Unintended consequences are a nightmare for companies of all sizes. They can strike in sales, technology, or finance–just about any decision you make could have an effect on your company’s fate!
The more established the firm, the more it is able to withstand damage once the unforeseen becomes visible. On the other hand, I’ve seen the unintended consequences of the law taking down startups in a far more significant way.
Market Share FOMO Case
I just got an email from a guy who’s on his way to becoming the next million-dollar entrepreneur. He had one question for me: “How do I find my ideal customer?”
In other words, He knew enough about his clients to know that he didn’t have enough information on them to go out and find more of them.
We were going over the strategy that any of us might use in a similar situation. I walked with him through what his responses should be, and how to limit them while tabulating their results. However, I quickly warned him to exercise caution when interpreting and acting on those results because of the law of unintended consequences.
The law is shown in two forms.
- When a company develops something that is completely unnecessary.
- When a company fixes something that is not broken.
Both of these are based on subjective and non-statistically significant.
Acting on Stories Is Trouble Disguised as Strategy
The first reason that the law of unintended consequences affects startups more frequently and severely than established businesses has two aspects.
First off, startups are often told to listen and talk with their customers, but this usually conveniently skips the fact that early startups have little or no customer base. Early-stage businesses also struggle in identifying who deserves to be talked about–a problem my CEO friend tried solving when he gave out his advice on how companies should market themselves.
The fact is that the majority of startups don’t have a consumer base; instead, they have a clique of early adopters.
It’s like ordering the blind to lead the blind if you ask customers for feedback in an early startup’s lifecycle.
Don’t be blind. There’s a reason you lead your company and it goes well beyond your capacity to persuade others what to do. You have a vision. It’s a good idea to pay attention to your consumers, but don’t get caught up in the unintended consequences of allowing them to take control of your startup and product.
Problems that Lack Data Aren’t Really Problems
The second way unintended consequences cause problems is in the well-intentioned attempt to address a big problem.
Define big. Define, to a certain number or degree, how much of an issue your company or product is before you fix what’s wrong with it.
We’ve all been there. A consumer, a colleague, or even an investor will bring up a major issue with your product – or a feature, service, customer support, or some other way in which your company operates. They’ll characterize the problem as massive and perhaps even the reason that your company will collapse.
Before you plunge into fix-at-all-costs mode, remember to ask these two questions:
- How often does it happen?
- How much does it cost us when it does?
Most of the time, the first response will be: I’m not sure. So do some research. I’m not suggesting you ignore any issues that aren’t catastrophic; I’m simply stating that you don’t have limitless resources or time. Make certain you’re not wasting your valuable time and energy on “crises” like this one don’t do much damage if they happen.
Interpretation Is Crucial in Avoiding Unintended Consequences
It is not enough to make a decision simply on the basis of data. But you always have experience, and your gut serves as a substitute for words.
This is what people who discuss leadership mean when they use the term “X-factor.” You’ll never be able to anticipate every conceivable consequence of every decision you have to make, but you should take the time to consider everything that could go wrong.
Because the law of unintended consequences implies that it will go wrong.