Startup general interest

Why clever people believe stupid things

By September 12, 2011 6 Comments

DO YOU AGREE, THAT SMART PEOPLE DO STUPID THINGS?I’m currently reading Ben Goldacre’s Bad Science.  I’m finding it an ok read, although interesting for reasons other than those I expected.  I was hoping his myth-busting might help change my diet or supplement regime, but the stuff he targets is actually pretty old hat.  However, on the plus side he has a lot of helpful reminders about the placebo effect, how stats can be misused, and common mistakes that people make coming to opinions.  I will post a full review on Goodreads when I’m done.

One of the chapters in Bad Sceince is titled “Why clever people believe stupid things” and it lists out five of the common mistakes that smart people make.  Note that they are not stupid mistakes to make per se, but rather come when the application of intelligence is taken too far.

  1. Seeing patterns when there is only noise – one of the best ways to be really smart is to see patterns early and act on them – e.g. spotting patterns in why customers are using/buying a product is key to giving them more of what they want and scaling a company, but backing the wrong hunches for too long will destroy the relevance of a product.  The key is to really look at the data before investing behind an idea, and then keep looking at the data whilst the investment is ongoing and be prepared to change your mind if the data tells you too (see below).
  2. Seeing causal relationships where there is only correlation – again good to spot these early, keep looking at the data and be prepared to change your hypotheses
  3. Biased approach towards new evidence – e.g. only looking for confirmatory evidence, or discounting new evidence that contradicts what we believe.  This is a very natural tendency, when you ‘know’ something is true you get into a mode of proving it to other people rather than properly assessing the evidence, and it seems pointless to waste time considering counter arguments you ‘know’ will be poor.  I see this behaviour all the time from investors and entrepreneurs who are passionate about their companies and investments.  We all make mistakes and keeping an open mind (and catching yourself when you aren’t) helps limit the damage when you do get something wrong.  It is also useful to try and separate in your own mind the process of advancing your beliefs (i.e. how you argue them) and the process of forming those beliefs in the first place and then keeping them accurate.
  4. Disproportionate weight on new information – to protect us from predators evolution has wired our brains to notice changes more than things that stay the same, and as a result it is common to over react to new information.  The first time you lose a major deal to a competitor, or lose a key employee it might seem like the end of the world, but the ship will keep moving forward and it probably isn’t a problem unless it happens frequently.

Figuring out how to make a startup succeed is a complex process and one that requires either luck or intelligence, and usually both.  Intelligence, however, can be a double edged sword unless combined with a high degree of self-awareness.  This list can be used as a self-awareness tool for individuals to look at themselves and root out the errors, and also as a framework for teams to question each others beliefs.

Finally, regular readers of this blog and followers of Nicholas Taleb might have noticed the overlap with his thinking, particularly points 1 and 2 which are similar to being fooled by randomness, and to the patonic and ludic errors that Taleb describes (erroneous categorisation and excessive certainty, respectively).

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