The Value Of Knowing What You Don’t Know

No matter how good we are at what we do, there will always be more to learn. Constant learning and improvement is something that all business owners should do, but there is always a problem – how do you know what you don’t know?

Knowing Our Knowledge Gaps

Everybody in the world has knowledge gaps – they’re just a part of what makes us human. It’s impossible for us to know everything. When it comes to running a business, the number of processes and elements that go into keeping everything running smoothly are mind-boggling. For example, while one person might struggle with the finance side of things, another might say that maintaining their website was what stymied them. Another business owner would struggle with social media, while time management and marketing are big issues for another.

For many businesses, debt collection is one of those knowledge gaps, whether they know it or not. While it might seem simple on the surface to call a customer and request payment for an overdue invoice, the reality is much more complicated. How do you do that without damaging your relationship with the customer? What do you do if they can’t pay, or if they keep putting you off? And what happens if you end up having to take things further, and navigate the court systems?

The Matrix Of Knowledge

In 2002, Donald Rumsfeld created something called the ‘matrix of knowledge’, which was split into 4 quadrants. These are:

1. What you know that you know
2. What you don’t know that you know
3. What you know that you don’t know
4. What you don’t know that you don’t know

For most businesses, quadrant A is really simple. We all know what we know. But for some business owners, an outside view (like from a coach, fellow business person or advisor) is needed to understand the other 3 quadrants – particularly quadrant D.

But why is knowing what you don’t know important? Simple, because it stops you from making stupid mistakes. There is another theory called The Dunning Kruger Effect, which is defined as ‘cognitive bias in which unskilled individuals suffer from illusory superiority, mistakenly rating their ability much higher than is accurate. That’s a lot of complicated words, but what it basically means is that when you don’t know what you don’t know, you can sometimes overestimate your abilities in a given area, because you don’t know any better. The only way to stop this from happening is to identify what you don’t know, and if you can, rectify it.

When you look at the matrix of knowledge in the context of your business, you will realise that the most valuable knowledge for you lies in quadrant D – things you don’t know you don’t know. Things like a deep understanding of the true behaviour of your clients (instead of what you think they do), a new way of collecting on invoices or a better way to prevent late payments altogether. You can find a lot of this information simply by gathering and analysing big data, or researching and examining information on your business, your industry, your market and the business sector in general.

Understanding what you don’t know is a critical step in improving your business. By doing this you can uncover any holes in your business and start down the road to fixing them, helping improve how your business runs and ultimately your profitability.  At Debtcol, we exist to fill in the gaps in your knowledge for you. Our experts have decades of experience in debt collection and prevention, which means we’re perfectly placed to help you. If you find chasing invoices or putting processes in place to prevent late payments difficult, we’d love to help. Just get in touch with the team today to book your free consultation.