Who to blame?
This is the first essay of a new series called “Root Cause”.
We have too much “conventional wisdom” that is creating more problems than solutions.
It’s time to challenge it, one concept at a time, to the root.
When something we do to grow our startup fails, we try to learn from that experience so we can correct course. In theory, that will get us closer to success. But what if, in practice, what we learn is not what will get us closer to success but something else instead?
To explore that hypothesis, we will do a thought experiment that will help us understand how we think/make decisions so we can see what we are really learning.
1. FROM A TO B
Imagine a company in the process of planning how to grow. They want to go from A to B.
“A” is their understanding of the current situation, in their case they know that they have lots of happy customers that left great reviews about their product. MRR is also significant, it feels too big to be just “luck.” So their understanding is that they have a solid product in the market, a product that people want to buy.
They also did some paid ads to accelerate their growth, and so far, it has been working well; CAC is $10, and LTV is $40, so it feels like there is an opportunity there.
But they want more, they want to get to “B”, and for that they need a plan.
Based on the current situation, they decided that paid ads are the most promising way to grow, but they know it will not be easy, so the plan is:
Hire a Paid Ads Expert
Increase Paid Ads Budget
They mapped everything in Excel. It looked doable, so they went for it. 3 months later, it was time to check on the progress made. They were not even close to B; the plan didn’t work at all.
2. WHO IS TO BLAME?
This is where the thought experiment starts. They had an understanding of the situation (A) that lead them to a carefully designed plan, but it didn’t work at all, why do you think it failed? Or, in less politically correct terms: Who is to blame? (think your answer before reading further).
Every single time I tell this story, the answer is always the same: The Paid Ads Expert.
“Maybe he looked like an expert, but he is not that good,” or “he is good but with other acquisition channels,” or “he didn’t work hard enough.”
The fact that, out of all the potential reasons why it could have failed, the very first one that comes to our minds is “another person” is pretty telling. Food for thought.
Now, when we find a likely cause of a problem, we get stuck on it. We will not look further; he is the culprit; let's replace him and try again. So if we want to learn more about "how we think," we need to discard him as a potential cause.
So let me tell you that the Paid Ads Expert was actually really good. He used sound tactics, and he did an outstanding implementation, so it was not him.
Ok, so if it was not the Paid Ads Expert, why did it fail?
When I ask this, the answers focus on the details of the plan:
“Maybe the budget increase was too small.”
“Or maybe the CAC was low because the initial volume was small, but the moment you increase the budget, CAC skyrockets.”
“Or…”
So the second potential culprit is the plan itself, a plan devised by the Marketing Manager or the CEO/Founder if the startup is still small.
Notice how, if we had not forced ourselves to discard the Paid Ads Expert as a culprit, we might not have looked into this second set of causes. So, let’s move on and find more potential causes of the failure.
So let me tell you that she is an exceptional Marketing manager who built a sound plan on paper. There was nothing that would make you doubt it was doable.
Ok, so it was not the Paid Ads Expert, and it was not the plan. Then what was it? Why did it fail?
Once the Expert and the plan are dismissed as potential causes, then the answers quickly move into “unforeseen external factors”:
“Maybe the channels we tried are saturated, and there is no way to grow there.”
“Or maybe it’s the whole market that is saturated, and we should look into new markets?”
I am not saying that these are not legitimate causes. I am just pointing out when, in our thinking sequence, we consider external factors the cause of the failure.
If we don’t trust the Paid ads Expert, then the conversation stops there; he is the culprit, and if he points out that channels are saturated, then we will consider that an excuse. If we trust him, and also trust the plan, then saturated channels will arise as a potential explanation.
3. WHAT THEY LEARNED
We have this mantra: “Failure is good if you learn from it.” Sure, but what did the team of our thought experiment learn?
The answer is: It Depends. Depending on who/what they thought the culprit was, the “learning” is different. And the course correction based on the learning is also different:
If they didn’t trust the Paid Ads Expert, then they “learned” that “Hiring a good Paid Ads Expert is hard,” and the next step will be to find a new one and try again.
If they trusted the Paid Ads Expert but didn’t trust the manager and/or the plan, then they “learned” that “they need to make a more sophisticated Paid Ads plan,” and the next step will be to change the plan and try again, for example allocating more budget.
If they trusted both the Expert and the plan, then they “learned” that “something is saturated,” and the next step would be to move to a less saturated place (Marketing channel, Market, etc.).
So, one experiment (hire a Paid Ads Expert, increase budget), with one result (no growth), and one “type” of learning (something is not working). However, that learning can take three different shapes; three different failure levels (implementation, plan, or external factors). And the failure level chosen is defined by the amount of trust placed on each different person who participated in the process.
In other words, What a company “learns” after a failed experiment is more a reflection of the trust between members than of their strategic capabilities.
4. REFLECTIONS
Now, a pause. We all do this; I do this too. It's not our fault; it's how we were told to operate. It's also a characteristic of knowledge; it's not easy to learn from experience; there are dozens of potential causes, and it’s impossible to change something that big, try again, and compare results because external factors keep changing, and it's not fully comparable.
The goal of this essay is not to rub salt into the wound; the goal is to make us aware of how we think/make decisions. Now that we know what we learn and what we don’t, we will not stop at the first "likely culprit." Instead, we can now look further, consider other potential causes, and give our colleagues the benefit of the doubt more often.
Also, there is still something else that could be the main culprit, a 4th potential cause. It’s hard to see, it’s something that over time became invisible to us, but it’s still there. Think about it: If it’s not implementation, it’s not the plan, and it’s not an external factor, then What is it? Can you see it?
We will explore that 4th cause in depth in the next essay; until then, you have some time to reflect on what it could be; that exercise will help you see even further.
5. KEY INSIGHTS
When an initiative fails, we just “learn” that “something is not working,” and then we take a corrective measure based on that.
There are three things that we usually blame as “not working”, in order: Implementation, then plan, then external factors.
What we choose as “not working” is a by-product of trust in the people involved in the process.
There is a 4th potential cause that could also be blamed. A cause that could become the most likely culprit in most situations. We will explore it in the next essay.
Leaving us with a cliffhangar!