Every entrepreneur has suffered from it. The ones which deal with it normally manage to succeed in business. The ones which ignore it or believe it not to be true end up seeing their business go up in flames, metaphorically of course. We’re talking, of course, of entrepreneur bias.
A business is born
When you are starting a business you inevitably need to make assumptions. Carrying out market research, doing your homework and getting genuine feedback are all great ways to help you shape your business, but, in the end, only once you’re out there can you see if your decisions were right or not.
No one gets it perfectly right the first time (or the second, third, fourth…), in fact, succeeding in business is not about getting it perfectly right, just right enough. However, what you do when things are working out as you expected makes all the difference.
If you are suffering from entrepreneur bias, chances are that you will blame anything and everything which you cannot control, and ignore the necessary internal changes which you can control. The probable result is that your business will join the majority of startups and fail.
On the other hand, if you accept the possibility that you may have made some wrong decisions and work to rectify them, you stand a good chance of success. Admitting being wrong is nothing to be ashamed of, even by an entrepreneur who might feel the need to constantly be right. Admission of a wrong decision is the first step in the process of reaching a good decision.
The decisions go on and on
Entrepreneur bias is not simply a problem in the early stages of a business. In fact, this bias tends to get worse the more confident and reassured a business leader becomes. A pattern of being right more often than being wrong can become dangerous, allowing the bias to grow unnoticed until a major unexpected situation causes the entrepreneur to ask “how could I have been so wrong?”
Without a doubt, entrepreneur bias was one of the reasons behind some of the worst business decisions in history. There is no such thing as too big to fail or getting it right every time. Bad decisions are taken all the time in business, but the important thing is to quickly identify such a situation and seek to rectify it quickly.
The baptism of entrepreneurs
Since I referred to entrepreneur bias as the original sin of entrepreneurs, I chose to refer to its removal using the same analogy. I certainly don’t mean any disrespect to followers of various religious faiths.
There are several ways in which you can eliminate, or at the very least reduce the effect of entrepreneur bias in your decision-making process. Here’s how:
- Consider each argument for or against a decision. What is your basis for calling each argument factual? Are you basing it on factual evidence, a hunch, or something in between? Hunches can very easily be taken over by entrepreneur bias and must, therefore, be treated with a lot of caution. Concrete evidence, such as in the form of facts and figures is always better to compliment a hunch, however, make sure not to skew the numbers to make a favourable argument.
- Can you get qualified independent or unbiased persons to evaluate your arguments and decisions? Qualified doesn’t necessarily mean holding a particular degree, it just means having the necessary skills, experience or background to provide you with a valid opinion.
- Is there a way to implement the decision in stages so that it can be put on hold or reversed back in case of issues? A complete overhaul is difficult to stop once it has begun. Carrying out change one store or one employee at a time can more easily be paused or reversed.
- Once a change is taking place as a result of your decision, what is the feedback you are receiving? Are you getting feedback directly from the front line, or is this feedback being filtered through various levels of management? If you want the freshest fish go directly to the docks. Similarly, if you want the unfiltered truth ask for it from the people at the bottom of your organisation.
- Do you need to make a change? Did the decision turn out to be terrible in ways you could have never imagined? Is most of the feedback negative? It’s ok, get your team together and work on making a new decision. Start from Step 1.