Early stage startups are a set of experiments — they’re trying to prove or disprove a hypothesis. The output of experiments lead to decisions that move you closer to your ultimate goal.
Startups exist day to day, often making strategic decisions about our business that are based on some assumptions about the world (or industry) they exist in. It’s incredibly easy to make a strategic decision or judgement call, implement the changes and move on to the next thing, without thinking to check the assumptions that were made in the first place:
- You redesigned that login flow because you assumed that the existing one was causing too much cognitive load for users.
- You raised your pricing because you assumed your customers were more than happy to pay more.
- You built an integration with <Company X> because you assumed it would unlock more horizontal growth.
There are two key kinds of assumptions we all make on a day-to-day basis:
These assumptions aren’t necessarily complete guesses — they are often informed by a certain level of knowledge about a situation, e.g. “some customers said they would happily pay more”. The problem is, this makes them all the more dangerous. Our brains have a tendency to fill in gaps in a way that’s very difficult to pinpoint.
Blind assumptions are dangerous because you’re not even aware that you’re making them, and they’re not explicitly made or defined. These are often triggered by cognitive biases, and are deeply ingrained into our thought processes. The typical working day is packed with hundreds (if not thousands) of tiny micro assumptions, but they’re incredibly hard to recognize.
Why assumptions can kill a startup
“Untested assumptions are a signal for inflexibility in a startup, and when baked into company culture they’re difficult to address.”
Startups exist for the very purpose of challenging the assumptions of their industry and its existing solutions. If you’re executing on your vision without questioning these things from the ground up, you’re wasting an opportunity to truly innovate. For large incumbents, the cost of questioning every single decision is just too high — the result would be zero forward progress.
Startups have a luxury — a lack of baggage weighing down their movements — and as a result can afford to question (and test) the most basic assumptions about the world we live in. Untested assumptions are a signal for inflexibility in a startup, and when baked into company culture they’re difficult to address.
Why assumptions are left unchecked in startups
Very little incentive to self-assess: For individual employees operating independently (as is the case for many small startups), there’s very little incentive or motivation to do this. Self assessment takes effort and is often painful. But it’s also the key mechanism through which we grow as professionals.
Sense of urgency: Startups don’t have the luxury of time or resources for self-reflection and analysis. When every single item on the to-do list is urgent, the industry tells us we should get our “hustle” on.
Very few people to sense-check ideas: Small startups can be highly-collaborative environments, but often times individuals are so highly focused on their own tasks that serious debate and in-depth discussion gets left off the menu. The rejection of meetings in startup culture also contributes to this.
Diversity of ideas is low: Startups may employ some of the smartest minds to tackle problems, but they’re not the kind of diverse environments required for out-of-the-box thinking. This seems counter-intuitive, given that the reason d’être of startups is to bring innovation and abstract thinking to a space.
A culture of experimentation is the only antidote
Encouraging a culture of experimentation in your business can be the difference between making progressive steps forward and flailing wildly and unsuccessfully. If we agree that self assessment and evaluative thinking is something that naturally gets left out of startup culture, we should nurture it in a deliberate, structured way.
Frameworks need to exist that allow startups to:
- Recognize when assumptions are being made
- Document and discuss assumptions
- Prove or disprove relevant, high impact assumptions with experiments
- Feed results back into the decision making process
Investing in experimentation needs to be a company-wide effort, and requires buy-in from the top management. One of the biggest cultural changes that’s prerequisite for this is as follows:
People need to be allowed and trusted to make mistakes.
In part two of this post, we’ll take a look at some frameworks for running effective experiments startups that enable deliberate, positive steps towards growth.