You’ve probably heard at least one successful entrepreneur talk about how they went with their “gut.” By opting to rely on their intuition instead of data they came up with a decision that led to a wildly successful outcome. While these stories may be true, and thus incredibly tempting if you’re struggling with a decision, they ignore something else: survivorship bias.
How many stories have you heard lately about someone trusting their gut and failing miserably? That’s at the heart of survivorship bias. We hear about the successes, the ones who made it, but we rarely hear the flip side, the ones who didn’t have the best intuition. This bias towards success then leads us to believe that we’re on to something, that we’ve discovered the secret to making tough business decisions. It leads to a question I think all entrepreneurs needs to ask themselves: why are we so obsessed with finding a short cut?
Obviously efficiency is a huge plus in business, and as an entrepreneur, you want to make the best use of your time, but this pursuit of silver-bullet strategies seems like a fool’s errand.
Let’s go back to survivorship bias for a minute. One of the things that makes this bias so attractive is the idea that it’s identified something predictive, something that will always work. That’s the entrepreneur’s version of catnip. There are so many unknowns in both starting and running a business that it’s understandable why we’re looking for ways to remove the uncertainty.
But we get into trouble when we start thinking that these ideas should take precedence over our strategy and assume we’ve found a short cut around uncertainty.
There’s a reason that entrepreneurs collect data about how their business is functioning and how their customers are reacting, then taking the time to analyze it. You need the specific information about your organization to determine what’s working and what’s not. So if you’re opting to put aside all those other data points and trust just one—your gut—it looks much more like a Hail Mary pass instead of a so-called executive decision.
There will definitely be decisions when circumstances will force you to make a call that isn’t supported 100% one way or the other by the data. That’s part of being a leader and using your knowledge to make the best possible decision at that moment in time. What’s not particularly good leadership is waking up one morning and deciding since your gut was right last time, it makes sense to let your gut trump everything else going forward.
The only predictable thing this approach offers in the business version of indigestion. So please remember that your gut may be an important data point, but it’s rarely the only one that matters.
Photo credit: Ed Schipul