Decision Hygiene for Entrepreneurs: Overcoming Biases for Better Business Outcomes

Starting a business is like embarking on a voyage across uncharted waters. As a startup founder or entrepreneur, your decision-making compass can be the difference between sailing smoothly or steering towards rocky shores. But there’s a catch - we all have biases. Decision Hygiene for Entrepreneurs: Overcoming Biases for Better Business Outcomes

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The Peril of Bias in Business

Biases are like the hidden currents beneath the surface; they can misdirect us without our knowledge. When we fall back on our instincts, we often believe we're making the best choices for our startup.

However, biases can be treacherous, leading to flawed judgments and business strategies that miss the mark. For instance, overconfidence bias can make us underestimate risks, while confirmation bias can lead us to overlook critical information that doesn't align with our beliefs.

Overconfidence Bias

Think of bias like a sneaky filter on your camera lens that you don't know is there. It changes how you see things without you realizing it. For a startup founder, not knowing your biases is like walking through a maze with a blindfold. You might think you're heading towards the prize, but you're actually just bumping into walls.

When you know about the biases, you can take off that blindfold and see the maze for what it really is. This means you make smarter choices because you see the real picture, not just what your brain tricks you into seeing.

An overconfidence bias example
Imagine a new coffee shop opens up in a neighborhood with ten other coffee shops. The owner thinks, "My coffee will beat everyone else's, I'm sure of it!" That's overconfidence bias.

It's like wearing glasses that make everything look better than it really is. The owner doesn't think about how hard it'll be to win over customers who like the other shops. If the owner recognized this bias, they could plan better, maybe by finding a special coffee flavor that no other shop has, giving them a real edge. That's the power of understanding and dealing with bias.

Confirmation Bias

Confirmation bias is when you look for things that agree with what you already believe and ignore everything else. It's like only listening to people who say 'yes' to you.

When you understand that this bias exists, you can make a special effort to listen to all sides of a story. This helps you make better choices because you're taking everything into account, not just the stuff that makes you nod your head.

A Confirmation bias example
Imagine a boss who thinks one of his products is the best on the market. He looks at all the good reviews and feels great, but he doesn't pay attention to bad reviews that might actually tell him how to improve. It's like he's only eating the cherries out of the fruit salad and leaving the rest.

If he took off his 'bias glasses', he might see the full picture and realize that there's room to get better. He could then use those tough reviews to make the product even better, which could lead to more sales and happier customers.

Implementing Decision Hygiene

Implementing decision hygiene is like cleaning your thinking glasses. It means you’re carefully washing away the sticky fingerprints of bias that blur your vision. For someone who’s making big choices in a business, it's about double-checking that you're not just seeing what you want to see.

You make sure to listen to different opinions, use a checklist to avoid missing anything, and learn from what didn't work before. This way, you can trust that your decisions are as clear and clean as possible, helping your business to grow strong and healthy.

Here are some practical ways to practice decision hygiene in your business:

Challenge Assumptions

It's easy to get caught up in the momentum and forget to question the path you're on. That's why it's essential to hit pause every now and then to do what's called an 'assumption audit.' This is when you take a step back and really dig into the beliefs and assumptions that are guiding your decisions.

It's like checking the foundation of a house you're building to make sure it's solid. For a business, this means asking tough questions about what you think you know about your customers, your market, and even your own product. It's not about doubting yourself; it's about being sure you're on the right track.

For instance, consider you've had a hit product and you're itching to introduce more items like it. Hold on and think it through first. Just because your first product was a winner doesn't mean there's the same demand for more.

This is where the assumption audit comes in. Look at the numbers, get feedback, and really test the waters. Maybe run a small pilot or survey potential customers. It's like checking the weather before you sail out; you want to know you've got the wind in your sails, not just hope for the best. This way, you're not just assuming success – you're planning for it.
Regularly conduct 'assumption audits' where you question the validity of your business assumptions.

Before expanding your product line, critically assess the demand, rather than assuming it exists based on past successes.

Seek Diverse Perspectives

Bringing together people from various walks of life to form a 'challenge group' can be a game-changer for your business decisions. This group’s job is to poke holes in your plans, offer fresh viewpoints, and challenge the status quo. It’s like having a team of lookouts on a ship, each scanning a different part of the sea for obstacles or opportunities.

By involving individuals with diverse experiences, cultures, and skills, you’re not just relying on the echo of your own voice. Instead, you're opening the floor to a symphony of insights that can steer your business clear of blind spots and toward innovative solutions.

For example, when you're brainstorming a new marketing strategy, don't just rely on your marketing squad. Pull in some folks from other departments or even outside your company. Listen to the tech team, the customer service staff, or that contrarian friend who always plays devil’s advocate.

They may not always tell you what you want to hear, but their outside perspectives can shine a light on potential pitfalls or hidden gems that you might not have considered. It’s like turning on a floodlight instead of a flashlight – suddenly, you can see everything around you, not just what’s in front of you.
Create a 'challenge group' of individuals from different backgrounds to review major decisions.

When considering a new marketing strategy, gather insights from people outside the marketing team, including those who might not agree with you.

Use Structured Decision-Making

Structured decision-making is like following a recipe when you cook a complex dish. Just as the recipe ensures you use the right ingredients in the right amounts, a standard set of criteria for decision-making ensures that you evaluate each choice on its merits, without letting personal feelings or hunches lead you astray.

This approach requires discipline, as it's about sticking to a predefined method, which can help you compare options fairly and consistently. By doing this, you can make decisions that are objective, transparent, and easier to explain to your team and stakeholders. It's a safeguard against the randomness of gut feelings and ensures that every decision is backed up by a solid, logical process.

Take the hiring process, for example. Every candidate who walks through your door has a different story, a different personality, and a different set of skills. If you rely on your gut to make hiring decisions, you might end up with a team that's more like you rather than the best for the job.

By using a scorecard with predefined criteria for all candidates, you make sure you're measuring everyone with the same yardstick. This doesn't just reduce personal bias; it also makes it more likely that you'll hire the person who's truly the best fit for the role. It's like using a measuring tape instead of just eyeballing it – you're ensuring that the fit is just right.
Develop a standard set of criteria for evaluating decisions and stick to it.

When hiring, use a consistent interview scorecard for all candidates to reduce personal bias.

Embrace Probabilistic Thinking

Embracing probabilistic thinking in decision-making is like being a weather forecaster for your business. Just as meteorologists predict the likelihood of rain or shine, you assess the chances of different outcomes for your business decisions.

This means you don't just hope for the best-case scenario; you also consider what could go wrong, or even just differently. By assigning probabilities to different outcomes, you can prepare for a variety of futures, not just the one you wish for.

It's a strategy that acknowledges the uncertainty in every choice and plans for it, reducing the shocks and surprises that the business world can throw at you.

For instance, when you're looking ahead to next quarter's sales, avoid pinning your hopes on a single number. Instead, give a range that considers the best, worst, and most likely scenarios. It's like checking the weather at multiple sources before you go on a hike. Maybe you'll have sunshine, or perhaps it'll rain — or you might end up with a bit of both.

By preparing for each possibility, you ensure that no matter what the business climate brings, you have a plan, be it an umbrella or sunscreen. This approach to thinking about the future helps you build a resilient, adaptable business strategy.
Quantify the uncertainty in your decisions and plan for multiple outcomes.

When forecasting sales, instead of one target number, provide a range that reflects different scenarios.

Keep an Error Log

Keeping an error log is like maintaining a personal history book for your business, one that helps you learn from the past. It’s a deliberate task where you jot down not just what decisions you made, but also how they turned out, and most importantly, what lessons can be gleaned from them.

This practice is about embracing mistakes and missteps as learning opportunities, not just outcomes to be avoided. By systematically recording these experiences, you create a treasure trove of wisdom that can guide future decisions, prevent repeat blunders, and streamline your path to success.

For example, after launching a new product, take the time to create a detailed record of the event. Write down what aspects of the product or launch strategy resonated with your audience and what fell flat.

Did the real-world performance match up with your expectations? This reflection isn't about patting yourself on the back or beating yourself up. It's about honest evaluation and using that insight to refine your approach.

Over time, this error log becomes a roadmap of do's and don'ts, custom-made for your business, helping you navigate the often turbulent waters of the market with the wisdom of hindsight firmly in hand.
Maintain a record of past decisions, their outcomes, and what you’ve learned from them.

After a product launch, document what worked, what didn't, and how your initial expectations compared to reality.


As leaders at the helm of our startups, we must be vigilant against the undercurrents of bias. By adopting decision hygiene practices, we can make clearer, more effective decisions.

The journey of entrepreneurship is fraught with uncertainty, but with a disciplined approach to decision-making, we can navigate towards success with greater confidence. The first step to overcoming bias is to acknowledge it exists.

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