Good stories can be captivating, but they can also lead us astray. It's crucial to discern the difference between a compelling narrative and a sound idea. Let's delve into how to avoid being swayed by a well-spun tale.
Stories are powerful, but they can also be misleading
Stories help us discern complex matters, remember ideas, communicate with others, and make predictions about the future
- It’s crucial for decision makers to recognize the different ways in which stories can be misleading.
- Some stories simplify reality by warping or ignoring the effect of time
- Hindsight makes success and failure seem more predictable than they actually are
- Correlation mistaken for causation
- Myopia
- Shortsighted narratives lead management to opt for quick fixes that merely relieve symptoms rather than effective long-term cures
Expiration
Stories are based on the past, so they can quickly become obsolete when situations change suddenly and dramatically.
- Only a few decades ago, a college degree would almost certainly guarantee a lucrative career. This is no longer true, but this notion is one cause of the growing student debt crisis.
Warning signs of survivorship bias:
Selection bias: Some stories simplify reality by omitting a crucial part of the picture.
- Averages: One may expect a certain strategy to boost profits, education to increase income, and grit to produce success. However, these are just small samples that tend to be unrepresentative. In fact, given wide ranging variabilities in circumstances and personalities, the more unique an observation, the less likely it is to be generalized.
- Anecdotes: It’s appealing to induce overarching stories from personal experience and striking episodes. These stories tend to emphasize how uniquely talented and hardworking the successful are, yet they conveniently ignore scores of failures with similar skills and work ethics, who didn’t achieve the same level of success for all sorts of circumstantial and random reasons.
- Survivors: Learning from success stories is both fun and motivating. Analyses of common traits of successful people and organizations overlooks the fact that these same traits may be equally prevalent in the not-so-successful.
- Outcomes: Stories often focus on observable outcomes while ignoring underlying processes. One consequence is a widespread blindness to possible deceptions and unethical behaviors that contributed to those outcomes.
