Barry Horwitz explains how confirmation bias hurts business and provides key tips on how to identify and avoid falling into the confirmation bias trap.
I’m often reminded of a line from Ernest Hemingway’s novel The Sun Also Rises, in which a character is asked how he went bankrupt. His answer: “Two ways. Gradually, then suddenly.”
When dealing with change (bankruptcy-related or otherwise), there are often warning signs along the way — gradual shifts that are easy to dismiss as temporary or not yet consequential, until one day, abruptly, they arrive.
The point is that sudden threats to organizations are rarely truly sudden. The signs were there, but they were missed.
We’ve all heard of the examples: The streetcar company that didn’t appreciate the advent of cars; Kodak sticking with film until it was much too late (despite the fact that it was a Kodak engineer who invented the digital camera); Blockbuster turning down the opportunity to buy a struggling Netflix for a mere $50 million in 2000.
And yet, it keeps happening. Partly because our view of the world is a function of what we believe to be important. Blockbuster, for example, assumed that “movie night” was its main offer – the ability to pop into a store and instantly have a movie whenever you felt like it. Waiting two days for the mail to arrive seemed like an inferior alternative. As it turned out, Netflix, not Blockbuster, was the one to anticipate streaming as the next, best iteration.
Whatever the specifics, the human tendency to embrace evidence that supports our pre-conceived notions and dismiss that which does not (“confirmation bias”), can lead us to ignore the weak signals of change until it’s far too late.
So, how do we avoid getting caught in this trap? There are a few ways…
Key points identified in this post include:
- Checking your assumptions
- Listening to your constituents
- Keeping an eye on trends and results
Read the full article, Is Confirmation Bias Hurting Your Business?, on the Horwitz and Company website.
Luca Ottinetti’s company blog shares case studies that reveal how Intel and SpaceX successfully launched new products, and what went wrong with Nokia and Swissair’s business model innovations.
Entering a new market with new products that target new customers requires a new business model. It is a powerful strategic initiative that changes the rules of competition. It also represents a challenge with odds of success at roughly 30%, but ultimately – when done right – it rewards winners with huge returns.
Managers need to know what they’re in for if they decide to pursue this path of business growth. The challenge in entering a new market through a successful business model innovation (BMI) consists of getting two elements right:
(1) the pursuit of attractive market opportunities, and
(2) ownership of the strategic control points in the industry to protect profit streams.
We look at cases of success and failure by companies that have entered new markets with new business model designs to illustrate the determinants of success.
Included in this article:
- Two case studies on successful business model innovation
- Two case studies on failed business model innovation
Read the full article, Market Entry through New Business Model Design, on the Great Prairie Group website.