problem may be what happened before the proposal was ever sent. And when the owner acts on instinct alone, the action usually ends up aimed at the salesperson. More pressure, more meetings, more scrutiny, more why hasn't this closed? Conversations. And it leads to more owner involvement in deals that should not need owner involvement. And that creates a short burst of activity, but it doesn't answer the better question. What changed in the system that made the sales result weaker? To truly understand the issue, the owner needs to see things like proposal age by salesperson and by lead source, conversion rate by customer time, discount trend by product or service line, average sales cycle for good fit versus per fit prospects, lost deal reasons in the buyer's own words, follow-up speed after quote, and margin quality of the work being won. So signals don't replace the owner's judgment. They give that judgment something firmer to base decisions on. If the issue is per follow-up, deal with per follow-up. If the issue is weak lead quality, stop blaming the salesperson for the wrong prospects. If the issue is discount creep, find out whether the team likes confidence, the price is wrong, the proposition is weak, or the business is trying to win customers it shouldn't want. If the issue is a slower buying cycle across a specific customer group, the owner needs to know that before the cash forecast starts lying to them. The instinct that there is something wrong is useful because it picks up a change, but the instinctual belief about the cause is often wrong, which is why insight matters. It stops the owner solving the wrong problem.

SPEAKER_01 7:20

The same issue appears with individuals in the business.

SPEAKER_00 7:30

That person is challenging more decisions, they seem slower to respond, and meetings feel like hiking through treacle when that person's involved. Other people have started working around them, so the owner senses resistance and starts to wonder whether the person is becoming a blocker. Again, their instinct may be right. Some people do protect their territory, some people do turn into personal power centres. Some people do become difficult when the business outgrows the informal role they've created for themselves.

SPEAKER_01 8:05

But it isn't the only answer.

SPEAKER_00 8:08

The employee may be the only person who understands a fragile part of the business. They may be short with others because every department comes to them to fix hours that should have been dealt with upstream. They may resist a proposed change because they can see a risk no one else's map. They may be slow because three different managers think their work takes priority and no one has decided who gets to say no. And if the owner acts on feeling alone, they may treat a system weakness as a personality problem. The person gets blamed for behaviour that the business has quietly made likely or even inevitable. And that real issue? Well, it remains untouched. The owner has a difficult conversation, perhaps even removes the person, and then discovers that the undocumented knowledge, unclear handoffs, and bad decision rules were the cause of the mess. The better route is to test the instinct. The owner needs to know where work slows down around this person, which decisions need their approval, which hands-off sorry, handoffs fail before work reaches that person, what knowledge exists only in their head, how often other people wait for them because no one else knows what good looks like, which mistakes they keep catching, and what happens when they're away for a fortnight, which is one of my favourite approaches. You can find great people from that, and you can find people who have been hiding and just making the system worse. Anyway, those questions separate the person from the conditions around the person. They don't excuse pure behaviour. If someone is damaging your business and the business, it needs to be dealt with. Those are not the same problem. They just feel similar when the owner is under pressure and doesn't have time to dig into all the potential causes. So how do you fix this? How do you avoid this? I I I use the phrase incisive insights to describe what's needed to prevent these issues. Incisive insights sounds like a clever BS consultant way of saying better data, but but that's not what I mean. Some businesses have no data, which is a huge problem in itself, but most businesses already have enough data. In fact, some have far too much. They produce monthly packs, dashboards, board reports, departmental updates, finance summaries, CRMX words, HR reports, pipeline reviews, project trackers and operational spreadsheets. So if the issue is seldom that no one has numbers, what is the issue? In my experience, the real issue is that too few people can point to the three or four signals that would change what they do next. And a useful signal has one job. It shows something important early enough for the business to act. It helps people see whether a problem is isolated or repeated. It separates noise from a trend. It tells the owner where to ask the next question, it makes a trade-off visible before the trade-off turns into cash pressure, rework, customer churn, or another decision landing in the owner's desk. A measure that doesn't change a decision or that doesn't create a decision, an early warning decision, it may still be interesting, but it is not incisive. And this is where owners often get caught by the dashboard trap. They ask for more information because they don't trust what they can see. Someone then builds a bigger report. The report contains more numbers and more charts and more colours, but the business still doesn't know what needs to change because a bigger report doesn't answer a poorly framed question. If cash is tight, the useful question may not be what is our cash position. You need that, of course. The better question may be to ask which customer type is stretching payment terms and whether the business knew that before it accepted the work. If margin is falling, the useful question may not be what was gross margin last month. It may be to ask which job looks profitable when quoted but lost margin through rework, discounting, scope crepe, or per internal handoffs. If the owner keeps approving or has to keep approving the same kind of decision, the useful question may not be why won't people step up? It may be which rule, threshold, or boundary is missing that means the team can't make this decision without them. Many, most owners say they want their people to take more responsibility. Often what they really want is for people to make sensible decisions without checking everything with them. That's reasonable, but people can't make sensible decisions if the business doesn't provide the incisive insights required for sensible decision making. If a project manager doesn't know how much margin how much margin they're allowed to protect before pushing back with a customer, then ask the owner. If a salesperson doesn't know which customers the business should business should stop chasing, they'll bring the opportunity anyway. If operations doesn't know whether speed, margin, quality, or or customer peace matters most in the trade-off, they'll escalate the decision. If finance chases all debt equally rather than separating slow players by customer type, relationship value, dispute pattern, and future work, the owner will get pulled into their own conversations.

SPEAKER_01 13:57

Look, those aren't always people issues.

SPEAKER_00 14:03

Sometimes they're insight issues. Because the team can't act if the business isn't measuring what matters early enough and specifically enough. When the business doesn't have those incisive insight signals, the owner remains the translator of reality. For Douglas Adams fans, uh amongst you, think Babelfish, the universal translator. And what I mean by that is the owner is the person who understands the customer nuance, the margin risk, the people history, the the exception to the exception. And the real reason this decision isn't like the last decision that looks like this decision. That may feel like control, but it usually means the business still depends on the owner to interpret far too much. The business may be busy, profitable, full of capable, capable people, but if they need the owner to explain what matters before they can act, the owner is still part of too many decisions.

SPEAKER_01 15:12

That limits growth and it affects business value.

SPEAKER_00 15:18

A business buyer, an acquirer, may not describe it in those words. They may talk about management depth, reporting quality, customer concentration, operational control, second-tier leadership or risk. But fundamentally what they're testing is really simple. They're asking, does this business still make sense when the owner isn't explaining it? If the answer is no, their perceived perceived risk goes up. When risk goes up, valuation comes down. And that's one of the reasons incisive insights sits inside solid foundations in my catalyst operating system. Incisive insights reduce the buyer's fear that the business depends on the owner's private judgment. They also reduce the owner's fear of stepping back because they can see what needs attention without being copied into everything and being around everything. And that matters long before an exit. It matters when the owner wants a real holiday and doesn't want to return to three weeks of mess. It matters when a senior manager needs to make a customer decision without waiting for approval. It matters when cash looks fine today, but debtor behavior says it won't look fine in eight weeks. It matters when the business is busy, but the work being won is slowly becoming worse work, taking more time and effort. So what should the wise owner be doing instead? The owner's instinct, your instinct, should prompt better questions. If something feels wrong, the owner should be asking what would prove it true, what would prove it false, where would it show up first if it were becoming a pattern, and what would they expect to see before the monthly accounts finally make the problem obvious? Those questions change the owner's role. The owner stops being the person who has to inspect everything and starts becoming the person who decides what the business needs to see, which is part of a big part of the transition from owner operator to value architect, and that's a much more valuable role, which is harder than it sounds because it requires restraint. The owner has to resist the urge to jump from feeling to action. They have to keep the questions open long enough to find the right signals. They have to avoid the lazy comfort of blaming a person when the system may be causing the behavior. They have to stop accepting reports that describe activity or old results, but don't improve decision making. The test I use in this is really straightforward. A question I ask of my clients. What would we need to know earlier to prevent this becoming a problem? If the issue is sales, the answer may be proposal age, conversion by lead source, qualification quality, or discount trend. If the issue is delivery, it may be rework, missed handoffs, exception requests, job overrun by type or jobs waiting for owner approval. If the issue is customers, it may be margin by customer group, payment behavior, complaint rate, referral quality or cost to serve. If the issue is people, it may be repeated escalations, unclear decisions, absence patterns, knowledge trap with one person or work waiting because no one knows who can approve it. Look, the exact signals differ from business to business, but the principle doesn't. Good signal helps the business act before the result becomes irritating. Never mind painful. By the time the customer has left, you're too late. By the time cash is tight, you're too late. By the time the good employee has resigned, you're too late. By the time the founder has found the weakness in due diligence, Christ, you're far too late. So to be clear, incisive insights are not about knowing everything. They're about knowing the right things early enough to act to prevent future problems.

SPEAKER_01 19:45

Okay.

SPEAKER_00 19:50

Windscreen. Those bolts didn't fail because nobody had experience of fitting them. They failed because something that appeared close enough hadn't been properly checked against the job it was required to do under pressure.

SPEAKER_01 20:06

Owners face a quieter version of that test all the time.

SPEAKER_00 20:12

Customer looks valuable because they bring revenue. A salesperson looks busy because their CRM activities are f are full. Manager looks capable capable because the department keeps performing. Forecast looks believable because everyone can explain the slippage. A business looks under control because the owner still knows how to intervene when things wobble. The question is whether those things still hold when pressure is applied, when the business grows, when cash tightens, when the owner has to step away, when a key person leaves, when a buyer starts asking better questions, or when the market shifts. The owner doesn't need to stop trusting their instincts. They need to stop asking those instincts to make to make judgments without enough evidence. I'll say that again. Once the business has grown beyond what they can personally see, the question is no longer whether their instinct is good. The question is whether the business is giving them the incisive insights needed to make good judgments. As I said earlier, incisive insights is one part of solid foundations, which is only one part of the catalyst operating system. So if you've watched or listened to this and you're thinking, we're actually pretty good at this, there are eight other areas that shape how structurally sound your business is, how much it still depends on you, and how it would look to someone assessing it from the outside. And if you've listened or watched this thinking, ooh, this is exactly where we're exposed, the same point applies. Incisive insight, it's not having incisive insights may be the obvious issue for you right now, but it won't be the only thing worth looking at. My value architecture diagnostic gives you that wider view for free. You can find it at value growthcatalyst.comslash diagnostic.