Business models are just that – models. They help us organize and understand the world around us but they are far from perfect truths. Rather, the models we apply to our business, social and personal lives are simply hypotheses that are (in theory) founded on reason and supported by available evidence. Philosopher Charles Sanders Peirce’s Pragmatic Theory of Inquiry argued long ago that even the best models are inherently fallible and therefore destined to be replaced by future models. Imperfect tools are all we have and ever will have. His views have been echoed by many philosophers, scientists and other deep thinkers before and after him.
But just because the fallibility of models is a well-proven fact doesn’t mean it’s not a hard pill to swallow. Especially for those of us suffering from the human condition (read: everybody.) Understandably, humans have evolved to crave certainty because it is easier to meet the needs of your people and protect against threats when you operate under the assumption that you know what they are, where they are and when to worry about them. This is why we hold onto our established models so tightly for so long. Unfortunately, we often hold onto them even when their detriment to society becomes too obvious to ignore. We explain away these detriments in knee-jerk fashion. We fear the uncertainty that would comes with making concessions and, thus, making change.
But certainty is an illusion. If the year 2020 has taught us anything, it’s that our current working knowledge and beliefs are nothing more than fallible models. As the saying goes, “the only constant is change” and we do ourselves a disservice by believing anything else (as much as we might really like to.)
The good news is that this realization offers ambitious, open-minded entrepreneurs (and anyone else, frankly) a fantastic new cognitive reality to thrive in. A reality in which anything could be possible if we are willing to suspend our beliefs and allow alternative perspectives to enter our consciousness.
The takeaway? Entrepreneurs who challenge and reframe long-held hypotheses that everyone else (ie. your competition) has accepted as truth will be able to solve more problems for customers, create healthier happier work environments and, in turn, differentiate themselves in a way that rewards their risk-taking.
Stand-out Canadian corporation, Shopify, is an excellent case study in how challenging widely-held industry assumptions can lead to enormous success. CEO and Founder, Tobias Lutke, did not set out with the intention of creating an ecommerce platform. Originally, he wanted to sell snowboards. But once he found himself at the helm of a budding technology start-up, having no background in traditional business disciplines, he was faced with a number of industry “truths” (assumptions) about how to grow successfully.
The first long-held industry truth was that, in order to be successful, a Canadian start-up ultimately had to be bought by a company or move to a technology hub in the United States. The supporting evidence, of course, was the prolific in-your-face history of rapid-growth, global-reaching technology firms coming out of the US: Apple, Google, Facebook and Amazon to name a few. The conclusion and resulting industry “truth” being that the talent, resources and know-how that Shopify would need was only available in the United States. Shopify would have to move south to achieve success.
However, perhaps because of his outsider status within the “business” world, Tobias rejected that truth. Explaining his mentality in one interview he said: “I tend to think, when everyone says do one thing, you should do the opposite. I’ve found that to be a sure-fire way to be successful. You can build a world class city anywhere. People are no smarter in Silicon Valley than they are here. Some of the smarter people from Canada might move there, sure, but that just means that there’s more competition there.”
There can be great efficiency in starting with a theory or belief and searching for evidence that confirms it. Many business professionals (especially in the management consulting industry) subscribe to the method of hypothesis-led problem solving for this reason. Unfortunately, what all-too-often happens is a tendency to adopt the seemingly-unavoidable industry truth (i.e. only the United States has the talent and know-how to build a billion-dollar technology company) and subconsciously focus on evidence that supports it while ignoring evidence that refutes it. This is a well-documented cognitive process known as Confirmation Bias and literally all of us fall victim to it. But that doesn’t mean we can’t fight – and win – against it.
To avoid subconsciously seeking evidence in support of that pervasive industry “truth” (i.e. location matters) savvy problem-solvers can instead consciously attempt to disprove it. There are two possible outcomes of taking this approach, both of which are valuable to problem-solvers. First, if, despite your efforts, you cannot find sufficient evidence to the contrary, then you can move forward, assuming the pervasive industry truth, with greater confidence. (Woo hoo!) Second, if you DO find sufficient evidence to refute the pervasive industry truth, you can begin to formulate a fresh new perspective that, in the words of Tobias Lutke, “culturally aligns with what [you’re] trying to accomplish, and then just go for it.”
However, an even more useful and exciting approach for problem-solvers may be to seek evidence for how the industry truth AND opposing hypotheses could be simultaneously true. That’s where the real magic happens.
A great reference book for this is The Opposable Mind by Roger Martin, former Dean of Rotman School of Management and respected business strategy thought-leader. Referencing his many interviews with leaders around the world, Roger highlights similarities in the way they overcome business problems. Meg Whitman of eBay, told him “it’s this idea of ‘and'” and Nanden Nilekani, of Infosys, explaining how, when presented with two opposing options, he asks himself “are there solutions that satisfy both?”
Tobias Lutke took such an approach when he faced another pervasive industry truth: the “start-up culture” of a young technology company could not be maintained if it grew to be a multi-billion dollar corporation. In this case, Tobias challenged the understanding of what having a “start-up culture” really meant. When Shopify grew to 1,500 employees, he would receive feedback from candidates who expressed their preference for working at smaller companies. Tobias asked such candidates to deconstruct what that really meant. The bottomline, it turns out, is that these candidates really wanted to feel they had personal impact at work – something that was not inherently at odds with a large organization (or at least didn’t have to be.)
As a result of Tobias’ intentional opposition to old industry truths, Shopify has become one of Canada’s greatest success stories. During a time of social and economic chaos, Shopify stock reached the noteworthy $1,000 per share milestone (coincidentally, just this past Canada Day) growing 159% above last year’s price at this time.
Such stand-out success is within reach of any entrepreneur ambitious, courageous and open-minded enough to challenge, deconstruct and assign new meaning to long-held industry truths. To quote Roger Martin in The Opposable Mind, “Explicitly refuse to accept trade-offs that the rest of the world says are “unavoidable”.
By nature, such an endeavour will be unfamiliar territory to most people. Living and operating in a new cognitive reality is not so simple. Seeing alternatives to the deeply-ingrained status-quo is not so easy. I can help.
As a human-centered strategist, I collaborate with Canadian businesses to systematically deconstruct problems, uncover new meaning and, ultimately, design more effective customer-facing systems and content. If you keep bumping up against a pervasive industry truth in your pursuit to solve customer problems, nurture a productive workforce and achieve stand-out success, I can help you overcome it.