In recent years, many companies have focused on increased digitalisation, transformations or new working methods. Modern financial controlling is required here in many ways to ensure the organisation's goals together with the management.
But be careful - there are also human factors!
Complexity, the constant flow of information or the growing dynamics quickly lead to our brains being overtaxed. An example of this is FOBO - the "Fear of Better Options". The main effect of FOBO is that decision-making processes become paralysed, which can have serious consequences for companies. In addition, a multitude of Unconscious Biases (German: Unconscious Biases) play a role - also in controlling!
Effective business partnering also means knowing human factors and learning how to deal with them adequately - there is a lot at stake in organisations!
The quality of decisions and their effective implementation are essential factors for the success of companies. It is often a matter of optimising or maximising results. In financial controlling, one of the most central tasks on the agenda is "decision support", which is practically reflected in the following activities:
But what if these activities are systematically distorted?
The self-image in financial controlling - which I know well from my own practical experience in a 20-year corporate group career - is often shaped by attributes such as neutral, objective or rational. Being called a "no nonsense guy/lady" may reinforce this image, as does the use of state-of-the-art tools or processes.
There are also human beings in Controlling & Finance. It can be said on the basis of a well-researched field that phenomena such as unconscious biases or various deeply rooted patterns do not stop in this area either. One phenomenon of these is FOBO - "the Fear of Better Options".
The term FOBO, like its more widely known counterpart FOMO ("Fear of Missing Out"), goes back to the US American investor and author Patrick McGinnis. He considers FOBO to be particularly problematic in decision-making.
The "fear of better options" refers to the inability to decide between different options when they seem possible and good.
In business, there are many goals and interests to consider. We have often been socialised to maximise results and choose the best option. This can be very unsettling and the number of options has tended to increase. The internet and the mass adoption of sophisticated technologies have accelerated the availability of information.
This can lead to us being overwhelmed by choice and overthinking - even in business. After all, there might be a better option that we don't know about yet!
The desire to maximise the outcome of a decision makes FOBO highly relevant. The usual incompleteness of information combined with additional (and potentially unknown) options is a burden.
FOBO can affect decisions of all kinds, investments as well as strategic direction, planning and forecasting as well as HR. The effects of FOBO are typically a combination of the following factors:
Unconscious biases have already been mentioned - in FOBO, the following, for example, play a role:
Instead of finding the best option and maximising results, an organisation decides too late or not at all. With the exact opposite result - instead of maximising, resources are reduced.
Some degree of FOBO is both rational and useful, as choosing the first available option is not necessarily the best one. Beyond a certain point, more options no longer increase the chances of achieving a goal, but jeopardise it.
Decision-making processes take place in organisations all the time, and controlling is usually right in the middle of it. Knowledge of distorting factors as well as a suitable toolbox with adequate measures can significantly increase the quality of processes!
This requires dealing not only with "hard stuff" such as methods, processes or tools, but also with the human side of business.
During my time at Borealis, I managed to gradually build the latter into decision-making processes as well as into connected elements. At the end of the day, organisations decide how they decide - effective business partnering can make all the difference!