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Business Advice Plagued by Survivor Bias

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Summary

This article discusses the concept of survivor bias and how it affects business advice. Survivor bias is the tendency to only focus on the successes, while ignoring the failures, when making decisions and drawing conclusions. It is illustrated with a number of examples, such as in the study of bullet holes in planes during World War II, and the publication of pharmaceutical research. The article then looks at the implications for business advice, such as Harvard Business School's case studies and books like Good to Great and In Search of Excellence. It concludes by suggesting that being aware of survivor bias can help people make better decisions when it comes to business advice.

Q&As

What is survivor bias and how does it affect business advice?
Survivor bias is the tendency to draw conclusions only from data that is available or convenient, and thus systematically biasing results. It affects business advice by skewing the results of case studies and other research, as only success stories are typically shared and the failures are not taken into account.

What is the file-drawer effect and how is it related to survivor bias?
The file-drawer effect is a form of survivor bias in which studies whose results are statistically insignificant are not published, but instead are abandoned or silently stowed away in academic filing cabinets.

How have pharmaceutical companies exploited survivor bias?
Pharmaceutical companies have exploited survivor bias by publishing only the positive trials of anti-depressants given to depressed children, while burying the other evidence.

How does the example of an ESP experiment illustrate survivor bias?
The example of an ESP experiment illustrates survivor bias by showing that the chance of Margaret flipping ten heads in a row is 1-in-1024, but that wasn’t the experiment that was run. Instead, the experiment was run with 1000 people, so the chance that somebody in the crowd would flip heads ten times is a whopping 62%.

What is the author's advice for avoiding being taken in by survivor bias?
The author's advice for avoiding being taken in by survivor bias is to prefer advice that makes you think rather than giving you answers, forces you to answer tough questions, and causes you to extend your existing strengths, and become a better version of the person you already are.

AI Comments

👍 This article is an incredibly informative and thought-provoking piece about survivor bias in business advice. It provides great insight into how we should think critically about advice and the implications of survivor bias.

👎 This article is too long and lacks practical advice on how to avoid survivor bias in business.

AI Discussion

Me: It talks about how business advice is plagued by survivor bias. Basically, it's the idea that we tend to only pay attention to the people and businesses that have succeeded and ignore those that have failed. This can lead to skewed data and incorrect conclusions.

Friend: That's really interesting. So what are the implications of this?

Me: Well, it means that the advice we're getting from successful businesses and entrepreneurs can be misleading. We don't have access to the same data that they have, and we don't know what other businesses or entrepreneurs have tried and failed. We should be mindful of that and try to look for advice from a variety of sources, not just those that have already been successful. It also means that we should be careful not to rely too heavily on any one source of advice and to question our assumptions and conclusions.

Action items

Research and read articles written by founders who have failed in order to gain a more balanced perspective on business advice.
When reading business advice, consider the potential for survivor bias and look for evidence that the advice is based on more than just the success stories.
When taking advice, focus on advice that encourages you to think critically and extend your existing strengths rather than giving you a set of answers.

Technical terms

Survivor Bias: A cognitive bias in which people focus on the successes of a group and ignore the failures.
File-Drawer Effect: A form of survivor bias in which studies with insignificant results are not published, skewing the results of a study.
ESP (Extra Sensory Perception): A paranormal phenomenon in which a person can perceive information without using the five senses.
Zener Deck: A deck of cards used in ESP experiments, containing five different symbols.
Heady: A term used to describe someone who is successful at guessing the outcome of a coin flip.