How confirmation bias is hurting your startup (and what to do about it).
What do car buying and entrepreneurship have in common? From the psychological perspective, it turns out they’re pretty similar.
Let’s examine two situations.
You’re looking to buy a new car. You visited a few car dealers over the weekend and found some models you like but are still struggling to decide between them. For the next week, you start to see one of the car models everywhere you look. Your brain slowly starts to tell you that this model must be the best option; everyone is driving it. It’s crazy how little you had noticed this car before!
You want to build a fintech product that keeps user data more secure after your bank account got hacked. You conducted some early research and found twenty different articles from reputable sources on data breaches within financial institutions in the last two years. In the reports are quotes from people expressing frustration with their available choices. You've got your “go” signal. You get rolling on a new app that revolutionizes the way that financial data is stored.
The examples above are slightly over-dramatized, but can you remember encountering situations like these with your business? It turns out that it’s not all that uncommon to take small pieces of data and interpret them as indicators of success, and it’s called confirmation bias. According to Psychology Today,
“Confirmation bias occurs from the direct influence of desire on beliefs. When
people would like a certain idea or concept to be true, they end up believing it to be
true. They are motivated by wishful thinking. This error leads the individual to stop
gathering information when the evidence gathered so far confirms the views or
prejudices one would like to be true.”
While confirmation bias is often unintentional, it is something that founders should be acutely aware of as they conduct their early market and customer discovery work. Let’s face it; there is so much fear and negativity surrounding the launch of a company that any form of validation feels great! Finding the market research report that “confirms” that the world needs your company and hearing words of support from friends can feel like striking gold. While nothing is wrong with these early indicators and, in some cases, they may be true; we encourage you to challenge them. And challenge them frequently.
Accepting validation signals too soon places founders on a slippery slope, allowing confirmation bias to creep into their work. Here are a few examples of how confirmation bias might sneak into your discovery work.
You are not asking the “hard” questions to your early customers.
Ignoring negative feedback from customers or thinking it might “just be that person.”
“What they meant to say is ______.”
Searching only for articles that support your idea or hypothesis
Asking leading questions in conversations and surveys
Tuning into news sources that support (and never challenge) your concept
Relying too heavily on a few quotes from third-party articles as evidence of “customer need.”
Building a product from market research alone, without talking to potential customers.
What’s the big deal?
On the surface, you’ve collected a lot of data that seemingly demonstrates a need for your company or product. If enough people say they want it, it must be somewhat true, right? Unfortunately, by not looking at the whole picture in your research, there’s a good chance that you’ve missed crucial sources. What happens if one article validates your concept but three others do not?
It’s best to leave no stone unturned, especially when raising capital for your product. When working with investors, It is far better for you to know the answers to the difficult questions and recognize potential challenges than to let them find out on their own.
The Good News
Confirmation bias is easily avoidable. You can (and should) build a smarter business by simply adding an entrepreneurial twist to the scientific method (check out a how-to guide here). A well-researched idea minimizes your launch risks today and saves you time and money in the future by removing the likelihood that your story will encounter unexpected plot twists.
Here are a few tips on avoiding confirmation bias in your research.
Develop a hypothesis. A hypothesis, at its core, is falsifiable. You can think of hypothesis testing as debugging, and you should constantly try to find every failure point possible - your customers and investors certainly will.
Create a learning plan. Compile all your hypotheses and create a plan to collect data that potentially supports and challenges them. You know your idea has legs when you intentionally try to challenge it and can’t! A learning plan also helps you avoid research rabbit holes and analysis paralysis by giving you a concrete KPI or OKR (depending on your favorite term) that you can track.
Be honest with yourself. Take a moment and evaluate your existing research. How much of it has focused on disproving your idea? How much of it serves to support your hypothesis? Scrape through your market research with a fine tooth comb and see where there are gaps.
Fill in the gaps. Revamp your research using the steps above to ensure you’re on the right track. It doesn’t need to be a long process, but the longer you wait to do it, the harder it gets!
You're on a great track if you’ve conducted all these steps and are still finding evidence supporting your hypothesis! We didn’t write this article to tell you that you should ignore the signs of validation that you see during your build's market and customer discovery stages; we just want to remind you to be diligent. The harder your hypotheses are to disprove, the better your idea.
Are you still having trouble conducting research or providing the validity of your concept to your investors? Talk to us. We’re here to help.
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