Don’t Drink Your Own Kool-Aid

7 Strategies to Overcome Reality Blindspots in Startups

Last week I highlighted that as entrepreneurs we are particularly susceptible to cognitive biases that distort our reality, subtly steering our startups off course. While awareness of these biases is a great first step, much more than simple awareness is needed to guard against their pernicious effects.

To that end, here are 7 actionable everyday strategies to help you keep these common biases in check so that you can make better decisions:

1. Seek Diverse Perspectives

Great minds may think alike, but they think best when they come together. Many studies have shown that diverse perspectives are not just beneficial; they’re essential as they encourage dissent, tease out contrarian views, and let the synthesis of ideas guide the path forward.

Why It Works: Confirmation bias leads us to favor information that aligns with our existing beliefs. By actively seeking out diverse opinions and perspectives, we can challenge our own assumptions and expose ourselves to different angles on a problem.

How to Implement: Encourage team discussions where dissenting views are welcomed. Make sure everyone in the meeting is heard (dissenters typically prefer to stay quiet). Consult with a varied group of stakeholders before making major decisions. For very important decisions, consider having a structured offsite brainstorming session (as I detail in Exit Path) and assigning a “red team” to deliberately act as the devil’s advocate to stress test your assumptions.

2. Lean Into the Growth Mindset

To overcome cognitive blindspots, embrace intellectual humility. Promote a culture of curiosity, where learning from mistakes is celebrated and effort and following the right process is valued.

Why It Works: When we acknowledge the limits of our knowledge and internalize the fact that skills and understanding can be developed with effort, we open ourselves up to learning and improvement, to avoiding snap judgments and replacing them with proper process and due deliberation.

How to Implement: Promote a culture of continuous learning within your team or organization. Provide resources for professional development and encourage the sharing of new insights and knowledge. Create processes that support continuous improvement, from experimentation to data gathering and evaluation. Reframe failure as an opportunity to learn and turn obstacles into “obstacle courses,” as Maryam Banikarim put it beautifully in her 2023 TED talk.

3. Schedule Reality Checks

Unless you schedule it, you won’t get to it. And what is more important than to make sure you are still pursuing your mission and true North Star? Regular “reality checks” are thus vital.

Why It Works: Inertia, status quo bias, sunk cost fallacy, etc. often conspire to lead us off course. Regularly revisiting decisions and strategies with fresh eyes and renewed perspective helps to evaluate them based on current, not past, realities.

How to Implement: Schedule periodic reviews of ongoing projects and investments. Use these reviews as opportunities to assess progress and viability without the weight of past decisions influencing judgment. Be particularly mindful of the preference to continue a course of action because of past investments or fear of change.

4. Conduct Pre-Mortems

Our entrepreneurial optimism can blind us to many of the pitfalls ahead and render us strategically myopic. Considering why a particular strategy or course of action may not work before taking steps to implement it is a great way to combat that.

Why It Works: A pre-mortem — imagining that a project has failed and then working backward to determine possible causes — can highlight potential problems before they occur, countering optimism bias by creating some psychological distance and injecting needed realism into planning.

How to Implement: Before launching a new project or initiative, conduct a pre-mortem session to identify risks and vulnerabilities. Use the insights to strengthen your strategy and planning.

5. Establish Decision-Making Processes

Our intuition can lead us astray, guided by biases we’re scarcely aware of. Implementing structured decision-making processes can help. Google’s use of OKRs (Objectives and Key Results) is a prime example of a framework that aligns goals, ensures accountability, and mitigates the impact of biases.

Why It Works: Systematic decision-making frameworks can help mitigate biases by ensuring that decisions are made based on data and rational criteria rather than gut feelings or flawed heuristics that are prone to cognitive biases.

How to Implement: Develop and adhere to a structured decision-making process that includes steps for data gathering, analysis, and evaluation. Incorporate checklists to ensure that all relevant factors are considered.

6. Know When to Trust Your Gut

There’s a time for analysis and a time for intuition. As Apple famously demonstrated with the design of the iPhone, sometimes the relevant data doesn’t exist for breakthrough innovation. Develop an acute sense of when your experience and gut feeling should guide you, balanced by a willingness to pivot based on feedback and results.

Why It Works: While intuition can be a powerful guide, it’s also susceptible to error by numerous cognitive biases. Knowing when to trust your gut and when to seek more information helps balance between overthinking and recklessness.

How to Implement: Develop criteria or signals that indicate when a decision should be intuition-driven (in areas where you have extensive experience and expertise) versus data-driven (in all areas outside your expertise). Encourage reflection on past decisions to identify when intuition led to success or failure for continuous optimization.

7. Identify One-Way Doors

When making a decision, it is important to understand whether the consequences of the decision are reversible or irreversible, with very different levels of scrutiny demanded by each. Jeff Bezos elucidated this distinction and its practical implication in his 1998 shareholder letter:

Some decisions are consequential and irreversible or nearly irreversible — one-way doors — and these decisions must be made methodically, carefully, slowly, with great deliberation and consultation. If you walk through and don’t like what you see on the other side, you can’t get back to where you were before. We can call these Type 1 decisions.

But most decisions aren’t like that — they are changeable, reversible — they’re two-way doors. If you’ve made a sub-optimal Type 2 decision, you don’t have to live with the consequences for that long. You can reopen the door and go back through. Type 2 decisions can and should be made quickly by high judgment individuals or small groups.

As organizations get larger, there seems to be a tendency to use the heavyweight Type 1 decision-making process on most decisions, including many Type 2 decisions. The end result of this is slowness, unthoughtful risk aversion, failure to experiment sufficiently, and consequently diminished invention. We’ll have to figure out how to fight that tendency.

How to Implement: Before making significant decisions, assess whether they are reversible (two-way doors) or not (one-way doors). For one-way doors, slow down and require a higher standard of evidence and broader consensus.

👉 These strategies will help you stay grounded in reality while navigating the treacherous terrains along your entrepreneurial journey. Note that cognitive biases are particularly hard to detect because they mostly operate without us being aware of them, when we are operating on autopilot, when we may even feel we are in flow. Thus we need to implement rituals and processes that break the unconscious habits of our minds and awaken our senses to the actual reality around us.

Do you have any go-to strategies for overcoming blindspots and cognitive biases? Love to hear about them and any other feedback you may have. Look forward to continuing this conversation in the comments! 🙏