The purpose of this article is to alert current and future entrepreneurs to the dangers of cognitive biases, so they do not end up finding themselves like the man depicted in a New Yorker cartoon saying to a friend: “I tried being an entrepreneur but found out that the ‘fire in my belly’ was just acid reflux.”
The first and most crucial step in fighting the destructive impact of cognitive biases is to be aware of their existence. Although there are over 100 various biases, this article will tackle the two that are most hazardous to the entrepreneurial process.
Confirmation biasConfirmation bias is defined as the tendency to search for and interpret information in a way that confirms one's own existing preconceptions, beliefs and opinions. We want the external world that we interact with to be congruent with our thoughts, opinions and notions. Any information -- or interpretation of information -- that contradicts our beliefs, views or pre-conceived notions creates dissonance in our minds that leads to mental discomfort. We are programmed to reduce, or if possible, eliminate this mental discomfort, which is where the confirmation bias comes in.
A very basic example of confirmation bias in daily life, in which people look for information that supports their existing notions and views, is the preference of conservatives to watch Fox News and of liberals to watch MSNBC. A more profound example of confirmation bias, which has life-and-death implications, can be found in the world of medical diagnosis. Physicians are known to be prone to confirmation bias when diagnosing patients. After a few short minutes of Q&A with a patient, the physician may reflexively form an opinion of what the diagnosis is, and from that point onward, her questions -- and interpretation of the answers -- will be geared towards confirming her diagnosis. Even Dr. House and his team of ace diagnosticians may claim at times that something is likely wrong with the MRI machine when the image it has generated does not support their current diagnosis.
In the world of entrepreneurship and startups, being subject to the influence of confirmation bias may be equated to driving a car with one eye covered. You see some of what’s ahead of you -- but the full picture and depth perspective are lost. Entrepreneurs, generally known to be highly driven people, are intensely focused on their goal and therefore may be extra vulnerable to the destructive effect of confirmation bias
The various areas in which entrepreneurs are susceptible to the confirmation bias include: 1) identifying who the real competitors of the start-up are, 2) methodically and rigorously analyzing what the competition is doing and how it may affect the start-up, 3) understanding what the company’s current and prospective customers need and want (it is usually not what one originally thinks), and 4) estimating the resources needed by the company to achieve its stated goals.
For the full story: http://www.entrepreneur.com/article/252499?utm_source=News+for+All+Faculty+and+Research+Staff+December+1+&utm_campaign=December+1+newsletter&utm_medium=email