Over the past twenty years, I’ve served as the founder and co-founder of tens of software startups; and some others from non-tech industries. Looking back, trying to learn from my mistakes — and from others’ — has helped me come to the following realization. Many’s the time we — all of us — have fallen into the trap of trusting common sense in business. And, as a matter of fact, we use that approach as a strategy — or methodology even — in crucial business decisions.
Now, you’re probably thinking that common sense has a positive meaning by its very nature; as, more or less, it’s a sound way to judge practical matters, right? So, what’s wrong with using our judgement in business decisions? Well, to give you a hint, the problem lies in our erroneous choice to solely base our decisions on that (kind of) intuitive reasoning. And, much more, in using common sense in business aspects, when all of them have been backed up by related science, for many years now. And that’s exactly what I’m going to analyze below.
I’ll illustrate my thoughts, starting with the healthy side of the matter.
Making the most out of our scientific knowledge — or doing it the right way
It’s not unusual for founders, co-founders or private investors to hold a university degree and have previous professional experience in a field related to their activities. Let’s take for example the case of founders that have a background in computer science or engineering; but I’m sure you’ll agree that my reasoning also applies to a wide variety of scientific and technological fields.
So, in our case, founders, because of their accumulated knowledge and past experience, are in the position to know exactly how to carry out tasks related to their field. In particular, they know, for example, how to develop apps and how to coordinate their teams, until they finally complete the projects they’ve undertaken. All in all, founders know perfectly well how to approach such problems and find best possible solutions, as they’re kind of close to the heart of these problems that are, of course, relevant to their scientific field.
But, what happens when they do exactly the opposite, when dealing with business activities irrelevant to their expertise?
Doing what seems to be right
When founders have to deal with business activities that don’t fall into their field of expertise, they follow a completely different approach. In particular, they attempt to solve such problems empirically. And it’s in this empirical approach that lies the problem I initially drew your attention to. More specifically, the same people who focus on applying the scientific methodologies they have been taught with precision and rigid attention to rules, when confronted with such problems, simply do what seems to be right. And what’s more interesting is the fact that those people, who most of the time diligently work on updating their scientific knowledge, simply or naively even, resort to applying common sense to business related problems.
Falling into the trap of applying common sense as a cure for all (business) ills
There is a Greek a word that aptly describes the situation explained in the previous section and it’s “komboyannitism” (κομπογιαννιτισμός), which describes, more or less, the same thing that quack doctors or scientists dishonestly claim to do. I have to admit here that I have, myself, unconsciously fallen into this trap, trusting common sense in business.
I studied Computer Science at the University of Crete and I started my first company as an undergraduate student. So, in the early days of my business activity, I unfortunately followed said approach. In particular, as far as software development was concerned, everything was actually done ‘scientifically’. But, for all other business issues I used to follow a kind of ‘logical way’ of doing things.
But, the thing is, when we try to solve business related problems with what “seems” to be right, all we achieve is make a leap from science to alchemy with all it entails for our business viability and success. What’s more interesting is that, unfortunately, we can be quite creative in that approach of ours; and thoroughly apply it in all business aspects, filling in the blanks as it goes.
Common sense in business related aspects
Let’s take a closer look at the ways we erroneously leverage our hypothetical experience and judgement to manage different business aspects.
Common sense in marketing
When it comes to marketing, employing common sense to solve related critical issues is not just a naïve approach, but quite a risky one. And that’s because this way of thinking cannot help you get answers to important questions that arise throughout your endeavor. Here are a few questions you’ll be needing to answer:
- How can you be sure the product you’re building is the right one?
- Assuming that you’re making a relevant analysis to answer the previous question, how can you quantify that analysis-estimation?
- How can you find out what is the problem your customers are dealing with? (bear in mind that most of the time customers have a different perception of what the problem is)
But when these questions are not properly answered — or, much worse, when they aren’t even raised, founders deceive themselves believing it’s their responsibility to ‘build a product’ the way they believe it should be built. And, of course, it’s somebody else’s responsibility to ‘promote’ and sell that product.
Allow me here to say that this way of thinking is absolute nonsense. And, worst of all, this perception is commonplace for thousands of businesses all over the world; especially when things don’t seem to go as planned. The excuse used in that case is the following:
We made it the right way, but for some reason customers won’t buy it.
But, is that excuse enough to comfort themselves? Well, unfortunately, sooner or later, our fellow founders will find out — the hard way — that the product wasn’t originally built the right way. Because, if that was true, then the product would be able to sell itself. So, what’s missing here? By why did this happen? More on this, later on.
Common sense in management
The second area where applying common sense in business is often “deadly”, is that of personnel management. In the same vein, most founders with a tech background probably know how to manage a team when developing a project. But what happens when the project ‘never ends’ — or when there are no clear specifications — as it oftentimes happens with product startups? To make things worse, how can common sense be of help when these specifications, if any, change over time?
Managing a team, when building a product from scratch, is one of the most difficult and demanding tasks for founders to undertake. And what’s more interesting is the fact that, as in marketing, applying common sense in management aspects will betray you too. In fact, that approach will prove to be fatal. And that is because your team members will often be low-spirited. Even when they know WHAT to do, they will not understand WHY they do it. Hence, this will make an already difficult situation worse. As expected, you’ll have to deal with employee departures during crucial periods; and low productivity will be the rule, rather than the exception. Same as highlighted above; you’ll be wondering why is all this happening?
Why common sense is not a viable solution in business
Apart from marketing and team management, common sense is also disastrous when applied to financial management, investing and other business aspects, too. I could illustrate my rationale with additional examples that would all end up in a big “why?”
- Why does that approach not work?
- Why trying to solve problems by “what seems to be right” does not work?
And the answer is, of course, desperately simple. It’s because founders fell into the trap of applying common sense to business aspects that have already been subjected to scientific evaluation procedures.
Let’s focus on marketing and human resources management that are, perhaps, the heart of modern entrepreneurship. In particular, some core marketing issues you’ll have to deal with when building your startup company are:
- finding exactly which product to make
- for which customers and
- the reasons they will buy it over competitors’ solutions
Here’s the main issue with that; dealing with all of these questions or issues is not a matter of luck or inspiration, as founders will typically assume.
It is, on the contrary, the result of scientific work. And founders need to acknowledge the importance of executing relevant marketing processes, using respective, scientifically proven methodologies and then train themselves, in order to be able to apply them. In the same fashion, they need to follow the respective strategy for human resource management, financial management, investing and other business aspects, rather than rely on common sense ‘methods’.
Why outsourcing cannot replace a founder’s effort
As expected, some will probably suggest outsourcing as an alternative way to work; but, the truth is, outsourcing or any other form of delegation is not effective. And that is because there exists no third party, either within or outside the company, able to successfully perform such tasks, except for the founders themselves. That holds true at least in the early stages, when everything is a matter of thorough research and validation. Therefore, it’s the founders that must study the relevant topics and learn.
But how do we learn? Well, first we study, then we attempt to apply the theory we have absorbed; then we get back to basics for a deeper understanding and a reality check. And, finally we can return, well equipped to apply the knowledge we have gained.
How I managed to walk away from common sense in business
The process described above is, of course, difficult and challenging. Founders need first to make the time to study; they also need to clear their heads and then focus on studying all these business aspects described above. But is this feasible? Let me guess, you’re probably thinking that since founders are already preoccupied with building their products — and, at the same time, working hard to achieve milestones, that is not an option, right? I’ll admit that this has been my excuse for almost 12 years.
Holding on to the “I have no time” defense, I was struggling with some business aspects. And, year after year, these problems kind of kept ‘swelling’, with new ones being added until, at some point, I decided to give the respective literature a try. My decision to delve into scientific knowledge in the fields I had problems with was a painful process, as I had to get into the habit of reading again. Frustration and disappointment were commonplace for a short period. Fortunately, things got better after a while; and I started noticing encouraging results. Note here that I gradually started devoting 15%, 20% and, sometimes, 30% of my time on studying. And as it proves, that decision was definitely worth the effort.
Today, I have no doubt…
‘Common sense’ is a huge trap into which startup founders usually fall. As mentioned, the first thing that will help them get out of this trap is acceptance. In particular, founders need to realize — and admit — that there are important scientific fields (marketing, management etc.) which are critical for their business success — in which their knowledge is not sufficient. Not at first, at least.
Hopefully they have a way to improve this situation; that is, to achieve that knowledge through repetitive cycles of theory-to-application. Indeed, they need to go through as many studying and applying-knowledge cycles as needed, in order to resolve issues they’re currently facing. This way, they’ll be able to deal with such issues exactly the way science dictates; not as komboyanitism or common sense suggest.
Now, let’s examine this topic from a different perspective; Have you ever wondered what makes a company uniquely competitive?
Your startup’s potential in succeeding rests on your ability to learn and grow
As Jack Welch, former Chairman and CEO of General Electric, says
the ultimate competitive advantage of an organization is its ability to learn and rapidly translate that learning into action.
And I couldn’t agree more with this philosophy. However, I would like to remark that this competitive advantage must, first and foremost, start with the founders themselves. They’re the ones that should lead by example; and do whatever it takes to broaden their knowledge on a wide range of business aspects.
And now you’re probably wondering where to start. Right then, on to the next section.
Where should I start?
When it comes to modern entrepreneurship, I believe that one should start by focusing on the four following pillars:
- Lean Startup
- Customer Development
- Design Thinking
They aptly and sufficiently define contemporary management practices for startup companies.
Then, founders should deepen their knowledge in various areas of marketing (product, growth, content), of human resources (recruitment, culture, etc.), financial management and, of course, investment aspects.
Beyond any doubt, the first and foremost step of the whole learning process is to start out. This is the most crucial part of this process of learning. Then, everything will gradually fall into place. And it’s in these cycles of switching between theory and practice that lies the essence of the whole learning and development process that leads to knowledge.
If you want to become a successful startup founder, there’s one way to achieve this; you must study a lot and for a long time, mainly in fields outside your expertise.