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Agency Forward explores the future of agencies as tech and AI drive down the cost of tactical deliverables. Topics include building competent teams, developing strategic offers, systemizing your business, and more.
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Chris DuBois 0:00
Hey everyone, today, I want to give you another solocast episode where we talk about the 10 biases that destroy agency founders. Now, over the years, I have talked to well over 100 agency founders, one on one, and we have, I've seen these same common trends over and over and so I wanted to hack all this information together so hopefully you can buffer against some of these mental biases and get your agency and yourself on a strong growth curve so that you don't see these things holding you back. It's easier than ever to start an agency, but it's only getting harder to stand out and keep it alive. Join me as we explore the strategies agencies are using today to secure a better tomorrow. This is agency full award. All right, before we get into the 10 biases, biases, a biases. I don't know which one it is. You tell me it doesn't really matter, but I'm going to read a definition for what a cognitive bias is, so that we have some some bit of a primer right before going into all 10 of these. So this description from the great Wikipedia, cognitive biases are systematic patterns of deviation from norm and or rationality in judgment, right? So it's essentially this pattern that we've created for ourselves and we fall into, and we don't even notice that we're doing it, but that leads to us making worse decisions. So I want to jump into the 10 biases that I see agency founders using the most frequently and hopefully like you can acknowledge some of these and then not have it become an issue bias. One is the confirmation bias. This is essentially you going around seeking evidence that your idea is right, rather than looking for whether it is right, right? And so this is something that I see agency founders doing all the time, when they have a new idea for a service offering, or they want to re shape, you know, how their agency is structured, anything like that, and and they go just seek all the evidence of others who have done that and have it right. But what that doesn't account for are all of those other variables that make your agency unique, right? And so you're taking certain pieces of information, throwing them out so that you can just find evidence based on what others are doing, that what you're doing is moving in the right direction. And so you end up overlooking, you know, these critical pieces of information and stuff in your strategy, or any of these ideas, essentially, because you're emotionally invested in this, right? You're not thinking about it rationally. You're letting emotions drive those decisions. Something a man in a college psychology class, this one really stood out to me. But it's essentially a confirmation bias, and that we will go to people to get the answer that we want right. And so very frequently, you'll see this with children, when they want something they know to go ask dad instead of mom. And so they'll, they'll go, you know they want to go play outside or whatever. They know their mom's gonna tell them to clean the room. So they go ask dad, who isn't paying attention and just says, Yeah, go ahead, right? So you know who to ask. But on a like, a deeper level, a lot of times when we have, like, a deep struggle and we're trying to think through something, we will go ask, like, a friend or a mentor, who we we know is going to give us some certain information, and we don't necessarily outwardly know that, but we have an idea, because we know them so well, what type of response they're going to give us, right? And so just by looking at who you're asking for, you know response from can actually give you some insights into whether you have a confirmation bias. Right now, if you're only going to people who are going to side with the answer that you want, you're going to miss out on making the best decision. Bias. Two is the sunk cost fallacy. This isn't unique to agency owners. I mean, just like every other one in this list, right? We're all potentially struggling with these biases, but the sunk cost fallacy is something very commonly seen in in business owners, where you've invested so much money into a project or some initiative that you don't want to just throw it out when you realize that it's not working right, even though it makes logical sense to move on to something else, to cut your losses and just advance, there's some emotional debt there, and it's going to lead to more losses in the future. So whether this is, you know, a project, maybe it's a client relationship, maybe you have put so much effort into getting this client a win and. You can't do it, right? You're only going to be spending more time. You're also going to be like, losing some social capital with your team, because they're going to be getting frustrated having to work on that client when they know it's not going to get anywhere. It could be with you know, one of your team members, they could be not, if not, a fit, right? Some people just aren't a fit to work in your agency. Some people aren't fit to work in agencies period. Holding on to them longer than you should is actually going to be hurtful to them, as well as your business. It also hurts company culture, because the team knows, hey, this person probably shouldn't stay here, because your culture is the standard that you set, and it's the one thing that you as agency founder, have complete control of within your business, an easy system that you can implement to get around this is zero based budgeting, where every period you're going to use, right whether it's quarter, you could do it monthly, I guess if you want, you could do it annually, but every period that you're looking At, you're going to kind of reset all of your budgets. Okay? Whether that's, hey, let's relook at all the clients that we have. Are we actually being profitable with them? Do we actually want to move this forward? And you're not using any any pre judgment? Well, we had a great relationship with them for the past five years, so, like, Let's keep it going. It's like, no, if they suck now, we're going to cut them now. And so that's the same for everybody. That is what is going to get you much further as an agency, even with team members right at some point, you could have a veteran team member who is now resting on their laurels, and they're not contributing the same way that they used to. They got you so, you know, in love with their work ethic and everything. And so when you can do this through certain periods, right, maybe it's your quarterly reviews, annual reviews, with team members, right? Bringing back up, hey, this is what I'm seeing right now for your performance, and this is what I see for your potential. And then you're able to kind of guide them and set a plan there where you're not stuck just putting money and investing time into something that's not going to work and it will just cost you more in the long run. Bias three is the anchoring bias. The idea here is that whatever you first hear is what now sticks in your head as the best idea. And so rather than going off and learning a bunch of things right, and trying to really vet this thing out, whatever that first piece of information you got is going to be the one that's the most valuable to you. And so we don't want to get stuck in that, because we should be able to when you know, new data comes in, new information comes in, change our opinion on something right? And quick aside, I think this is one of the challenges with society, where Tony Robbins, one of his books, differentiated opinions, beliefs and convictions. Right? Everyone should have opinions. You can have them on anything, but you should be able to change your opinion pretty quickly. Then you have beliefs. Now there's a little more experience tied to these beliefs, and they make it much harder to change, and then convictions are like, you know, you're willing to die on that hill defending that idea. And in reality, we should have very few convictions, right? Because if you're willing to die on the Hill for everything, you're not going to get much else done. The challenge with society right now is that a lot of people are taking opinions and treating them like convictions. Because, you know, their tribe is saying this is important, and so everybody wants to be part of the tribe, and so they kind of sink in with that. And so rather than collecting new information and being able to say, Oh, actually, now I believe this, because, you know, these things change. Like we didn't know this before, people just kind of plant their flag and say, No, this is how I'm moving forward, right? So American politics, you can see it all the time. If a politician changes their opinion, everyone stopping arms, right? But it's like, well, no, maybe they had other information that allowed us to do this. Okay? This is similar with the anchoring bias. I wasn't necessarily just a complete off, uh, off the cuff aside, like there are some purpose to it. Right with the anchoring bias, we want to be able to pull in new data and let it influence our decision without being stuck believing that that first thing we heard is the way that is a way to failure, and it is not something that you want to do. So set good expectations with everyone initially, but know that as you're going through a project, as you're working with a team member, as you're you're doing anything right, new information is going to come in, and you need to be willing to adapt your initial uh, plan in order to facilitate all that, or you will lose
bias. Four is the overconfidence bias. Now this one can be viewed as a blessing and a curse. The overconfidence bias is essentially you going into an engagement and being more confident than you probably should be. And so you're going to ignore some of the risks you're you're kind of going in with this. I will figure it out. Mindset. What often happens with. Agencies, when you fall into this overconfidence bias is that you'll sell more projects than you actually have bandwidth for. And because you say, we'll figure it out, then you end up hiring more team, you know, in order to facilitate those projects. But then you have more team than you actually have projects, because you might lose one of those, you might complete one of the projects, right? And so now you have too many team members, and so it's like, well, we'll figure it out by bringing on more headcount, or, sorry, more projects, right? And so you play this game of ping pong between revenue and headcount, and you just keep going back and forth, and you're just now in the stuck in this mindset of, I've got this, I'm going to figure it out when, in reality, it's just tying you up from working on the things that you should actually be working on, and making it harder to get any traction anywhere. Bias five is the availability heuristic. The idea here is that you're making assumptions that because something is a certain way for you, it's going to be that way for everybody else, right? So if you live in California, you think it's always sunny. Everywhere you've never been to, you know London, where it's always raining, or the Pacific Northwest, where I guess it's always raining, or you get all this snow up in here in Maine. So what we see with agency owners is that they they use a an experience that they've had with clients, right? Maybe it's their first client. They thought it was always going to be a certain way, because that's how that client came in. But then, as soon as you shift something in your agency, right, it's completely different. The I like using the curse of the Red Queen to find this right. What worked yesterday won't work tomorrow, and so ideally, we don't want to let yesterday's success story become tomorrow's flawed strategy. So you have to look at the bigger picture, and not just individual details based off what's going on with your agency, with your life. You got to be able to look at the bigger market. You have to look at other agencies. What are they doing? How are they being successful? What challenges do they have? Because all of that stuff is going to tie back into some of the decisions you should be making around your agency. You just haven't seen it yet, right? You're assuming everything is going to be great for a long time, because that's what you're seeing right now. But until you know there's that little change, and then you don't know how to react, right? You're you're going to feel fine. And so we want to kind of proactively figure this out, like, what are the things that we should be doing? Because if you have to go into a reactive mode, often the decision is made for you, and we don't want that bias. Six is the herd mentality. The idea here is that you're going to follow the crowd, because you see, that's what everyone else is doing. It must be working right? We can see this very clearly in the number of Rev ops agencies that grew very quickly, and now everybody has it as a service offering, right? It was an opportunity heard was going one direction, and rather than people just sticking to what they were already good at and doing that, they started kind of watering down their services, adding rev ops. Now you can find tons of revops agencies, and so it's much harder to actually get a footing in that area. So before joining the stampede, ask, does this actually work for us? Right? Is this something that we actually want to plan our flag on and start working towards? Because it will actually shape the way you run your agency. When you add a service, it's going to contribute to your offer. And so if it's not tied into that big outcome, that dream outcome, that you want your prospects coming to you for like it's going to water things down, and we don't want that, the herd mentality. There's one interesting element about this within your team as well, where there were some studies that showed, even if you have a very diverse team, right, and we all want diverse teams, but that it doesn't actually matter how diverse your team is, because as soon as a couple people start saying, Hey, this is the idea that we want to go with, everyone ends up falling into that herd mentality and siding with the majority, Right? And so we don't want that. And so a diverse team is only strong when the leader can actually bring out that diversity, right? Get people talking, get people out of the herd mentality, so that they're each bringing their unique voice. A group left to being a group will always create its own tribe, regardless of how diverse all of the individuals in it are. So we want diversity, but we need the leader to kind of oversee and make sure that we're not falling into some of these mental biases that plague everyone. All right. Bias seven is the halo effect, and this one's actually going to be reversed a bit how I see it for agency owners. Now, the halo effect in itself, is like thinking someone's a genius because they got some shiny award, right? Because they they did one thing that was awesome. You've now put them up on a pedestal, and you think everything else that they do is going to be awesome, and you kind of ignore the fact that, no, they just did that one thing really well, right? They, they've earned their place because. Is they were a master at something. That does not mean they're going to be able to get you the same result by doing everything else. What I see with a lot of agencies is that they win an award in something they put it up on their website, and they think that constitutes being great at everything. Now I'm not saying you shouldn't use it in your own marketing, right? Use it show people that you're awesome and stuff that's great, but you need to realize that that award is more than likely subjective. Most awards that are out there, you got to pay to play anyways, right? And like, there's other reasons that people want you to have these awards. And so just keep these things in mind, because you're you're going to overestimate your potential in some things, and you might bite off more than you can chew. We also do this with other companies, right? If we see a prospect who is just their business was crushing it in certain areas, and we're like, oh, we know if we we come in that we can, we can help them, because they did. They're just doing so well at sales or whatever it is, right? But then you go try working with them for the marketing and it's just a nightmare. Their marketing team is terrible, but the company looks like it's doing awesome, right? Because of, you know, everybody talking to all their sales teams, talking on social media, and they're doing a great job marketing from the sales side. But as far as getting like, brand direction and all that stuff together, maybe it's a struggle, and maybe this is a terrible example, because I'm doing it off top of my head. Regardless, the halo effect is something you want to watch for. Bias eight is the Dunning Kruger effect. This is when you think you're an expert on everything because you watched a few YouTube tutorials. Now, doesn't sound like a big deal, right? But if we start combining it with a bunch of these other ones, right? The halo effect we just talked about. When we go back to the overconfidence bias, hey, we're just going to figure this out,
you start running into some bigger issues. If you have never gotten a great result doing SEO, maybe shouldn't be an SEO agency. You see so many agencies trying to take on services because they think it's what their clients want, what their clients need, but they're not actually good at it. This is why the entire first phase of the dynamic agency OS is figuring out what our team is good at and having a growth plan to really bring that out, bring out their strengths. We do that before we even look at the offers that we're delivering, you need to know what you are good at on your team. That includes the founder as part of that, right? You're part of the team, and usually you've started an agency because you're good at something, and you want to bring this new way to life. And so with the Dunning Kruger effect, we really want to make sure that we actually know we're making informed decisions, that we have expertise in what we're offering, and that we're not just saying, Oh, I read a book, so I must be an expert now. Bias number nine is the status quo. Bias now, everyone should be familiar with the status quo, because it's one of the biggest things to pay attention to in your marketing and sales, right? Your prospect, there is a better chance of them sticking to the status quo, of doing what they already do, rather than going off with one of your competitors. And so we got to figure out how to break that. How do we increase the cost of inaction in their heads, right? So they really feel the pain of that, so that they want to do something, and then, because you're the one talking to them, you hopefully are framing this problem in such a way that they know you have the solution, then they will go work with you. Okay, the challenge with the status quo, and this is how I see it, with agencies the most for most people, right? For most companies, the status quo is maintaining what they're currently doing as like a current path. They're really resistant to change. For agencies, the change is actually not changing. No, that's probably confusing. Most agency founders that I have talked to are very comfortable with change. They are comfortable to the point that their teams are constantly uncomfortable because they don't have that same kind of capacity for change, right? Whether it's because you just naturally, you know, have that inclination to have things change, maybe it's something that's learned from being an entrepreneur, but constantly changing can actually be your status quo, and getting out of that feels uncomfortable to pick a path and actually follow it to see what happens. Can be really hard, but I think that is one of the biggest challenges that I see with agency founders, is that they want to try everything. They want to keep doing it, but they never give anything enough time. And because they're doing 10 things instead of one, it's making it really hard to get results from that one. And so the status quo bias is telling us to actually look at how we currently operate, right? And that might seem counterintuitive for an agency founder who is saying, Well, I change all the time. No, that is your status quo, constant change. And so. So we look at that, we figure out, what do we actually need to do in order to to shift gears right, to break through that status quo and actually advance right, and then just go forth and do it. But keep in mind, as an agency founder, right it is. It does seem counterintuitive for how this works, right, and the 10th bias is the attribution error. Now I don't see this one as common, but I know it exists, because I have heard people talk about it in this way before. The idea is that you are taking credit for team wins, but you're blaming the refs for a loss, right? And so you're not actually attributing the right like consequences to the right actions, basically, right? So let's, let's break this down a little more. It's a say your HubSpot agency and HubSpot changes how they're doing some things within the ecosystem, or they create a new offer, and now it's something that you can stack on top of, right? You just happen to be in the right place at the right time to make it happen, and so, yeah, that could all be well within your plan, but you need to acknowledge that you're not some great marketing mastermind, and that's why it worked. It's because HubSpot changed this, right? And now, if HubSpot decides to do the opposite and take certain services away, right? Like I know agencies who used to build out multi step forms, and now you can do that natively in HubSpot, or you can create CTAs in HubSpot. You can do all these different things there. And so now they're losing some of their service offerings. And before they thought, hey, we're just really good at doing all this stuff, like, we're awesome. People need it. It's like, Yeah, but as soon as there's another way, they're gonna go do that. And so you need to figure out how to lean into that strategic expertise that you have so that you can keep making this stuff happen. So this also kind of becomes a problem when you're not when you're looking at past mistakes and repeating those same errors, because you're not actually giving credit where it's due simultaneously. This can really hurt team morale if you're the type of founder who takes credit for things and doesn't praise your team that is incredibly important. Just giving them a Hey, good job in front of everybody is super important. I have a blog on the agency, forward sub stack, just about bridge talk and tunnel talk. I would recommend giving that a read? If this is something that you you're interested in. Okay, there you have it. 10 biases, biases that agency founders need to get a grip on. I'm going to recap them real quick. The confirmation bias, sunk cost fallacy, anchoring bias, overconfidence bias, the availability heuristic, herd mentality, the halo effect, the Dunning Kruger effect, status quo bias and attribution error. Now more importantly is, how do we mitigate these? And I gave you some scattered throughout the episode, but some of the bigger ones right awareness and training, if you can be aware of all these things, so that when it comes up, you can call it out. You can just keep you know that inner voice starts going through and you actually say, Hey, I know you're here, that that gives you a huge defense against all of these additionally, right? We already talked about having some diversity across your team, but having those diverse perspectives and being able to foster those diverse perspectives, so that you kind of get rid of some of these blind spots that you have within biases, because everyone else is bringing their own biases, and those likely won't overlap for certain people, right? So one person might have an overconfidence bias, but we know that about Bill, someone else might come in with the halo effect, and so like, by knowing these things and being able to call each other out for them, now, it makes it much easier for us to do this, stick to being a dated, data driven agency, right? The more data you have, like, the numbers can't lie to you, so you see them, and there's, there is no bias that's going to come in here, because you can actually see what's happening, and hopefully you can attribute it back to what's actually working and not working. Additionally, get regular reviews, right? Plan quarterly reviews, annual reviews, with your team looking at your clients, looking at every part of your business. Do you need reviews so that you can make sure that if you are having a bias, and you're leaning into something that you have a chance to like, course correct, right, and you don't get stuck, just driving further into a potential hole there. And the last piece of advice I have for you is to get expert help. I've talked Solomon's paradox like ad nauseam, but even if you know that you have certain issues, you know what advice to follow, it is really hard to follow it for yourself. This is why I recommend everyone have some sort of coach, some expert, a mentor, something. If you want to work with us and help you figure some of these things out, you can grab time a dynamic agency. Oh. Us.com Otherwise, stay tuned for more podcast episodes, and we will speak soon.
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