5 biases that blind most startups.
Thoughts on the top 5 cognitive biases you need to ensure your startup is free from.
Ever heard of the word “cognitive bias”? Well, take a seat. You are about to learn how a bunch of cognitive biases might kill your startup if you are not being observant.
First, let’s understand what it really is:
Definition: A cognitive bias is a mistake in reasoning, evaluating, remembering, or other cognitive process, often occurring as a result of holding onto one’s preferences and beliefs regardless of contrary information.
If you have 3 min today, drop everything and read this wikipedia article that covers all of the known cognitive biases according to modern psychology.
But since here at ClosingPage, we’re interested in startups, here’s a list of the top 5 biases that you might want to keep a tab on as a startup.
The Top 5 Cognitive Biases With Respect To Startups
- Confirmation Bias: A crucial mistake in critical thinking is discrediting evidence that does not conform to your world view which leads to confirmation bias. Startups need to pay close attention and listen to customers problems. That means listening to 360 degree view points and even acknowledging you (not them!) could be wrong.
- Self-Serving Bias: This is the tendency to blame external factors when bad things happen and give yourself credit when good things happen. Unlike in bigger corporates, in a startup, there is no where you can pass the buck. You have to take 100% ownership and that means keep a guard on the self-serving bias.
- Functional Fixedness: This is the tendency to see objects as only working in a particular way. This bias could cost you so much. In startups, you will be forced to be resourceful and creative. That means you cannot accept things as they are. You have to think out of the box whether it comes to people’s functions or marketing or sales and will your way to success.
- Anchoring Bias: This is the tendency to rely too heavily on the very first piece of information you learn. As a startup, you are busy but that doesn’t excuse you from doing due diligence whenever required. Be smart and thorough in understanding your market.
- False Consensus Effect: This is the tendency to overestimate how much other people agree with you. It is extremely important to be grounded on what people “do” with your product than what they just “say” about it. Customers tend to be polite more than you think and may be giving you kinder responses or less harsh feedback. Don’t assume their consensus is final, observer their behavior when you are not around and use those metrics to guide your strategy.
The Only Bias That’s OK Is The Bias Towards Action
We talked about the potential dangers of having a few popular cognitive biases in startups. However, there is only one exception to the theory. When it comes to matters of execution, take the side of “action” as opposed to “debating”. Momentum is key in startups and if you are going to wait until you have it all figured out before you start, you will never start. That’s why you need to “just do it”. Adopt a bias for action, and learn as much as you can.
Now, it’s your turn. What are your thoughts about bias in startups? Feel free to share your views and tips.
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