Does the emperor have no clothes?
Does the emperor have no clothes?
It doesn’t always pay to follow the crowd

In the world of dentistry, it’s often hard to know who’s right. Competing voices, contrasting opinions, and too much confusion, can all lead to uncertainty.

For some time, we’ve been asking tough questions about NHS dentistry. Commercially, things haven’t been adding up, and now it seems that the rest of the world is beginning to follow suit. The industry is catching up, and the consensus is changing.

NHS dentistry is just one good example of human nature in action, with large groups of people reinforcing each other’s belief that nothing was wrong. Look beyond this, however, and the herd mentality runs deeper.

Back in 1935, Solomon Ashe carried out an experiment in conformity, in which a participant was asked to indicate which line best matched a target line. The answer was clear, but there was a twist: the participant was joined in the room by seven actors, all of whom had been instructed to give an obviously wrong answer. Perhaps unsurprisingly, over the course of the trials, 75% of participants ran with the crowd and gave an incorrect answer at least once. When it seems that everyone except yourself is aligned with one view, it’s natural to assume that they can’t all be wrong, or to fear ridicule by standing apart.

This isn’t just happening when it comes to clear decision-making points in life and business; it’s also around us on a subconscious level in micro-decisions. It’s the reason we join a long queue rather than stepping around it to the empty self-service, and why we might laugh along at an unfunny work anecdote.

Another evidential example is the Milgram experiment, which investigated how and why people obey when they feel coerced. This particularly considered the role of so-called authority figures, with the experiment presenting participants with an authority figure who instructed them to give “electric shocks” to another participant (in reality, an actor). What Milgram’s experiment proved was that even when their better judgement is against an action, many people continue to abdicate to authority.

In the dental industry, there are many different authority figures and the sad reality is that many of them don’t have the experience or expertise to offer good advice. They may have a conscious or unconscious bias, or even an agenda of their own to serve. In sum, they’re not necessarily to be trusted.

Conversely, the advantage of a business like ours is that Hive doesn’t have the same level of bias; here, the range of services we offer means that we’re never compelled to “sell” via bad advice. Instead, we can guide our clients towards the services and support that truly make the best sense for their business.

Speaking to clients on a daily basis, I’ve found that some kind of fallacy or business myth comes through in almost every conversation. And so, when facing any kind of decision or assumption, it always pays to pause and examine your own thought processes. Why are you making that decision? What is your choice grounded in? If the answer is that “everyone else is doing it” (as seen in the Ashe experiment) or “they said so” (Milgram), it’s time to re-think.

Following the crowd is never a good business reason for doing something. For us, it’s a helpful part of the process to consider a counter-argument for any decision, as it often helps to gain a true perspective of what’s going on.

There’s a difficult myth among some traditional lifestyle practices, which is often reinforced by common consensus. These might be practices that are 20+ years into ownership, with a principal who works hard, takes a reasonable sum (let’s say £10,0000) per month, and on paper, has a business that’s 30% profitable. However, this isn’t quite right. If a practice isn’t allowing for paying a salary, the profit and loss figure isn’t reflecting true profit. When salary is factored in, true profit might be around 5-10%, but the common consensus, reinforced among owners, is that this doesn’t matter. Considered objectively, though, it does; a good business should be able to pay for itself and then make a good profit.

When the pandemic hit, we found that the “crowd” of owners operating in this way struggled to keep their business running well and generating profit. In this situation, it was the owners who ran their businesses as a business, that were ready for disruption and came back stronger than ever. Originally, they were going against the consensus by operating differently, but now that times have changed, they’re seeing the wisdom of taking a different stance.

Before Roger Bannister, the world thought it was physically impossible to run a mile in under four minutes. It had never been done, and thus it could not be done. Just over a month after Bannister broke the four-minute barrier in 1954, another man achieved the same feat. By the end of 1957, 16 runners had also followed suit. Because the impossible was now possible, the “Bannister Effect” showed that they could do it, and so they did. But while Bannister’s name is famous, very few remember those who came after. It might be new territory, but taking the lead as an outlier can also lead to unprecedented success.

At Hive, we’re never afraid to question old dogmas. We’re here to support you to trust your own instincts and arrive at your own decisions. If something doesn’t feel right, you’re probably right. For a conversation about your business, get in touch with a member of our team.

The information contained in this article is based on the opinion of Hive Business and does not constitute formal tax advice. Any tax outcomes will be based on individual circumstances, tax legislation and regulation, which are subject to change in the future. You should seek specific advice before embarking on any course of action. Hive Business does not provide regulated Financial Advice, including advice on investment, insurance or lending products or their suitability for you. This article is provided for information only and does not constitute, and should not be interpreted as, investment advice or a recommendation to buy, sell or otherwise transact, or not transact, in any investment including Bitcoin and other crypto. Any use you wish to make of any information contained within this article is, therefore, entirely at your own risk.

By Dan Fine Management Consultant
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