Failed businesses offer greater insights than few success stories

“Why do most business and motivational writers focus so much on examples of a few achievers and completely ignore millions of failures?”

This question is deeper than it appears. First, this is not just an issue of writers; you and I do exactly the same on many other areas. Psychologists have actually discovered, contrary to what we think, that we hardly make purely logical analysis or conclusion.

There are several assumptions, judgmental errors and biases that crowd our decision every day. As such most of the decisions we make, no matter how well-thought out they seem, are biased or so to say, illogical.

We can increase our chances of success by being aware of the various biases and trying as much as possible to look at things objectively.

Back to our question, Catherine’s observation is based on one bias called survivorship bias. There are other biases such as confirmation bias, loss aversion and availability heuristic but let’s look at survivorship bias because it sheds more light to our question.

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Survivorship bias simply put is focusing on survivors rather than those who perish in a given situation. It is our tendency to focus on, and draw lessons and inspiration from the few who have made it while completely ignoring the losers who failed despite employing the same strategy and possibly in the same environment.

For instance, quite often we read the stories of few school dropouts or people with little formal education who have succeeded greatly such as Njenga Karume and Bill Gates and completely ignore millions who dropped out of school possibly at the same time and tried to do exactly what they did and failed miserably. In this case we focus on few survivors and ignore the many fatalities.

Admittedly this skewed or biased view point makes understanding the science of success very hard. Whereas it is logical to say that such people succeeded in spite of, and not because of lack of formal education, many people tend to focus on the latter and conclude that formal education is not really essential for success, which basically is not the case.

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Most businesses and indeed life failures and agonies spring from making decisions based on survivorship bias. For example, it is a known fact that most startups fail within few a years. Logically we can, to a large extent avoid or reduce failures in our own businesses by carefully analysing and drawing lesson from those that fail than riding on the inspiration of handful survivors.

Focusing on survivors as already said makes it hard to understand the principles of success. When we write and read about achievers, the ultimate motive is to see if we can walk the path they have walked and reach where they have reached; to replicate their strategies and get similar results.

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Then, what if thousands walked the same path and used the same strategies, as is the case quite often and failed? It is clear then, that their success is much attributed by something else which is not so overt, and which is rarely addressed.

When Steve Jobs died many people all over the world were inspired by his mercurial entrepreneurial path. Magazines and books that carried his story were hot cake in the market.

After all who would not want to be the next Steve Jobs and create the next Apple Computer by dropping out of college and starting a business with friends in a garage? But how many people have followed the Jobs model and failed? Nobody knows. Why? Because we tend to focus on survivors and not those who drown.

Kiunga is a business trainer and the author of The Entrepreneurial Journey: From Employment to Business

TheFounder Magazine

Made Of Founders

TheFounder Magazine is an online business magazine that focuses on starting, running and growing a business in Kenya today

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