5 serious illusions that any entrepreneur should avoid

A leader who is always thoughtful and coherent is very important in a startup - where inadequate, hasty views, thoughts can lead to very serious strategic mistakes. In The Art of Thinking Clearly (Harper, 2013), author and entrepreneur Rolf Dobelli shared that he has synthesized 99 common mistakes that we need to know to stop block out. Here are 5 of the many issues that are directly related to entrepreneurs.

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1. Sunk cost Fallacay: Sunk cost Fallacay: We invest too much so we must continue

In economics, suck costs are investments that are invested and cannot be recovered. For example, a company invests 1 million USD in a new technology but has no results. The $ 1 million spent is a sunk expense and cannot be taken back. However, the company still decided not to let future investment projects be affected by that loss.

Another example, you bought a movie ticket that came close to the date of the screening, you suddenly became sick. Even so, you still decide to go for the money to buy tickets. At this point, you become the victim of the so-called "sinking sophistry": Go or not, you still lose money. But if you go out, you will be able to watch movies but you may get worse. Obviously, you spend more on medicine than accepting it at home and only cost money to buy tickets.

Submergence costing means that because it is spent too much, we still have to continue even if we know that it is likely to fail. That's the reason we can't give up.

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You spent a great amount of money, plus that every month, even for years trying to make a meaningless marketing plan. Your staff wonders if there is a "late tunnel light" , and, frankly, you have the same worry. The problem is that you have no choice but to continue to follow the plan because all the money, time and effort poured into it. Not to mention, you don't want to lose face.

It is this thought that has caused you to become a victim of "sunken sophistication" . "Prescription" Dobelli prescribes for us as follows: Forget the past and move forward, or more accurately, forget what you invested and face the truth. Ask yourself if there are more resources and more time, will there be good results? If not, cut the loss and return to focus on another strategy or project.

2. bias based on Social-comparison bias: He is good, he will make us worse

It is understood that the social comparison theory that we continually make judgments about ourselves and our lives by comparing ourselves with others. Therefore, each person often feels a bit jealous when making comparisons (see others better than you in the field you appreciate) and feel better when comparing down (see others poor) more than me in the field I appreciate). For example, living close or in contact with the rich, you find yourself in need; living close to or in contact with the poor, you find yourself very lucky.

You decide not to hire a young person to control all of your important communication strategies. Why? Because you are afraid of being too dependent on them. It is also something that many companies in Asia tend to create advancement opportunities for senior and loyal people instead of relying on young talents.

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Here, there is clearly a bias based on the social comparison theory, which is to judge people not based on their own values, instead relying on how they appear before others. , even the boss. Therefore, you turn your back on potential employees. This is really a very bad idea.

Dobelli borrows advice from venture capitalists and former Apple creative director Guy Kawazaki : A "A" start-up "game" recruits better people than themselves, while Grade B will recruit lower people to feel better and keep following that pattern. Hire B-rated employees and eventually, you can "stand up" with Z-class employees - this is what Steve Jobs calls "Bozo Explosion" phenomenon . Specifically, when the company is on its way to prosperity and suddenly Z appears, from the peak of success, your business will plummet without braking. At this time, Bozo's "ghost" began to appear, heralding an inevitable decline in decision making, product quality, design, customer care and solutions now " change the blood of your "staff" - something that cannot be done in a short time.

Instead, look for promising people who can best support you. If they can do better than you, it is an extra bonus not only for you but also for start-ups and your recruitment strategy.

3. Inability to "close": Always open to all options

Whether you put dozens of books next to the bed to read when there is time or consider countless options to expand into all customer segments, Dobelli says welcoming options and not having any one Any mature decision will ultimately lead to time, money and failure.

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A business strategy, he stressed, "is primarily a statement of what is not involved." Therefore, make calculated decisions to ignore certain abilities and "put all the eggs in the best baskets". Dobelli also relates to Xu Xiang - Director of Zexi Investment Investment Fund and Spanish explorer Cortes - who burned his ship after setting foot on enemy territory. Why? Because his army will have no choice but to move forward.

Hernán Cortes is a famous Spanish explorer. In 1519, he led a delegation of 11 ships with more than 150 sailors from Cuba to the Yucatan Peninsula with the goal of obtaining the world's largest treasure of the time.

When halfway through the journey, many sailors began to complain about fatigue and some regretted being involved. Cortes was really headache and when their train set foot on Yucatan Island, before fighting the army of treasure guards, he told his crew: "Burn all of our boats." go".

Both the crew were bewildered and anxious to ask if burning a boat would surely die because there was no means to return. Cortes with an extremely confident face answered: "Because we will definitely win, we will win the treasure and we will return to the enemy ships."

Cortes's words had the power to spread, the crew was so excited, they shouted loudly, together they set fire to the boat and plunged into battle with extraordinary strength. And the miracle happened, for the first time in 600 years, the treasure was conquered. Why did Cortes's crew do it, because they had only two choices: one to win treasure, the other to die.

4. Prejudice about survivors (Survivorship bias): Let's look at those who are successful and forget about failure

The prejudice against the survivor implies that we often focus on successful people who forget the existence of failures. We hear too much about success, find that unsuccessful people never write books, never open training centers that make us illusion that we can be as successful as they are. We do research with good choices and forget that there are always opposite variables.

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Current media is full of inspiring success stories to start your career. However, Dobelli reminds that in real life, failure is much more than successful. Reading about the winners who never pay attention to those who fail will make us fall prejudiced about the survivor - overestimating the chances of starting a business based solely on the story of some businessmen peaks of success that are not business examples "have sunk to the bottom".

Dobelli's "Prescription": Against this tendency by "visiting the cemetery of budding projects that have gone out or examples of failed business" , you must even actively explore. about them.

5. Lucky pioneer: Nothing can stop us now

Your start-up has exceeded your expectations and your products or applications have become the main topic in everyone's discussions. Investors start pouring capital into your business. With the vision of joint venture opportunities, franchises, even acquisitions, the world seems to be very close. You start believing that fate is in your hands, "drawing" the company's development in 10 years and billions of dollars are pouring into you.

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However, Dobelli wants to wake you up with the phrase: "The pioneer's luck" . This is common for customers who try new products or brands and get unexpected pleasure. This first advantage can make a huge profit for a while, but are success stories always beyond the opening chapter?

So how do you know if your startup is successful due to "luck of pioneers" or due to internal capabilities? The answer is based on the ability to overcome challenges and competition over time. So, instead of hastily thinking about success in the long term, carefully consider what has been achieved in the present, the industry context, evaluate the past action strategy to see if they It is still suitable for the future. In short, you have to be hungry but also need to be alert.