Confirmation Bias

The best CEOs excel at building teams and systems that solve problems.  You can think of a company as a massively parallel computer, where the processors are people.  Most SaaS founders uncovered a business problem worth trying to solve and created a product designed specifically and uniquely to address it.  While this focus is well intended, it can create an echo chamber of ideas and people — those that only support the founder's view that this is a problem worth solving.  Any idea that conflicts with the founder's position is summarily dismissed (knowing the answers prior to taking the test tends to artificially create a higher test score).  Ultimately, the company’s operating system — its structure and processes — must be carefully designed to coordinate those people and respond effectively and objectively to the external environment.

In the early stages of a company, the relationship between the company and its environment (i.e., the market) is one of constant experimentation.  The company’s primary goal is to determine what’s real (and worth solving) and what’s not, in order to determine where to focus its ongoing and future efforts.  A common and dangerous mistake I see among early-stage companies is the tendency to treat internal beliefs as universally shared truths (something is not necessarily true merely because you believe it to be true) and investing in marketing those beliefs rather than rigorously testing them.  What they’re often doing is seeking confirmation of their assumptions instead of challenging them — a classic case of confirmation bias.

Great early-stage CEOs actively seek diverse input when designing market tests.  This practice helps minimize personal bias and ensures that experiments are informed by a wider range of perspectives.  The collective input shapes the data model behind the original test design.  Leaders who cling to fixed views, especially those based on outdated analogies rather than current realities, do so at their own risk.

The ideal outcome is that as a result of market testing, the product is either shelved (the need was not significant enough to warrant the need for it in the first place), gets reshaped to address a slightly different challenge or confirmed that it is positioned to provide great value to its intended customer base.  Regardless of the outcome, the tests should provide objective data in order to make the most informed product/market decisions.

Therefore, testing only to prove preconceived ideas is likely to result in a missed or more limited opportunity.   If your SaaS company struggles with confirmation bias, please ask Virtual Dave or email dave@moicpartners.com for guidance.