Connect with us

Entrepreneurship

4 Psychological Biases You’ll Face During Startup

Published

on

The Startup Genome Report Extra on Premature Scaling is a project coauthored by Berkeley & Stanford faculty members with Steve Blank and 10 startup accelerators as contributors. They analyzed 3,200 high growth web/mobile startups and found that within 3 years, 92% of startups failed. Of those who failed, 74%, failed due to premature scaling. Premature scaling refers to spending money on marketing, hiring etc. either before you found a working business model or in general, spending too fast while failing to secure further financing.

Why would someone rush right into spending a bunch or money before they even had a product people really wanted? Because we believe our idea is something people would actually pay for. There is clearly a gap between what we think people want and what they really want. And this is the main issue…the gap between an idea and a valuable product. The problem is never coming up with a great idea, people have ideas all the time. The problem is completely understanding what it is people need as the basis of a product rather than an idea as the basis of the product; a great idea but a useless product.

Why do we have such arrogant thoughts? It might be easy to write this off to egotistical self-importance. But it’s more fundamental than ego; it is a function of cognitive errors in neurological information processing that blind us from seeing what customers really want. And ultimately whether our idea is of value. These are referred to as psychological biases. Different lenses that obscure or alter our view of the world. These aren’t just results of messing up facts or errors in logic but real deficiencies or limitations in our thinking.

There are dozens of cognitive biases known in psychology but the ones that typically affect startups include:

  • Confirmation Bias – We listen to or focus on information that tends to back-up our own beliefs about a topic or idea. Startups need to be careful of this blind-spot given all the analytical techniques involved in growth hacking. Vanity metrics could lead startups to think they are doing better than they are since they are not measuring customer adoption or satisfaction but simply page hits and sign-ups.
  • Attentional Bias – We tend to avoid data that is inconsistent with our thoughts…almost the reverse of the confirmation bias. This is a common mis-step undisciplined entrepreneurs and investors (or anyone for that matter) have towards avoiding information that may challenge their ideas. The person using this bias is so focused on success that they fail to pay attention to data that would have signaled they were on the wrong path. People and groups who experience this tend to have sensational blowout failures rather than small failures and pivots.
  • Dream Bias – Many startups fantasize about being purchased or going public making the founders rich. Dream bias is the extremely narrow view that makes startup exits extremely exciting because that is all we hear about online and in the media. We join with the dream and don’t attend to the 99 out of 100 that did not succeed.
  • Curse of Knowledge Bias – Many founders have creative ideas that are very forward looking and have immense potential. The Curse of Knowledge Bias is the narrow filter that inhibits these people from understanding an idea from someone with less information, education, or initiation about the idea. This is often the curse of people with gifted intelligence who make such rapid connections in their mind that they are dumbfounded why others cannot see it how they see it.
  • Group Think Bias – When the entire development group is so gung-ho that they all think the same way and avoid alternative points of view.

What these biases have in common is that they are related to a sense of clinging to one’s own idea of value rather than understanding customer’s needs. What’s interesting about modern startup approaches, like Eric Ries’ Lean Startup, is the conscious and explicit priority of the customer’s needs. Entire business models should be uprooted if they fail to meet with market expectations. It is difficult to say if this philosophy is the full antidote to failing businesses but it certainly is focusing our attention on the right habits.

Here are a couple simple strategies that startup leadership can build in to their processes that will help inoculate the group from troubling biases.

  • Employing Black Hat approaches to discussions at core decision junctures in development. Thinking Hats was coined by Edward De Bono who taught that there were a number of ways of thinking (i.e., the hat one is wearing) that influences the group or team. To avoid these biases the team focuses on strategizing about a problem in stages, including the Black Hat stage, which essentially forces the group to think about why it won’t work. A trick is to hire a “Black Hat” to do the work for you as we all have proclivities to one way of the thinking (We all know that special person who can find reasons why it won’t work).
  • At specific times of the project, bring on board a thoughtful consultant or external friend of the startup who can present research that may force the group to attend to information that is contrary to the hope the group has for success.
  • Have the group present their idea, its value, and its merit to a group of consumers and experienced, successful entrepreneurs who have been able to be rational in their business development success. Listen to their perspectives of what is wrong with the idea.
  • Try to avoid saying I, me, or mine as much as possible in any conversation. You’d be surprised how much this helps you think about other’s needs, particularly potential customers.

Biases in thinking, problem-solving, or information processing are simply part of being human.[1] We cannot magically remove them from our psyche. However, we can become aware of them thus reducing their effect on our business decisions, and more importantly actively work to moderate their impact, which is essentially what the lean approach to a startup is. That is, build something small, get feedback, assess, tweak or pivot. By constantly evaluating our product through the eyes of the consumer, startup leaders close the gap between a good idea and a valuable product.

This regular reflection shouldn’t just be done on products but on our own thoughts and assumptions that build our companies, products, and relationships. When we try our best to keep on top of these things, meeting customers’ needs isn’t so hard.

These biases in thinking not only pervade our business life but also our home life. They affect product development, relationships with staff, team functioning, and life at home. So you can use these techniques at work or at home with your loved ones as well. Like asking your customer for feedback about the startup, asking your wife if she is having her needs met by you is a powerful way to avoid thinking bias with often the most important people in our lives….those who love us. And, of course, those with whom we work.

written by Bob Acton, executive coach at Obair Leadership.

Entrepreneurship

Women on Top in Tech – Daphne Ng, CEO of JEDTrade

Published

on

(Women on Top in Tech is a series about Women Founders, CEOs, and Leaders in technology. It aims to amplify and bring to the fore diversity in leadership in technology.)

Daphne Ng is the CEO of JEDTrade, a blockchain technology company focused on trade, supply chain, and financial inclusion projects in ASEAN. She is also the Scretary-General at ACCESS and Exco. of Singapore Fintech Association

What makes you do what you do?
I was introduced to blockchain technology in 2016 after I left my corporate banking career after 10 years. It was my mentor who first got me interested in this technology, which I then went on to delve further into, on its potential applications in the lending and trade finance space – domains where I came from.

How did you rise in the industry you are in?
Being in the space for 2 years and actively involved in the ecosystem, I was able to bring on the projects, network and a good degree of thought leadership in this vertical. Early on in the startup journey, our team faced many challenges. And to me, the key to rising above failures are two essential factors – resilience and support. While resilience is innate, I received a lot of help be it in terms of connections or advice. ‘Nobody succeeds without help’ rings very true for me.

Why did you take on this role/start this startup especially since this is perhaps a stretch or challenge for you (or viewed as one since you are not the usual leadership demographics)?
From the start, I focused on my domain expertise in trade finance and the application construct of how blockchain and DLT can be applied to these use cases. Also, my strategy from the start was to build a technology company made up of 80% tech and engineers, which is also our key competitive advantage today. At the end of the day, deliverables are about strategy and execution, which includes building and leading an ‘A’ team.

Do you have a mentor that you look up to in your industries or did you look for one or how did that work?
I have many mentors, which includes our company advisors (all of whom are well-known in this industry) and mostly informal mentors I meet via my connections, and on various occasions and circumstances. Creating opportunities also means putting myself in the right place, at the right time. And in my case, these were mostly organic and genuine friendships formed from the initial connection.

How did you make a match if you and how did you end up being mentored by him?
To me, a match in values is very important. It also takes humility to ask for help and be willing to listen to advice, which is important in order for mentorships to be successful – be it formal or informal.

Now as a leader how do you spot, develop, keep, grow and support your talent?
I love this question! I am passionate about building strong teams and helping my people grow. I abide by the 3Rs when identifying talents: resourcefulness, resilience and right values. And then I invest in the ‘potential’ and this means giving them room to lead, make decisions and take risks.

Do you consciously or unconsciously support diversity and why?
My support of diverse talents, skillsets and characters can be seen in the make-up of our core team – all helming specific roles and each bringing their own value to the table. We need the sum of all parts to build a great company.

What is your take on what it takes to be a great leader in your industry and as a general rule of thumb?
Great leaders emerge in times of failures and challenges, never abandoning the team, and always putting the team’s interests before her own. And I consciously live by these mottos every day.

Advice for others?
My advice to other entrepreneurs: be resolute and dare to be different. If you are going to follow others, then you will end up on the same path as them. No right or wrong; but I would rather chart my own path. This June, we are officially launching our blockchain project, Jupiter Chain (www.jupiterchain.tech), which have garnered much interest in the industry, even before we made it public. We believe this project is the epitome of marrying innovation with practical implementation, and we want to be the first to truly operationalize blockchain for our ecosystem projects in this region.


If you’d like to get in touch with Daphne Ng, please feel free to reach out to her on LinkedIn: https://www.linkedin.com/in/daphne-ng-%E9%BB%84%E7%91%9E%E7%8E%B2/

To learn more about JEDTrade, please click here.

Continue Reading

Callum Connects

Jace Koh, Founder of U Ventures

Published

on

Jace Koh believes cash flow is the lifeblood of your business. Understanding it will enhance your ability to run and manage your business.

What’s your story?
My name is Jace Koh and I am the Founder of U Ventures. I’ve always been inclined towards investment and entrepreneurship. I’ve played a hand in starting businesses across these industries – professional services, cloud integration, software and music. I believe that succeeding in business is tough, but that’s what makes the rewards even sweeter.

What excites you most about your industry?
Everything excites me. These are my beliefs:

  • Why is accounting important?
    The accounting department is the heart. Cash flow is like blood stream, it pumps blood to various parts of the body like cash flow is pumped to various departments and/or functions in a business. It is vital to the life and death of the business.
  • Is accounting boring?
    Accountants are artists too. They paint the numbers the way they want them to be.
  • What makes a good accountant?
    A good accountant can tell you a story about the business by looking at the numbers.
  • Why is budgeting and projection important?
    Accountants are like fortune tellers, they can predict the numbers and if you wish to understand your business and make informed decisions, feel free to speak to our friendly consultants to secure a meeting.

What’s your connection to Asia?
I was born and raised in Singapore, and here’s where I want to be.

Favourite city in Asia for business and why?
Singapore is my favourite city. We have great legal systems in place, good security and people with integrity. Most importantly, we have a government that fosters a good environment for doing business. I recently went for a cultural exchange programme in Hong Kong to learn more about their startups. I found out that the Hong Kong government generally only supports local business owners in terms of grants. They’ve recently been more lenient and changed the eligibility to include all businesses that have at least 50% local shareholding. But comparing that to Singapore, the government only requires a 30% local shareholding to obtain government support. In the early days of starting a business, all the support you can get is precious. It’s great that we have a government that understands that.

What’s the best piece of advice you ever received?
The best time ever to plant a tree was 10 years ago as the tree would have grown so big to provide you with shelter and all. When is the next best time to plant a tree? It is today. Because in 10 years time, the tree would have grown big enough to provide you shelter and all.

Who inspires you?
Jack Ma. His journey to success is one of the most inspiring as it proves that with determination and great foresight, even the poorest can turn their lives around. I personally relate to his story a lot, and this is my favourite quote from him, “If you don’t give up, you still have a chance. Giving up is the greatest failure.”

What have you just learnt recently that blew you away?
I’ve faced multiple rejections throughout my business journey, and recently came across a fact on Jack Ma about how he was once rejected for 32 different jobs. It resonated very deeply and taught me the importance of tenacity, especially during tough times.

If you had your time again, what would you do differently?
Nothing. I live a life with no regrets. Everything I do, regardless of whether it is right or wrong, happy or sad, and regardless of outcome, it’s a lesson with something to take away.

How do you unwind?
I love to pamper myself through retail therapy and going for spas. I also make a conscious effort to take time off work to have a break outside to unwind as well as to uncloud my mind. This moment of reflection from time to time helps me see more clearly on how I can improve myself.

Favourite Asian destination for relaxation? Why?
Taiwan! Good food with no language barriers and the people are great!

Everyone in business should read this book:
I don’t really read books. Mostly, I learn from my daily life and interactions with hundreds of other business owners. To me, people tell the most interesting stories.

Shameless plug for your business:
We’re not just corporate secretaries, we’re “business doctors.”
U Ventures is a Xero certified advisory firm that goes beyond traditional accounting services to provide solutions for your business. You can reach us on our website: http://uventures.com.sg/

How can people connect with you?
Converse to connect. You can reach me via email at [email protected] or alternatively, on LinkedIn here: https://www.linkedin.com/in/jacekoh/

This interview is part of the ‘Callum Connect’ series of more than 500 interviews

Callum Laing is an entrepreneur and investor based in Singapore. He has previously started,
built and sold half a dozen businesses and is now a Partner at Unity-Group Private Equity and Co-Founder of The Marketing Group PLC. He is the author two best selling books ‘Progressive Partnerships’ and ‘Agglomerate’.

Connect with Callum here:
twitter.com/laingcallum
linkedin.com/in/callumlaing
Download free copies of his books here: www.callumlaing.com

Continue Reading

Trending