What is Delusional Thinking
Delusional thinking refers to strongly-held beliefs that are clearly false or irrational and contradict reality and evidence. People experiencing delusions are unable to change these beliefs despite proof to the contrary.
Delusions involve misinterpreting experiences and perceptions in a distorted way. They feel subjectively real to the person experiencing them, even though others recognize them as false.
How Delusional Thinking Affects Entrepreneurs and Startups
Many entrepreneurs exhibit optimistic biases, overconfidence, and delusional thinking about their business ideas and likelihood of success. This can lead them to make poor decisions.
Common startup delusions include underestimating competitors, exaggerating one’s abilities to influence outcomes, overestimating market size, and lacking objective data to validate assumptions.
Delusional entrepreneurs rush into implementing their ideas without properly evaluating business models, testing assumptions, or getting external perspectives. They may be unwilling to pivot even when faced with negative signals.
The tendency towards delusional optimism likely arises from cognitive biases as well as organizational and social pressures to be positive. However, it often sets entrepreneurs up for failure when reality does not match their deluded expectations.
Dealing with Delusional Thinking
Entrepreneurs should gather objective data, test key assumptions, conduct prototyping and seek external feedback early-on to validate ideas before fully launching.
Recognizing delusional biases and consciously adjusting optimism levels closer to reality can lead to more balanced decisions.
Seeking different viewpoints, exploring worst-case scenarios, and roleplaying competitor reactions can provide reality checks against delusions.
Summary
Delusional thinking is common among entrepreneurs but can undermine rational decisions and set up startups to fail. Maintaining realistic optimism, validating ideas externally, and correcting for biases are important to counteract its pitfalls.
