How is it possible to throw yourself into launching a business,
when you already know that your
business idea sucks? If ever
there was situation rife with conflicts of interest in validating a business
model, then being co-founders in a startup is a good example. The founders'
may get so committed to their vision that they can lose the ability to
examine it from an objective perspective, and they may get caught up in groupthink.
A startup is an
experiment and the goal is to
explore and discover a sustainable business model. This requires a change of
orientation in the mind-state of the entrepreneur. The
commitment and focus should not be to prove yourself right. Rather the goal
should be to find the best way to deliver the vision to customers, in a manner
that customers find valuable. Entrepreneurship can be considered a great
calling if the ultimate goal is to provide lasting value to customers and to
make their lives better. If the focus is on this more universal goal,
then it becomes easy to throw yourself into launching your business, even if
your starting assumption is that your business idea probably sucks.
There are actually parallels in science and social science, which
are important to highlight. Experimental social scientists run their
experiments and data analysis, on the assumption that their hypotheses suck as
well. They use more complex terms such as the null hypothesis and the alternative
hypothesis. The simplest way to describe the null hypothesis is to call it
the default position or status quo. This is the hypothesis that whatever
intervention you are designing will not have any effect on changing
human behaviour as it currently is. In a startup that means that your
business idea will not have any effect in changing customer behaviour in a
manner that will allow you to have a sustainable business. The alternative hypothesis
on the other hand is your proposed idea or research hypothesis (e.g. teenage
males find shopping stressful).
When doing research, social scientists thrive to ensure that there
is no bias in the data collection methods. As such, they always begin by
assuming that the null hypothesis is correct. They assume that
their alternative hypothesis sucks, and the focus is on eliminating
as much doubt as possible. When the research data is collected, scientists then
perform what is called null
hypothesis testing. They examine the probability of observing the results
in the data assuming that the null hypothesis is true. That is, assuming
my hypothesis sucks, what are the chances of observing the findings I have.
Notice here that the burden of proof lies on the
scientist demonstrating that their results could not have been
obtained by chance, if one assumes that the null hypothesis is
true. Such an orientation focuses the scientist away from a
confirmatory bias into a developing falsifiable hypothesis and assuming they
are wrong from the start.
The goal is never to validate the alternative hypothesis (i.e.
your business idea), but to reject or fail to reject the null hypothesis. Even
when the data shows that the null hypothesis might be wrong, scientists are
still tentative in fully embracing the alternative hypothesis. This is not to
argue that there is no bias in the practice of science. There are some examples
of such bias. However, in terms of a cultural focus, the normative approach
is for scientists to assume that their ideas suck. Scientists don't find this
disheartening or discouraging. Our commitment is to a greater notion of discovering
the truth about the universe. This commitment drives the actions scientists
take and the high standards of evidence.
In a lean startup entrepreneurs should always assume their
ideas suck. As Steve Blank always says, "no
business plan survives first contact with customers". We should know
this and embrace it. The quicker we fail to reject the null
hypothesis and pivot away from our stupid ideas, the more likely we are to
succeed in business. When pursuing the greater goal of providing real value to
customers, assuming the null hypothesis to be correct will save us from building
stuff that nobody wants.
