Survivorship bias has roots in WWII. During the war, analysts initially recommended reinforcing parts of returning planes that showed the most damage. However, statistician Abraham Wald pointed out that the focus should be on the areas where the returning planes were undamaged, as planes hit in those areas did not return. This early example illustrates how overlooking non-survivors can lead to misguided strategies.
You’ve no doubt seen this popular graphic with the diagram of the airplane and red bullet holes that avoid the engine entirely.
This concept has evolved, applying to various fields, from finance to technology. In finance, it often refers to funds that have survived the market, potentially skewing perceptions of average fund performance. In technology and business, it shapes views on entrepreneurial success, with high-profile successes overshadowing the multitude of failures.
In the tech industry, survivorship bias can lead to significant missteps. For instance, it can lead to the team overlooking important lessons from projects or initiatives that didn’t succeed. Teams might focus on replicating the strategies of successful projects without considering the context or reasons behind the failure of others.
This bias can also affect how user feedback is gathered and interpreted. Focusing only on the feedback from active users while ignoring those who stopped using a product can lead to a distorted understanding of user needs and satisfaction.
Survivorship Bias plays a large role on the HR side too. Survivorship bias in organizations can overlook less vocal but competent employees during promotions, undervalue consistent performers in raises, neglect employees needing development in training opportunities, and fail to recognize significant contributions from those working behind the scenes in recognition programs, leading to a lack of inclusivity and diversity.
🎯 Here are some key takeaways:
Avoid basing decisions solely on success stories
Remember that for every success story, there may be numerous unseen failures. Balance your understanding by considering both.
Look for what isn't immediately visible
Seek out the hidden stories, the unspoken challenges, and the less obvious failures that aren't obvious or in plain sight.
Learn from the industry's failures
Look beyond your organization and study industry-wide failures to avoid repeating common mistakes.
Value all customer feedback
Actively seek feedback from a diverse range of users, including those who are less vocal or have stopped using the product or service.
Balance data with context
While data is crucial, understanding the context, including the failures and the non-survivors, is essential for accurate analysis and decision-making.
📚 Keep exploring
To dive deeper into the topic of Survivorship Bias and its implications for decision-making, check out these resources:
