Time Travel to Save your Startup
Dramatically improve the odds of your venture’s success by rooting out and mitigating knowable risks with a premortem.
In startup culture, optimism tends to flourish at the expense of honest pessimism. At Foundational, we embrace this by starting our strategy engagements collaborating with our clients to agree on how the world must be changing, what their teams are doing to bring about that change, and how we will measure the achievement of their inevitable success… we also use a novel process that quickly identifies the likely causes of failure well before they occur. It’s a simple and impactful technique that any team can do for themselves in under an hour.
Deep-down we all know that most startups fail, and that flawed assumptions, unforeseen today, hide along the critical path to success. It’s essential to our work that before we kick-off any ambitious plan, that we surface critical-path assumptions so that we can either validate them or mitigate their associated risk while there is still time to correct course. To do this we’ve adopted the premortem; a favorite tool of Nobel Prize winning behavioral economist Daniel Kahneman which he refers to as imaginary time travel.
“Gather leaders in a room, ask them to look ahead one year, and imagine they’ve failed.”
— Daniel Kahneman, Nobel Laureate
Intentionally navigating the minefield of startup uncertainty with thoughtful experiments is important because it minimizes the risk of failure, and demonstrates that assumptions have been confirmed — which is the basis of the compelling traction narrative that investors expect when they determine whether to fuel a venture’s growth.
Gary Klein, the originator of the premortem, cites research which found that imagining that an event has already occurred increases the ability to correctly identify reasons for future outcomes by 30%.
The premortem doesn’t just help teams to identify potential problems early on. It also reduces the kind of damn-the-torpedoes attitude often assumed by people who are over-invested in a project. Moreover, in describing weaknesses that no one else has mentioned, team members feel valued for their intelligence and experience, and others learn from them. The exercise also sensitizes the team to pick up early signs of trouble once the project gets under way. In the end, a premortem may be the best way to circumvent any need for a painful postmortem. — Gary Klein, Performing a Project Premortem
A premortem’s almost laughable simplicity and its profound utility make it an ideal tool for any startup. All that’s required is a brief three step process of identifying a time-bound growth target, imagining one’s self at the defined due date, and then telling a very short story about why achievement of the target has failed.
How to Perform an Effective Premortem
My team has developed a number of best-practices for running premortems with early-stage startups. I highly encourage all those kicking off a strategic growth initiative to adopt these steps in their own premortem analysis.
- Have all team leaders participate. There is an immense benefit to brainstorming various viewpoints beyond those of the founders: leaders from engineering, operations, customer success, etc… We’ve seen founders who fully embrace this process even include their board members!
- Set quantifiable and time-bound targets for objectives. It’s hard to differentiate success from progress without both a date and a measure of achievement. Once both are defined, it’s much simpler to understand the magnitude of resources required to accomplish a goal, and how other pieces may fall in-place (or in this case, out-of-place).
- Feel the future pain. Make sure everyone understands what is at risk when the defined objectives are not achieved. David Hoffman, a co-founder of Next Big Sound (acquired by Pandora) shared with me a simple framing his team used in their premortems in order to get them to empathize with the embarrassment that would be experienced by their future selves: “Imagine at X date this project has gone so horrendously wrong that it is featured on the cover of Tech Crunch. What happened?”
- Preserve individuality. Each leader has a unique perspective and way of thinking. The value of this should be captured by having each participant construct premortem narratives individually.
- Write in present-tense narrative form. This is an exercise of imaginative storytelling. It’s important not only to imagine one’s self in the future, but to also write in full sentences. There’s a creative and emotionally expressive part of the brain required to link ideas together in descriptive sentences that writing in bullet points does not engage.
- Keep stories short. About 8–10 sentences per contributor is more than sufficient to surface the critical path assumptions underlying a strategic plan.
- Construct a cohesive composite narrative. Deconstruct the individual narratives into their individual thoughts. Then arrange them based on the themes that emerged. Post-it notes on a whiteboard are great for this exercise; they can be grouped into clusters based on their common root cause of failure. From the most prevalent root causes, a present-tense narrative representative of the entire team can be reconstructed.
- Collect feedback. The composite narrative should be reviewed by friendlies who did not contribute to the premortem narrative (other team members, mentors, etc…) so that they can provide some outside perspective on the resulting story.
- Assess threats as a team. Founders can’t solve problems on their own. That’s why they all hire a talented team! Get together to assess the identified threats by their severity and likelihood. Determining what to do about them should be a team exercise. As the team moves forward to act on its findings, they will do so with a unified understanding of their purpose and value.
This article originally appeared on Foundational’s site.
Foundational expedites the pursuit of early-stage venture capital. Its framework-driven approach proactively aligns startup go-to-market and product development initiatives with the expectations of their prospective investors to eliminate the months of consensus building that leads to the prolonged fundraising cycles most founders face.
Harlan Milkove is a product-minded software engineer and veteran startup founder. He has led initiatives across several ventures to launch flagship products via individual contribution and by forming high caliber teams. His most notable venture, Reonomy, is a commercial real estate analytics platform that has secured over $69M in funding.