Survivorship Bias: The Tale of Forgotten Failures - Deepstash

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Survivorship Bias: The Tale of Forgotten Failures

https://fs.blog/2019/12/survivorship-bias/

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Survivorship Bias: The Tale of Forgotten Failures
Survivorship bias is a common logical error that distorts our understanding of the world. It happens when we assume that success tells the whole story and when we don't adequately consider past failures. There are thousands, even tens of thousands of failures for every big success in the world.

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Survivorship Bias

Survivorship bias is a logical error that twists our understanding of the world and leads to a wrong understanding of cause and effect.

We fall into survivorship bias when we assume that success stories tell the entire story of a product/business, while we don't properly consider past failures.

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Against the Odds

When we only pay attention to the exception above the normal, we end up misunderstanding reality. While there is much to learn from the anomalies, it would be a mistake to expect the same results from doing the same things. 

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Cause and Effect

Survivorship bias leads us to think that coincidence is a correlation. We want the encouragement from survivorship bias so we can believe in our own capabilities, but it results in an inflated idea of how people become successful.

The fact is that success is never guaranteed. It does not mean that we shouldn't try, just that we should have a realistic understanding.

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Survivorship Bias in Business

Statistics of market performance can be distorted when they focus on the rare successes while excluding companies which collapse.

Business books laud the rule-breakers who ignore conventional advice and still create profitable enterprises. However, many misfit billionaires succeed in spite of their unusual choices, not because of them.

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Learning From Failure

Successful entrepreneurs teach us very little. We would do better by analyzing the causes of failure first and then the successes.

The huge failure rate for start-ups is often hidden. We will do well to recognize that these failures hold important information.

The only real similarity in unusual success stories is luck.

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Consider What You Don’t See

We can overcome survivorship bias by considering the things that started on the same path but didn't make it.  Try and figure out why they failed. If you're going to do something, make sure you are fully informed.

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The Survivorship Bias

The Survivorship Bias

We tend to be interested in the success stories of many. We love the encouragement it provides us, but we often overlook the fact that most of these success stories have undergone through m...

The effects of survivorship bias

When we ignore the logical error of the stories and advice we hear it deceives us into believing that past failures are not adequate enough to be considered.

This bias induces people to see correlation in sheer coincidences.

A great example is when the U.S. Military tried to reduce aircraft casualties back in WWII. They analyzed the planes that got back safely but never the ones that didn't. They concluded that they should increase armor in the wings and the tails of the planes, but not the engine.

Survivorship bias in business

We must remember that most people do not become rich and famous. Most leaps of faiths are miscalculated. This does not mean that we should stop trying, instead we should remain to have a realistic understanding of reality.

Most entrepreneurs don't actually know what they're doing. There isn't a lot of them who have a detailed or a perfected plan to follow. Still, we try to "copy" their ways so that we can probably achieve what they have achieved.

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Biases...

Biases...

... specifically cognitive biases, are your unchecked tendencies to make decisions or take actions in an irrational way. 

Instead of making decisions based on facts and data, you ...

Biases = shortcuts for processing information

The brain creates shortcuts in order to make fast decisions when it hits information or inspiration overload

These shortcuts form unconscious biases so it’s easier for your brain to categorize information and make quick judgments over and over again.

Self-serving Bias

It causes you to claim your successes and ignore your failures. 

This means that when something good happens, you take the credit, but when something bad happens, you blame it on external factors.

Self-serving bias may manifest at work when you receive critical feedback. Instead of keeping an open mind, you may put up a defense when your manager or team member is sharing feedback or constructive criticism.

Failure

Failure

Success is sought after by most, while failure is looked down upon, even seen as something shameful.

More than success, it is our failures, errors and rejections that provide us wit...

The Ostrich Effect

Once we have invested our time, effort and resources in something, we tend to avoid correcting ourselves in real-time if we are off-track.

Inversely, when people engage in mental contrasting, anticipating the upcoming obstacles, they tend to succeed.

Failure Is A Goldmine

Sharing information on failure among peers means less work overall, and better success for the entire team, as team members do not have to reinvent the wheel by making the same mistake to learn from it.

People do not share failure as it hurts their self-esteem, but if we keep the personal equation aside, a lot can be gained from the collective knowledge of what didn’t work.