The essence of strategy is choosing what not to do. - Michael Porter (American academic) This famous host - Monty Hall who in fact ruled the primetime network with "Let's Make a Deal" in the 60s and ran for more than 30 years has left some serious lessons that matter for every entrepreneur or strategist in the corporate world. Who would have thought that a simple game show could inspire an entire group of statisticians & mathematicians with PhDs to run massive experiments to uncover the truth. The Monty Hall problem confused people for decades (it even confuses me now) So let me explain what is this and then look at the confusing part. Monty Hall asks you to choose one of three closed doors. One of the doors hides a prize and the other two doors have no prize( or goats). You state out loud which door you pick, but you don’t open it right away. Monty opens one of the other two doors which you did not pick, and there is no prize behind it. At this moment, there are two closed doors, one of which you picked. The prize is behind one of the closed doors, but you don’t know which one. Monty asks you, “Do you want to switch doors?” The majority of people assume that both closed doors are equally like to have the prize. It appears like the door you chose has a 50/50 chance. Because there is no perceived reason to change, most stick with their initial choice. Now comes the Monty Hall problem or the time to shatter this illusion with the truth! If you switch doors, you double your probability of winning! (Statistically proven) What!? (Even I was in a shock the first time I heard it) The correct solution to the little game is for the contestant to always switch doors to the remaining door (more on that in a second). The problem is that the solution is entirely counter intuitive even for an experienced educated person. This is because the people see the original option as an entirely independent event even when subsequent revelations are on offer to them. The main argument is that Initially I had 1 out 3 as the probability and now it has become 1 out of 2 after one door was opened. And if you also thought the same, then you are wrong!!!
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I knew that if I failed I wouldn’t regret that, but I knew the one thing I might regret is in not trying. - Jeff Bezos As the financial year comes to a close, we all start to evaluate what you have achieved during the last year. You assess your achievements, KPI, career and the teams who worked for you and very soon you come to the conclusion: IT SUCKS. At the start of the year it was full of promise and now at the fag end of it all looks wasted and fatigue. You start to hate your job. Does this sound very much like you? As an executive and career coach, I have listened to hundreds of such stories over a 100 times. Passionate hard-working folks who mostly are thwarted by the management when they come to me, I give them the universal solution - "Be your own boss" The moment when they hear this advice, the backtracking starts. When I say to them, why not put the money in your idea, work it out for some time and then test the results. The backtracking excuses starts to flow:
So what does entrepreneur mean? It means choosing one solution which you think works, you start to work much harder than when you were as an employee, get paid very less initially and have exponential stress levels with unforeseen uncertainties and very less family time. Trust me, it’s very scary and if you think not - then you are really stupid. The next logical question is - if it’s so scary why do it? The main reason is that it earns something which even money can't buy - FREEDOM. Freedom to have no one to blame, freedom to choose your time, freedom to plot your own course, freedom to change the world for the better. But there is something that comes along with FREEDOM as a free package. Don't forget to carry the dead one. - US Dept. Of War Math
You constantly keep hearing statements like this from the older generations, “Music was so much better in the 1960s?” It’s easy to scroll through a list of hits from this era and agree -- but this is a prime example of survivorship bias. As the decades have passed, only the best and most popular songs from the 1960s are remembered, replayed, and shared. Simply put, the B.R.Panthulu and Bhim Singhs of the 60s have been forgotten. The current FM channels have made it easy for us to listen to a long list of music. So we have a higher ratio of bad music along with the good ones. When asked what the deadliest shark is to humans, most people will say the great white. The lasting influence of the movie Jaws, reinforced by dozens of pop culture references and news reports, keeps that species of shark at the top of the mind when one considers the world’s most fearsome predators. Most of it is true, but these sharks also tend to leave a lot of survivors. We must be careful to not let a volume of survivors in one area blind us to the stories of a small number of survivors elsewhere. So what do these things have to do with decision makings and what is survivorship bias? I am glad you asked it in the beginning itself. Survivorship bias is the act of focusing on successful people, businesses, or strategies and ignoring those that failed. To put a simple example: The fatality rate in known attacks is 21.5% for the bull shark, 26% for the tiger shark, and 16% for the great white. But in sheer volume, attacks attributed to great whites outnumber the other two species three to one. So there are three times as many survivors to tell the story of their great white attack. Another classic example from WW-II, allied forces studied planes that survived being shot to discern armour placement. By neglecting bullet holes on lost planes, they missed armouring planes’ most vulnerable areas. Also called “survivor bias,” this phenomenon refers to the human tendency to study successful outcomes and ignore the accompanying failures. Because of this, we adopt opinions, structure businesses, and make decisions without examining all the data, which can easily lead to failure. |
AuthorVasudevan is a Leadership Mentor and an Executive coach. I run an online website geared towards helping creative entrepreneurs and future managers to build their dreams. Archives
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