In business, anchoring is a form of bias. It represents something you understand to be true, but you’re not quite sure why or how you got to that understanding.
Usually it involves assigning some sort of value. In business it’s usually a monetary value, but in other aspects of our lives it can be money, or power, or relationships.
Sometimes the anchor can serve you, but other times it keeps you stuck in place, as an anchor is meant to do, right?
Anchors can serve you or not
For example, I remember the last time I negotiated a salary for a corporate job. I had just gotten out of business school and I had a nice, round number in mind that represented for me a type of landing pad I wanted to arrive at after having invested in an MBA program. If someone had pressed me about how I came up with that number, or asked me to provide a business case for why that was the “right” number, I would have had trouble answering. And yet, keeping that number in mind during my negotiations served me in getting to a starting salary for that job that I was very happy with.
Last week, I heard an example of an anchor that didn’t serve someone. I was at a meeting of consultants in Charlotte where someone told the story of a business owner who wanted to sell his business of many years and retire. The owner had a number in mind that he wanted to sell the business for, but the buyer wasn’t quite meeting it. He got so stuck on making sure he got that number that he forgot to think about all the other reasons why he was trying to sell the business. He wanted to retire and have more time with his grandkids, less stress. He wanted to leave a legacy for his community, for his family, for his employees. The deal went south and he didn’t sell his business. Maybe he was fine with that. Although, maybe he didn’t anchor himself to the ideas that would have served him best.
Are you aware of your anchors?
Have you ever missed out on a great job or relationship because the offer or the person in front of you didn’t meet some preconceived idea of value? Or, have you ever overpaid for a piece of jewelry, car or clothing just because you felt your self worth was dependent on it?
How about the other way around…have you ever missed out on a deal because you thought it was too much to pay for something, even though it would have fulfilled your dream or brought you some other true value, like to your family or your self?
This week, I challenge you to think about one idea that you’re anchored to. Where is it coming from? Is it serving you, or is it keeping you stuck?