6 Steps to Save Your Startup from Cognitive Bias
Humans are biased by nature. Our brain finds patterns and makes associations to simplify decision making. And while forming assumptions and creating biases may have helped our predecessors survive, today it can cause your business to fail before it starts.
After more than a decade working with startups, I’ve noticed that those that are most biased tend to overlook key factors at the beginning of their business journey. They’ll spend time and money throwing things at the wall, only to find that nothing sticks. Their assumption is that their product is so good that there will be no competition, that people will flock to buy it. Sadly, this is a recipe for financial ruin; they’ll take out loans against their home, run up credit cards, and burn through their life savings, all because they believe they have the best product.
Case in point, your biases can cause blindspots. That’s why it’s essential to understand how it affects our judgement and can influence important business decisions. With as many as seven cognitive biases that can ruin your startup, it’s crucial that you consider how your beliefs, interpretations and assumptions can make a huge impact.
The good news is, once you’re aware of your own bias, you can use data, research and honest feedback to overcome them and make sure your business fulfills a market need. To give you a head start, I’m sharing six steps you can take to look past your own bias and build the strongest company possible.
1. Come to terms with your own biases
Our biases alter our perspective. They influence what information we look at, how we remember past experiences and decisions, and what we feel is trustworthy as we research options. That all might not sound too bad but whatever we look at will be based on our own viewpoint and beliefs which isn’t always accurate. In other words, if you believe the bird in the tree is a blue bird, you will find information and people to agree with you.
2. Keep your challengers close
We are all biased, but our biases are not all the same. Having people around you that challenge your biases about your product and business is a good thing. Look for mentors and advisors who are honest – their job is to ask hard questions and challenge your assumptions.
3. Analyze your reactions
Start with your reactions. If you are feeling defensive when someone is questioning or challenging your product or idea, look to see if bias is showing up. Check to see if you are making assumptions or do you have actual facts; gut feelings or data? Data and gut are a good combo. But gut feelings alone can cause decisions to be made according to your bias.
4. Prove that your product is NOT wanted
Step away from being enamored with your product. What if you were highly skeptical and took effective steps to prove that your product wasn’t wanted by the market? Your bias is now flipped on its back. If in the end, you prove people want the product, then it makes sense to move forward. If you prove it is not wanted, then you move on to finding the next product, but this time, you will be looking for the problem that people want solved instead of having a product no one wants.
5. Ask strangers about their problems
Stop talking to your circle about your product or idea. Get in front of the people whose problem you’re really solving. Only when you validate with customers can you deliver a product or service that addresses a real need, not just a nicety.
6. Understand your competition (and their strategy)
Who has the stronghold in the industry? Can you beat their strategy to gain market share?
Taking an in-depth look at the value your competition is proving their customers is essential. Being honest with yourself and answering - Does my product/idea beat this value? In order to win in the market, you have to do it much better - not just a little better. If you think it is much better, then ask your customers a non-leading question to determine how much better and listen with honesty.
Ultimately, collecting data to prove that the market wants your product is key. I can’t stress the validation process enough, but in order for it to be effective, you have to be completely open to the feedback you receive. It’s all about finding the truth about how your potential customers feel about your product, are you truly solving their big problem, and if the market will really buy it. This takes work and requires challenging your biases. The outcome will definitely change your business.
Ready to shatter your biases and dive deep into validating your business?
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