Survivorship Bias 2 – Why It Matters

Last time I explained the concept of “survivorship bias.” That is the danger of focusing so much on what works that we fail to learn from what does not…since it is usually only the successful survivors that are around to query. We are then tempted to copy ALL that the survivors did as though their whole formula is key to why they were successful. More often than not we try, but cannot replicate what they did, so we get discouraged or disparaged, and we quit.

If we studied the factual data, we would discover that typically only about 1% or fewer excel at anything, a bunch more get adequate enough results to gain some recognition and keep plugging away, and the vast majority of us better have a good attitude…and other options. This is true in sports, business, music, art, finance and almost any other human endeavor you can name. It is certainly true about real estate investing.

Non-survivors—I hesitate to call them “failures”—rarely if ever get paid for their advice on what NOT to do. First, most disappear. They quit and you don’t see them again. If any keep plugging, we do not put much stock in what they could tell us. After all, they have not accomplished what we hope to accomplish. The proof of the value of their experiences is in their results, right? Not necessarily! Thomas Edison was quite open about having learned 10,000 things that would not work to make an electric light bulb. He did not view that knowledge as “failure.”

Similarly, much of what we have learned in life—as in business—has come from trying something that did not work or that ended badly. The next time we did not do it that way. You probably learned the same lesson I did as a young child about sassing my parents. In my investing I have learned painful and expensive lessons about trusting a partner too much, inadequate protection in contracts, poor legal advice, insufficient due diligence, the downside of being a landlord, and much more. I am sure you can supply a similar list from your experience.

The survivorship bias matters when it blinds us to valuable lessons we can learn from non-success, like what to avoid, what did not work, etc. It is the rough equivalent of trying to drive your car with half the spark plugs missing. You’ll be better off if they are all there.

Next time, in the final installment on the survivorship bias, we will summarize some key lessons on how to avoid the bias and some foundational keys to success that the gurus generally do not even realize about themselves. It turns out that these keys are key ingredients of the secret sauce behind most success. You can apply them to ANY guru’s teaching. Don’t miss it!

Survivorship Bias – The Concept

I just read a fascinating blog post that has nothing to do with real estate or entrepreneurship…and yet has everything to do with finding success. It was about e-books and was written by a best-selling author. It introduced me to the idea of “survivorship bias.” Let me share what I learned and how it applies to us.

The survivorship bias describes our tendency to put great stock in trying to learn from the few successful survivors while making no attempt to learn from the multitudes doing the same thing who did not get those results. Without comparing the two sets of experiences, we cannot truly discern the key aspects that made the difference. We assume that copying the successful as closely as possible will also make us successful. More often than not, it was a combination of many things, some of them more important than others. This applies to fad diets, stock market investing, products advertised with testimonials, and seminar gurus, among other things.

We are not the only ones who fall into that trap. The military almost did it during WWII when they were exploring what to reinforce by studying damage on bombers that made it back to base. The reality was that the surviving bombers successfully made it back with that damage. The damage that really mattered was the deadly damage to those planes that did not make it back. Companies do it, too. Have you ever been given a satisfaction survey? Were you surveyed after you decided NOT to purchase their product or after you bought it? Usually it is the latter. Without going further, they cannot learn why most people did NOT buy. All they can learn is why some did.

Over the next few postings I am going to explore this further. In the fourth installment I will summarize the very important lessons for all who truly want a level of success that has eluded them so far. They are key ingredients in the “secret sauce” behind most success. Don’t miss it!

Decisions, decisions, decisions!

“You keep saying it is a decision! Everything cannot be about a decision.”

Oh, really! If you fall out of a tree and break your arm, how was that not related to your decision to climb the tree? Or to not be as careful as you could have been about where you put your foot? If you did not make that last sale, how was it not related to your being just unprepared enough so you were unable to meet that client’s needs or to address their objections or to know how to match the benefits to their needs? No matter what you are experiencing in life, if you trace it back, you can find a decision fork where you chose the path that brought you to it instead of taking a different path.

Where you are in life, what you are currently experiencing, whether success or failure, is indeed because of decisions you have made, whether you happen to believe it right now or not. You say you got rear-ended this morning while sitting at a red light and that was NOT because of your decision? Okay, how about this: If you had decided to leave 3 minutes sooner or 3 minutes later, where would you have been when that driver got to that intersection? Probably not in front of him.

That’s a tough one to swallow, isn’t it? However, your willingness to accept your personal responsibility for the things that happen to you empowers you to believe you can do what it takes to be successful, too. That’s the “victor” stance! Your unwillingness to accept that responsibility allows you to blame someone or something else and leaves you in the “victim” stance. Victims never win. Success or failure? Victor or victim? It’s your choice!

(And there I go again!)