Is Hindsight Bias Holding You Back?

On Steve's Mind: a Newsletter

Latent ProfitToday, I woke up and took a nice Sunday-morning walk around my neighborhood.  As my thoughts were wandering, I began thinking about a product line for my business that I have tried a few times to develop, but without success. “It’s never going to happen,” I caught myself saying.

Why did I think that? Just because it hasn’t happened in the past doesn’t mean it won’t happen in the future. Why can’t tomorrow be different?

Psychologists describe a phenomenon called “hindsight bias,” also referred to as the “knew-it-all-along effect,” in which an occurrence that was only one of many possible outcomes seems, in retrospect, to have been inevitable.  The therapist should have been able to predict that his patient would commit suicide based on things the patient said, shouldn’t he? The CFO should have been able to spot that her controller was embezzling funds, shouldn’t she?

When hindsight bias deceives us into believing that what has happened was inevitable, it can prevent us from exploring possibilities for our future.  If the one road that led you to your present state seems like the only road, it’s easy to see that one road as a fixed path towards tomorrow.

But there is no fixed path towards tomorrow. Your business has an infinite number of possibilities for its future, many of them good, many of them bad. Your job, no matter what your title or position, is to explore those possibilities and create a great future for your organization.  Recognize your hindsight bias, so you can push it out of the way.

It’s Possible to Overcome Hindsight Bias

The first step in overcoming your hindsight bias is to recognize the near-infinite number of possibilities for your organization’s future. Looking backwards, the past looks like a single line leading to today. Going forward, visualize that one line breaking into thousands of lines, all representing possibilities.  Does your past blind you to seeing the best of those possibilities?

How can this kind of hindsight bias limit your business? Do you ever catch yourself saying things like this?

“Our sales pace always falls off at this time of year.”

“That customer will never give us more than 25% of their business.”

“We always launch a spring promotion and a fall promotion, but summer promotions never work.”

“Two-thirds of the salespeople we hire fail, and it will always be that way.”

Every one of those opinions may be based on past trends, but they should not describe the limitations of the future. Recognize that the future is not fixed by the past.

Learn from Your Experiences

Hindsight bias can get in the way of learning from experience.

“If you feel like you knew it all along, it means you won’t stop to examine why something really happened,” observes psychological scientist Neal Roese of the Kellogg School of Management at Northwestern University. If you believe something bad that happened was inevitable, you may not address the situation that caused it. Or, after something good happens, hindsight bias may make you overconfident that it will happen again.   “It’s often hard to convince seasoned decision makers that they might fall prey to hindsight bias,” adds Roese. The same article describes that research has shown “that overconfident entrepreneurs are more likely to take on risky, ill-informed ventures that fail to produce a significant return on investment.”

Psychologist Baruch Fischhoff calls hindsight bias “creeping determinism.”  If we believe that the past was inevitable, it can lull us into thinking that our future is pre-determined, and nothing could be further from the truth. Your future and the future of your organization are not fixed. They are filled with possibility.  Identify the best of those possibilities, and pursue them to create your future.

Tagged with: , , ,
Posted in Invent Your Future, Latent Profit, Newsletters

Leave a Reply

Your email address will not be published. Required fields are marked *

*

Subscribe to the Blog
Email:  

On Steve's Mind
Get Steve's newsletter featuring his ideas and practical advice delivered to your email inbox.
* = required field
Latest Tweets
Testimonials
roma-maxwell
Rancho La Puerta has enjoyed continued success because of the work we did with Yastrow and Company. Together, we implemented business strategies that have contributed to our success. Steve and his team truly believe in our brand, and our experience with them was empowering, fun and a great learning opportunity. I highly recommend Yastrow and Company to any business that needs help building the bottom line

Roma Maxwell

Roma Maxwell, Director of Sales and Marketing, Rancho La Puerta
jim-winter
Steve put together a program that produced spectacular results, and the quality of our communication and customer satisfaction is vastly improved. I’ve been in business for 40 years, and Steve’s the first consultant that I’ve gotten my money’s worth from. We’re going to continue to work with Steve and the bright, energetic people that are on his team.

Jim Winter

COO, Dimension Design
Ditch the Pitch is a great read-- interesting, fun, and easy to follow. And I’ve already seen the concepts work. Just yesterday, I called a client and had a conversation that was 95% about the client, as the book suggests. At the end of the call, he sent a new matter my way. I ditched the pitch and it resulted in new business.

Attorney

Chicago, IL
Mike Depatie
Steve Yastrow is at the forefront of the next evolution in marketing. We have implemented many of his innovative ideas... and have seen very positive results.

Mike Depatie

CEO, Kimpton Hotels and Restaurants
Marc Allen
We are absolutely better off after engaging Yastrow and Company. They helped us look at our business from our clients’ perspective, resulting in a cultural shift throughout our organization. These changes have made a big impact - we’ve gained new clients and strengthened relationships with existing clients. The investment was well worth it.

Marc Allen

Vice President of Sales, AMD Industries
jim-evans
Yastrow and Company introduced Brand Harmony and their Be the Brand concept to our team at Jenny Craig.  I believe these new ideas contributed in helping us triple the company's revenue during my years as CEO.

Jim Evans

former President and CEO, Jenny Craig
roma-maxwell
Rancho La Puerta has enjoyed continued success because of the work we did with Yastrow and Company. Together, we implemented business strategies that have contributed to our success. Steve and his team truly believe in our brand. I highly recommend Yastrow and Company to any business that needs help building the bottom line.

Roma Maxwell

Director of Sales and Marketing, Rancho La Puerta
Alex von Bidder
Steve Yastrow's teachings are applicable to any business that values long-standing success based on personal relationships.

Alex von Bidder

Managing Partner, The Four Seasons Restaurant, New York
Jennifer Whelan
Our work with Yastrow and Company yielded the best long-term value of any consulting engagement we’ve ever had. As we grow and expand internationally, Acuative continues to depend on the branding approach and marketing tools Steve and his team developed. Yastrow and Company genuinely partnered with us, were exceptionally responsive and remain committed to our success.

Jennifer Whelan

Vice President of Marketing, Acuative
Doug Ducey
In one morning, Steve re-energized the way we look at marketing. The only question we had at the end of the session was, ‘When can we get him back?'

Doug Ducey

CEO & Chairman, Cold Stone Creamery, Governor of Arizona
Chris Tucker
Steve is a creative and collaborative speaker who communicates his ideas clearly and concisely. He immediately understood our business needs and provided a better perspective on how our customers see us as a company. I have referred Steve to our customers in the past and I will continue to do so. He’s intuitive and has a unique way of looking at business. Steve has the experience to turn a project into something extremely valuable for any organization. I strongly recommend working with Yastrow and Company.

Chris Tucker

Director of Business Development, MBX Systems
Kathleen Phillips
Not only is Steve's content sound, but the energy he displays in delivering it will knock your socks off.

Kathleen Phillips

Ernst & Young, Chicago, IL
Alex von Bidder
In these high pressure times of bite-size communications we all hunger to be listened to and cared for individually. Our customers know great hospitality, the kind that is not about selling but treating their needs as our highest priority. Steve Yastrow’s teachings are applicable to any business that values long-standing success based on personal relationships.

Alex von Bidder

Managing Partner, The Four Seasons Restaurant, New York
Jennifer Whelan
“Steve’s workshops helped bring out what is best at Acuative. His insights were fresh and long-lasting—we continue to use his tools and approach years later.”

Jennifer Whelan

Vice President of Marketing, Acuative
Rhoda Olsen
Steve Yastrow has clearly described the emotional reality of customer relationships and their impact on profitable business growth.

Rhoda Olsen

President, Great Clips for Hair
Ward Alles
Steve Yastrow knows his stuff. That's why our management team has read all of his books. And that's why we've had him as a keynote speaker at both client and employee events. From creating brand alignment, to selling more effectively, to providing top-notch customer service, Steve offers words of wisdom based on real-life experiences. He always engages his audiences with questions, interactive exercises and great storytelling that keep you coming back for more. Read Steve's books. Then book Steve. You'll be glad you did.

Ward Alles

CEO, Core Creative
David Sank
I highly recommend Yastrow and Company to any business that is intent on enhancing their customer experience. Prior to working with Steve, we were communicating various messages to customers. Steve and his team helped us achieve a cohesive brand message that we as a company live daily. Steve is an incredible listener and learned the nuances of our business rapidly. I can’t imagine anyone Yastrow and Company couldn’t help.

David Sank

President and CEO, Calico Cottage
Chris Miller
I rarely book speakers more than once. But I’ve used Steve four times! Steve has our association’s interest at heart and works tirelessly to deliver customized programs. He always ranks highly with our affiliates because he is outcome-focused, fast-paced and highly engaging. Anyone looking for insight and understanding into marketing, branding and sales should book Steve!

Chris Miller

Executive Director, Professional Systems Network International
Craig Dwight
Steve’s approach to integrating all customer contacts into a comprehensive marketing message is a must in today’s information age. We have partnered with Steve to develop our integrated and comprehensive marketing message, and as a result of his excellent work, his new book is required reading for all of our employees.

Craig Dwight

Chairman & CEO, Horizon Bancorp
Tom Peters
When Steve Yastrow writes, I pay close attention.

Tom Peters

Founder, Tom Peters Company
roma-maxwell
I give Steve two thumbs up—five thumbs up, if I had that many!

Roma Maxwell

Roma Maxwell, Director of Sales and Marketing, Rancho La Puerta
american-licorice-logo
We have seen huge benefits from Steve's input. Steve is unlike any other consultant I've ever worked with. He takes a genuine, deep-seated interest in our business. He is intuitive and able to identify problem issues quickly. We wouldn't be as far along in acheiving of our long-term growth strategy if we hadn't actively and aggressively pursued Steve's Brand Harmony.

Michael MacDonald

Executive VP Sales and Marketing, American Licorice Co.