Combating Confirmation Bias Could Spell Success for Your Startup
Entrepreneurs are a self-confident bunch, and for good reason. The old perception of nine-in-ten startups failing remains as true as ever, and you have to have deep faith in yourself and your idea to face down such long odds.
But the gift of self-confidence can also be a liability. As human beings, we’re already programmed to find evidence that supports our beliefs. Psychologists call this “Confirmation Bias”, and in ultra-confident entrepreneurs, that bias is often turbo charged… sometimes with expensive consequences.
Building a successful startup in today’s economy requires a willingness to learn from mistakes and, when necessary, make major adjustments. When you’re starting a business, assumptions that once seemed unquestionably true can quickly turn into big misses. As author and entrepreneur Steve Blank famously says, “No business model survives first contact with the customer.”
Here are three ways entrepreneurs can overcome the confirmation bias and let evidence drive their decisions:
Look for disconfirming evidence.
It’s not easy and it sounds counterproductive, but the best thing a founder can do is look for reasons a new idea won’t work (yes, you read that right). If nine out of ten startups fail, assume your first, second, and tenth idea has a fatal flaw (or two). Looking for weaknesses is the only way to find them, and that means identifying your main guesses and setting up experiments that shoot down your riskiest assumptions.
Avoid biasing your experiments.
When you’re gathering information about your product, it’s natural to want positive feedback. You’ll instinctively set up situations that show your product in the best possible light. You’ll add your magnetic personality or your compelling back-story to the conversation in hopes of smiles and nods. You’ll spend extra time explaining all of the wonderful benefits of your amazing idea. But if you want honest feedback, don’t let any of that get in the way of your product. Talk to strangers who won’t be afraid to tell you what you don’t want to hear. Add disclaimers like “this isn’t my idea” or “this is one of many options we’re working on.” If you can, have friends do customer interviews and exploratory sales calls. Let your product stand on its own – whether on a retail shelf or online – and see if customers buy what you’re selling without a pitch. Do everything you can to distance yourself and your biases from the transaction.
Get customers to show you (rather than tell you).
It’s amazing how often I see smart entrepreneurs investing lots of money based on the things people tell them. “Yes, I’d totally buy your product!” is music to an entrepreneur’s ears, but unfortunately what customers say they’ll do and what they’ll actually do are often very different things. Actions, not words, should drive your decisions. If a customer says they’ll buy your product, ask them to buy it, right there on the spot. Don’t have it on hand? Ask for a pre-order or a down-payment. Don’t have a working prototype? Mock one up. As imperfect as your lo-fi product/service might be, selling one product (or getting rejected) is priceless.
Need help turning your product idea into a growing business? Learn about the resources available at the MAGNET Incubation Center by visiting magnetincubationcenter.org or call Linda Barita at 216.391.7766.
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