Counting Zeros

Sorry to burst your bubble, but when you get that feeling STOP! You’ve likely been taken over by Innovation Bias (a close cousin of “The Dunning Krueger Effect”); a bias that can strip even the most rational person of their reasoning.

We all love excitement, enthusiasm and passion; it’s an integral part of a new project. However, there is a very fine line between enthusiasm and over-confidence. Learning to recognise the difference between the two is incredibly important. While some believe that market-research reduces these risks, the reality is that founders can skew research when they only see what they want to see. At this stage, not only do they believe in a flawed idea, but they have the evidence to prove it — a costly error.

Believe me; I am not immune to this either.

My friends and I jokingly call this “counting the zeros”, when in our early 20’s we took our first steps in entrepreneurship and prepared a business plan for a new directory business. After conducting extensive research, assessing the competitive landscape, and calculating a very “realistic” market penetration we valued the opportunity at $10,000,000… “Count the Zeros!” I said. That phrase stuck and the business was worth precisely that much (minus the number one at the start that actually would have made it worth something). Nothin’ but a lot of zeros. In reality, the concept sucked, the execution sucked–it all just sucked. Thankfully we didn’t lose too much money and can laugh about it today. It was a valuable learning lesson.

In reality, 90% of tech projects fail within the first 12 months, mainly due to this bias. Of the 10% that survive, 90% of those fail within the second year, and most are obsolete or not fit-for-purpose by the third year. Interestingly, when you speak to these same business owners after the fact, the most common explanations are:

• There was a problem with the market.
• There was too much competition.
• The timing was wrong; we were ahead of our time.
• If we had more growth capital for marketing, maybe it would have worked.

While all of these reasons may be valid to some degree, more often than not, the business was missing three critical factors;

• the ability to realistically validate the value of the early-stage innovation without access to historical data;
• a robust method to test a portfolio of alternatives without bias or preference;
• the ability to create a memorable customer experience.

The end result is that business leaders become more conservative and play it safe, focusing on cost-cutting through automation (business-as-usual). While there is value in reducing costs and systemising processes through automation, it should never be prioritised over growth. The end game is never really about automation but capturing market share.

What if you could instead, offer a memorable experience that allowed customers to value your product or service?

What if you could cut through the noise and capture 80% of your most valuable market?

What if you had a process that allowed you to validate the opportunity before diving in head-first?

It’s not about doing more of the same or taking crazy risks; instead, it should be about doing more of what nobody else will do, in a way that inspires your most valuable customers to choose you over anybody else.

Founder | Director

Credit: Thank you to Scott Evans who provided his input and feedback in the writing of this article.

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