Survivorship bias puts blinders on our judgment. It lures us to over-trust the advice of winners, because the losers are no longer around to provide contradictory evidence. It fools us into believing that success is easier than it actually is.
1️⃣ You read story after story of investors making a killing in crypto markets. You think “maybe I should give this a try. It doesn’t seem that hard.” Problem is, media rarely writes articles about people who bought in, then promptly lost everything.
2️⃣ You’re inspired by the stories of Bill Gates and Mark Zuckerberg, the guys who dropped out of college and became overnight gazillionaires. But you just never seem to hear the stories of the countless others who tried the same path and ended up with shattered dreams.
How can you avoid survivorship bias?
1️⃣ Actively seek the advice of those who tried and failed.
A lot of people treat them with contempt, but they are the unsung heroes. They can offer insights the winners often overlook. They have firsthand knowledge of the mistakes you’re most likely to make.
2️⃣ Don’t get dazzled by the advice of winners.
We start idolizing them, thinking their advice is the complete playbook to success. Think about it. Just because someone succeeded doesn’t necessarily mean it was skill that got them there. Blind luck, random timing, or a competitor’s mistake is oftentimes the hidden cause of their glory.
3️⃣ Become a student of failure.
Failure can be a brilliant professor in disguise. Why do we shy away from it? Because we don’t like to think the same thing could happen to us. The smartest business pros are on a constant hunt for the hidden mistakes they can avoid making.
4️⃣ Say no to anecdotal evidence.
Anecdotes are one-time occurrences that mask the whole truth. They are like flashy fireworks, but evidence is the steady lighthouse guiding us towards the truth. Base your decisions on solid data and statistical insights that hold the complete picture. Don’t be enchanted by the story of a random winner.
5️⃣ Actively recruit your own team of skeptics.
Their fresh eyes will challenge your biases, knock down your overconfidence, and ensure you don’t fall into the trap of survivorship bias. They’ll make you aware of the outliers, the hidden failures, and the alternative paths that may have been overlooked.