Cognitive Biases
Whether we like it or not, there are times when our brains play tricks on us, making us believe something though it may not be necessarily true. According to Wikipedia, cognitive bias is a “distortion in how humans perceive reality.” There are different categories of cognitive biases and the person establishing his start up business is not exempt from such. I came across an article tackling this issue and I found it quite interesting so I thought I’d share my take on it. Here are some cognitive biases that you should be wary of as they may do your startup more harm than good.
Bandwagon Effect
Already a commonplace term, the bandwagon effect refers to the proclivity of people to engage in a certain activity simply because other people are doing it. This is the same as saying “everyone is doing it so why shouldn’t I?” Well it doesn’t take a rocket scientist to figure out that just because everyone else is setting up a certain type of business means it’s a good opportunity for you as well. Even if it seems so at the beginning, you may very well be entering an already saturated market. On the other hand, you can turn things around to you favor by using the bandwagon effect to analyze what the market needs and what the customers want. There is a general trend as to the demands of the market and you can learn this to provide for what they want most.
Confirmation Bias
Simply put, confirmation bias refers to how people tend to manipulate information and facts in order to give evidence to what they already believe in the first place. This includes being selective in choosing information – that is, picking out bits and pieces of information so as to fit it with one’s beliefs. Red lights for the college student with the bright idea! Just because you believe that you have a great idea doesn’t mean it is a great idea. Do background research – objectively! Doing research and picking out only the information that backs up your premise is worthless. Keep an open mind and if you find out that your brilliant idea is not so brilliant after all, put on your thinking cap and move on!
Bias Blind Spot
I am not an expert but I would consider this the mother of all cognitive biases. This cognitive bias merely refers to the fact that we have the tendency to ignore our other cognitive biases and not compensate for them. Quite obviously, if you are bound by this cognitive bias, then your start up is doomed. What will happen is that you will be limited to your own world where only your ideas are perfect. Constructive criticism will just rile you up. Helpful input from the outside world will offend you. On the outset, if you do not deal with this bias, then you will not be able to hone and fine tune your start up to make it effective and successful. So if I were you, this is where I would start – make sure that I would not fall prey to a bias blind spot.
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As a retired psychotherapist, I have to applaud you in applying cognitive theory to business mindset. You did a very good job writing this primer. Cognitive biases affect most aspects of our lives: business, interpersonal relationships, parenting, etc. Sometimes we forget that other’s opinions can bear just as much weight as ours in the real world. But sometimes it is that bias that keeps us motivated to give the world the newst invention or gadget that makes life easier. It’s hard to know who to listen to at times (yourself or others). But it’s just as important to have an awareness of how you think. An open mind is truly valuable.
-RY