Monday, October 3, 2011

Could Spongebob Squarepants Also Be Bad for Business?

In case you missed it, much has been written about a study, published a couple of weeks ago in the journal Pediatrics, which detailed how a group of four-year-olds watching a short clip of an episode of "Spongebob Squarepants" performed worse on mental function tests than those who watched the more sedate PBS show “Caillou” or just drew pictures. If you’ve ever seen a Spongebob cartoon (and, unless you’ve been living in a cave, you probably have), you can attest to the frenetic pace of the content. In fact, the show is reported to switch scenes every 11 seconds (verses twice a minute for the tamer Caillou).

While I certainly wouldn’t suggest that my early-stage entrepreneurial clients are like four-year-olds, I’ve seen the frenetic pace at which they are often asked to operate. As founder, CEO, CFO, CMO, CTO (and whatever other two letters you want to put in front of the “O”), not to mention chief cook and bottle-washer, the job often demands constant reaction to and decision making about what’s good for business. I’m sure the barrage of incoming emails, phone calls, posts, and other inquiries can at times be completely overwhelming.

Just last year, I was working on an acquisition transaction with a client who was negotiating a letter of intent (LOI) to sell his business. I met with him to explain that the LOI didn’t really cover any of the key issues (like structure, escrow, earn-out details, and, every lawyer’s favorite, indemnification) and that, once he signed it, his leverage would decrease significantly. He spent much of the meeting reading and responding to emails on his iPhone (along with the two calls he took along the way). Basically, his conclusion was that he had made up his mind to sign the LOI “today,” and he was prepared to deal with the fallout.

I would have felt fine about that decision (heck, it’s his business after all) if I believed he had been paying attention and had stepped back to consider the ramifications. I knew he had not. After more than three months of subsequent due diligence and negotiation, he abandoned the transaction because he didn’t really have a deal.

I’m not sure that the Spongebob study translates into the real life of the adult entrepreneurs I work with daily. It may not even translate into a meaningful analysis as it relates to the behavior and cognitive function of four-year-olds. Some (including, not surprisingly, the folks at Nickelodeon) have questioned the small sample size and the methodology of the study.

That said, the findings seem sort of obvious if you think about it. It seems like the better we become at multitasking, the more difficult it becomes for us to focus on a single important decision. I’ve sometimes wished that a client would take a step back (and a deep breath) before making a decision that could have important business ramifications. In the sometimes ADHD world of entrepreneurship, it often doesn’t happen.

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