Aarrgh! I’ve met countless entrepreneurs over the years, many eccentrics among them, but not one sported an eye patch or hobbled on a peg leg. That surprises me, as so many exhibited pirate-like anchoring behavior.
As so ably described by Jeremy Burton in the linked blog, “12 Cognitive Biases That Will Kill Your Startup,” anchoring is the tendency to rely too heavily on the first piece of information one gets, then not adjusting one’s position based on new, contradictory evidence.
Sail Ho! Anchoring is most commonly observed when entrepreneurs ignore competitors or choose to dismiss their advances. Having spotted an opportunity and started their businesses, founders can get lost in their work, dedicating little or no time studying their competition. Often, there’s simply no money in the budget for a lookout.
Shiver Me Timbers! Chocolate chip cookies are the #1 cookie choice of US consumers. What a surprise! Yet, some 15 years ago, a Boston-based cookie company (let’s call it, “DD”) refused to sell chocolate chip cookies. Using classic, “nobody goes there anymore because it’s too crowded” logic, this flavor embargo was a core company value, enforced by the founder herself. Fortunately, this anchoring belief, not to mention the founder, were tossed overboard by more market aware investors. So unburdened, the vessel sailed smoothly thereafter.
All Hands on Deck! Drop everything; we have a problem to fix. At Keurig, an early crisis involved the K-cup insertion device. My partner and I were anchored in the belief that customers wanted an automatic brewer, one with a motorized K-cup drawer. It operated like a CD player . . . when it operated. We were so caught up in fixing this unreliable feature that we failed to question the need for the feature itself. Later, Keurig’s (then) commercial customers made it clear that they wanted a simple, dependable machine. Skip the electric winches, lads; stick to basic block and tackle.
Keep a Weather Eye Open, Matey! Today’s forecast? Change. The marketplace is anything but static. Overnight, it seems, there may be ten or more firms offering essentially the same solutions. Home meal delivery is a good example. To survive, Blue Apron, Plated, Hello Fresh, Green Chef and their many peers must continually differentiate themselves. Early stage startups that fail to update their market forecasts in a similar manner face some very rough seas.
Land Ho! A well grounded startup team revisits its data, questions key assumptions. The best ones welcome aboard the occasional landlubber, whose differing viewpoint may prove useful.
Consider, also, the article below; it’s quite a good read, savvy?
Peter has spent the past twenty-plus years as an acting/consulting CFO for a number of small businesses in a wide range of industries. Peter’s prior experience is that of a serial entrepreneur, managing various start-up and turnaround projects. He is a co-founder of Keurig.