Following the most successful people and learning from them is quite natural, but it can be a reason for destruction if you do not know survivorship bias. It can be said, an erroneous picture that is not similar to the real world emerges when an attempt is made to form a whole concept based solely on the experience of the 'survivors', those who have been able to reach success overcoming hundreds of adversities because there may be many more participants who are characterized by survivors who have made similar decisions in similar situations but have not had success.
One of the most famous examples in the world of survivorship bias can be given of 'World War II.' At that time, the American military hired a mathematician named Abraham Wald to figure out the best defence strategy for their warplanes. They knew from the military that the 'Metal casing' would work well in protecting the warplanes, but at the same time, wrapping the entire aircraft in such a casing would be costly and would make the plane much heavier. Initially, they planned to monitor the returning aircraft only. The first plan was to cover the part of the aircraft, which has been badly damaged.
But Wald realized it was going to be a wrong plan. Because their plan or observation was missing an essential part of the whole picture, and that part was the planes which could not return from the battlefield and was destroyed there. Some of them need a steel coating to cover. But as these planes could not return from the battlefield, the observer team did not think about them. The observation team was going to decide only by observing the bullet holes, which were on such places of the planes that even after being hit on such places, they could continue to fly. And no metal coating is needed in these places.
Once you become familiar with survivorship bias, you can easily detect its presence in all situations. One such place is the 'Commercial World.' Billionaires like Bill Gates and Mark Zuckerberg succeeded in their life without even completing a University degree. This matter has received a lot of media attention. They have published many colourful articles about it. An article in the NY Times was published which featured a cartoon where they dared to write "College is for suckers ". In 2011, Silicon Valley entrepreneur Peter Andreas Thiel announced a 1-million-dollar prize for young entrepreneurs seeking to be dropouts from their institutes. Such stories create a warm feeling in the mind of the reader. Because such success stories make the adversity encouraging to the audience, such confidence is born that, "If they can be rich without the university, it is also possible by me." As a result of such way of thinking, people easily fall prey to survivorship bias. Finding out the number of people who don't have a university degree and have failed in life will give a different picture.
In 2018, the employment rate for university graduates in the UK was 88 percent, and their average annual salary was €34,000. Among non-graduates, the rate of employment was 72 percent, and the median wage was €24,000. From these statistics, it can be understand that the university is not the only necessary element to get wealthy or successful, but it helps. If you try to determine the world's nature based on the experience of only those who have overcome adversity, you won't be able to see the whole scenario. Those people certainly do not represent the entire picture; everyone must be careful to imitate them in their way of living. If the success rate were too much in such high-risk areas, they would not be identified as high-risk.
In contrast to the world's most tremendous success, there are thousands of failure stories. But such failure stories are not attractive, and so they are not even presented to the audience. As a result of only reading success stories, the success rate seems much higher than it is. Thus, a misconception is created in everyone's mind.
The story of dropouts has already been told. There are some more exceptional examples like this. A smoker named Batuli Lamichhane lived for about 116 years. Again, four young musicians were rejected from the record company, but later they formed the most successful band in history. Yes, we are talking about The Beatles. The problem is, when we tell such rejected or outrageous stories, our focus is on these exceptional successes. On the contrary, we do not want to think about the massive number of failure stories. The result of this cognitive shortcut is survivorship bias.
If we only focus on the success rate, we will have a misconception about the base rate. Base rate is the probability of getting a specific result from a sample, and later it is expressed as a percentage. For example, in Roulette's game, the probability of winning one out of 36 games is 2.63%. This percentage is called the base rate. The problem arises when we assume the winners as the representatives of the game. In our opinion, the chances of winning rise much higher than reality. Bill Gates, The Beatles are such examples. Although there is much to learn from these examples, it will be wrong to expect similar results.
Let's give a simple example to understand the scenario. Steve Jobs biography, written by Walter Isaacson in 2011, became a bestseller. After that, many people have dropped out and tried to start a new computer company in their garage, but they were failures, and there is no telling of their stories. These failed stories never reached us. We only got to know about the success of Steve Jobs, and that catches our eye again and again in glorious form.
If we try hard and try enough, can we achieve anything? The answer is no. Survivorship bias creates a misconception of causes and effects. In many cases, people place a pattern of cause and effect between coincidences and events where there is no such pattern. "Many famous entrepreneurs are university dropouts"-this fact is just a coincidence, a correlation.
Being a dropout is not the reason behind their success. But we all try to see it as one of them. The survivorship bias thus creates an illusion of thinking consistency is causal. As a human being, we instinctively always want to hear the stories of those people who have overcome adversity and succeeded in their life. We ignore failure stories as our keen interest is only in this narrative of success.
How many people in the world would want to hear the story of a businessman who goes bankrupt and spends the rest of his life in debt? The answer is no one or very few people. Or the story of a musician, who is failing, despite repeated attempts. Survivorship bias motivates us to succeed; Even the confidence we need about our abilities. But success is never guaranteed in the real world. Most of the businesses fail. Most of the people cannot be rich or famous. 'Leap of Faith' does not work as expected for most people. This does not mean that we should stop trying. But our expectations and thoughts about the real world need to be realistic or practical.
This same misconception has a profound effect on the business world. Companies that fail early are rarely discussed or advertised. On the other hand, rare achievements continue to be appreciated continuously year after year. Market performance studies often do not have enough information about companies that fail, from which people can find the cause of their failure. In this way, the actual statistic is distorted, and success seems to be much more likely than real.
Just as history is written with the story of winners, this can also be said about business. Those who fail to get no platform to express their experience ignore that fate or coincidence can play a significant role in success and failure, considering failure as the only failure. Even many successful people think that their success is due only to their abilities. But he unknowingly forgot many things that worked for him, over which he had no control. Thus, a distorted idea of the real world is eventually formed in his mind.
In business and entrepreneurial magazines, outrageous success or those who have succeeded even beyond the conventional method are glorified. But for most entrepreneurs, taking additional risks and avoiding traditional practices is like a bad gamble. Many billionaires are praised only for breaking such rules. But most of the discussions ignore the role of timing, fate, relationships with influential people, and socio-economic conditions in their business. Members of a wealthy family have contacts with many valuable people. The timing can be combined to increase their chances of success, even if they have not completed a university degree.
"90 percent of start-ups fail"- with this phrase, most start-up discussions usually start. But very few people pay attention to this phrase or try to think what these words want to convey. Our focus is on such an idea, in which there is a secret formula behind success, and that's why we focus on world-renowned entrepreneurs then. A mentality is created that we will also get success like them if we can apply their knowledge and formula. Honestly, the formula of successful entrepreneurs alone cannot teach us everything that we need to learn. Whereas stories of failures can lead us to identify the mistakes which we need to be careful. Thus, by analysing the reasons for failure, decisions can be made accordingly. To have complete knowledge, the best way is to learn from both successful and unsuccessful ones.
We enjoy the stories of entrepreneurs who have succeeded in their life by overcoming many adversities. But we maintain a kind of thought-blindness because so many more entrepreneurs have failed even by walking the same path as them. Looking back on the unfavourable days, successful entrepreneurs think they always had a great plan. They knew then that the plan would one day work. The famous psychologist Daniel Kahneman says about this,
A stupid decision that works out well becomes a brilliant decision in hindsight.
Even after hearing his story, an outside observer might want to find out the success pattern from there. But as Kahneman says, the only similarity between these patterns is fate. Because entrepreneurs who failed even by walking on the same path, luck has not worked, will always find the same plan wrong.
The story of the mathematician Wald during World War II is an excellent example of overcoming the survivorship bias. The lesson to be learned from this WWII example is that decisions based solely on the information we have can be misleading. We must keep all the events in mind that started in the same way and failed. When reading a success story in a magazine, you must think equally about the failed people of the same pattern. Of course, it would be wrong to use the survivorship bias as an excuse against taking new initiatives. Rather, it's tool that helps to understand the world's true state by cutting down on statistical errors. As a result, in any matter, if you have the whole picture in your mind, it will certainly help you to take the right decision.