3 Mental Models To Reduce Uncertainty and Increase Winning
We had a conversation with Chris Cochella, serial entrepreneur and founder of Brackitz, an award-winning children’s STEM education building system. He shared with us three mental models intended to reduce uncertainty in highly uncertain environments.
Lean Startup methods are intended to reduce uncertainty in a highly uncertain environment. Warren Buffett likes to say, “I don’t look to jump over 7-foot bars, I look around for 1-foot bars that I can step over.” As entrepreneurs, we are looking to lower the height of the uncertainty hurdle while making decisions and moving forward. Another way to look at this approach is to create a situation where: heads, I win; tails, I don’t lose much. The Lean Startup approach is all about using all available tools to reduce the hurdle height and increase the likelihood of winning. It’s about stacking the odds in your favor.
Lean Startup is a toolbox full of mental models to stop and interrupt the waste caused by simplistic, fast, and easy “first order thinking” like cognitive biases. Applying Lean Startup mental models helps to provide deliberate, valuable “second order thinking” to the entrepreneur and intrapreneur that will help reduce uncertainty. While many people are familiar with mental models, we will highlight the value and application of mental models for extremely uncertain Lean Startup situations.The Lean Startup approach is all about using all available tools to reduce the hurdle height and increase the likelihood of winning. Click To Tweet
Mental models are thought processes that explain or represent the surrounding world. They help shape our behavior and determine approaches to problem solving. As humans, we subconsciously use them to make judgments and decisions. Unfortunately, there is no single mental model that works in every situation. It is the job of the Lean Startup entrepreneur to mix and match mental models to reduce uncertainty. By reducing uncertainty, you increase the likelihood of success, increase the reward, and preserve precious resources. Fortunately, there are many mental models that can be used to inform critical decision making.
First Conclusion Bias: Friend and Foe
First conclusion bias (sometimes called confirmation bias) is a cognitive bias where early evidence produces a hard and fast conclusion. At times, when needing to make a fast decision, this bias is a huge advantage. In situations of imminent danger, time-boxed events and so on, the ability to make quick judgments from available evidence is necessary. As humans, we have developed this rapid thinking skill. However, in situations where time is not a big factor, e.g. developing a business or idea that will continue for years — this bias can work against us.
Early on in the idea phase the first conclusion bias helps us get started and builds excitement. Entrepreneurs conclude that they have the idea for a new, valuable product or service. Early conversations with friends, family, and, maybe, customers are the evidence that confirms this conclusion. Entrepreneurs need that confirmation to build the passion to commit and take action. However, as the entrepreneur goes forward, that first conclusion bias can be a liability by creating blind spots that could otherwise help reduce uncertainty. Continuing to operate with this bias means that entrepreneurs can irrationally and unconsciously reject new, contradictory information while continuing to accept, in a lopsided way, supporting and confirming evidence.
The further a startup proceeds under this “spell,” the greater the risk of wasting time and money. Another way of saying this is that entrepreneurs “fall in love with the solution” or suffer the “passion trap” while rejecting information that is not consistent with the “love affair.”However, as the entrepreneur goes forward, that first conclusion bias can be a liability by creating blind spots that could otherwise help reduce uncertainty. Click To Tweet
The Lean Startup community readily agrees that early solutions are rarely complete, yet, as humans, we are hijacked by this first conclusion bias. Lean Startup entrepreneurs must develop a disciplined mindset to establish habits that draw on mental models to oppose or interrupt our first order thinking and cognitive machinery. The ability to shape our behavior and decision making provides a huge advantage. The following three critical mental models will help the Lean Startup entrepreneur subvert the first conclusion bias.
3 Critical Mental Models
- Cultural Awareness: Create fun, safe ways to increase awareness of confirmation bias into daily operations. Building an evidence-based culture over time will result in an environment where team members readily interrupt the risky behavior of the bias. Regularly asking, “How do we know that?” or “What evidence do we have?” or “What could make this fail?” or “Where is the bias here?” are important questions to ask. All team members need to feel interpersonally safe to regularly challenge conclusions and decision making. Have fun with it by giving out rewards or prizes to the most valuable “bias busting” question.
- Obsess Over the Problem: Instead of falling in love with the solution, obsess over knowing the problem through ongoing, open-ended discovery with team members, customers, vendors, and partners. Continually discovering the problem better than anyone else will ultimately produce the best solution and delight your customer like no one else can.
- Build-Measure-Learn Loop: Splice the Lean Startup build-measure-learn loop into your cellular DNA so that all aspects of decision making require assumption identification, learning, and validation. This discovery and validation loop is invaluable at all stages, from early-product ideation through post-customer evaluation and beyond. Make it part of your organization’s biology.
Lean Startup methods reduce uncertainty and continually delight your customers, but require, as Mad-Eye Moody from Harry Potter says, “constant vigilance.”
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Thanks to Chris Cochella and Adam Berk for contributing this piece. If you seek to bring the entrepreneurial spirit to your organization, Lean Startup Co. can help.