Survival Bias: why you should not be an entrepreneur!

Do you want to be an entrepreneur simply because your distant cousin created and sold a technology business to the Googles of the word for hundreds of millions of dollars? Wait! May be you are falling into what this blog highlights as a typical perception trap – the survival bias. 

Wikipedia describes ‘Survivorship bias’, or ‘survival bias’ as the logical error of concentrating on the people or things that “survived” some process and inadvertently overlooking those that did not because of their lack of visibility. 

The oft-quoted instance of survival bias is the one highlighted by a Hungarian-born mathematician Abraham Wald. He pointed out that one should not strengthen the body of warplanes based on the bullet-holes on a survived plane given the fact that it survived despite the bullets hitting the spots of those bullet-holes. Clearly, the planes that perished in the enemy attack may have been hit at different spots and the parts of plane’s body that may require strengthening, is the one without bullet wounds! 

So, why do we tend to focus on the survival stories instead of the failed endeavors? 

One of the reasons is that those who perish generally do so quietly and away from the gaze of the public. Failure is naturally painful and humans prefer to either erase it totally from their mind or endure it in isolation, away from the public gaze. When I searched books amazon with search term “success books”, I got 346,270 results whereas search term “failure books” yielded only 38,433 results!  

Not only is success boastful and bold, but it is also blinding! A full moon appears smooth and spotless. It is not easy to decipher imperfections on the surface of a shining body. It attracts attention and yet, distracts mind away from observing the details! No wonder, we so often walk into the survival bias trap. This bias can makes people emulate questionable ‘industry’ practices getting them in compliance troubles or lure them into burning our hard-earned cash on a wrong business idea. 

How do we avoid the survival bias trap? In my opinion, it needs a two-pronged approach. First and foremost, we need to train our minds to look at our own or others’ failures as a learning experience. We can learn from failures much more than what we can ever learn from the boastful success stories that are at best half-truthful. Secondly, when we hear a success or a survival story, let us ask for more details. Let us subject such survival cases to a much more robust analysis. It might reveal to us that such a survival came with some cost that we cannnot afford or it was an outright lie!

Next time when you see full moon, remember that it’s surface is full of craters! 

I welcome your views/ questions ...

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s