One of the most fatal flaws to successfully implementing a growth strategy is confirmation bias.
Let me explain.
It’s essentially where decision makers have been shown to actively seek out and assign more weight to evidence that confirms their hypothesis, and ignore or under-weigh evidence that could disconfirm their hypothesis.
Here’s a good example:
Let’s say a toaster manufacturer is considering making a toaster that can toast four slices rather than two slices. They’ve asked their ideal buyers if they’d like this benefit and by in large, their focus group as confirmed they would love that. So, they commit to creating this four slice toaster, but no one ends up buying them.
Could the reason no one is buying them be price related? Is their audience going to pay more for a four slice toaster over a two slice toaster, and are they okay with possibly paying twice as much?
My point: Depending on how you ask the question of your buyer and audience, your confirmation could be very different. So if you don’t ask the right question in the right manner, you get confirmation of something that does not necessarily allow you to enter into that market and offer a solution that’s in demand and profitable. Rather than confirming the things that you believe are true, what you want to do is you want to try and disprove the things that you believe must be true for this to be a good opportunity.
With the toaster manufacturer, the right way to approach their new product would be to ask their audience if a four-slice toaster was offered at the same price as a two-slice toaster, would you be willing to pay at least 50% more for it, in order to get that value? Once they have this data and insights, they can go out and test that.
Framework for growth strategies
The goal is to create a framework out of all the dimensions of what you’re offering.
When creating growth strategies, it’s more than just about price and performance. You can’t just go test individual features and ask potential buyers if they’d pay for it or not. That’s almost a nonsensical question. You have to combine the different dimensions of what would make buyers buy something or do something different, and then test them in a specific order.
Once that happens, a tremendous amount of time investment goes into that idea, features, or product. For that growth opportunity to be successful, an appropriate understanding of the risks and challenges needs to happen and how to avoid a failure.
The fatality comes in when you’re committing too soon and chasing too many opportunities. What we’ve found is an over-investment or committing too soon instead of doing the research and asking the right questions.
To navigate through avoiding these fatalities, there’s a process we’ve developed that essentially solves these challenges.
First, we talk about all new growth offerings. We talk about them in terms of performance attributes, price attributes, and how these match up to what they believe customers want. We want to make sure that any growth strategy offering isn’t only based on customer preference, rather we want to know, through business insights, that the performance and price matches up against demand. And, we want to align the distribution channels and ensure we’re accomplishing the goal of understanding what’s true borrowing from science only to prove what’s not.
To avoid the fatal flaw in your growth strategies of confirmation bias, you have to be thinking about the end goal: understanding what’s true based on science only to prove what’s not, so your growth strategy, product, or service can be successful.
To learn more about how your team can ask the right questions in order to get the right answers in your business insights, click here to get in contact with us.