Why is it that some people succeed, while others fail?

Is it simply that those who succeed follow the "formula," while those who fail don't?

Psychologists describe survivorship bias as the tendency to consider only those who survive whatever it is that you’re looking at, as a model for what works, but in the absence of those who followed the same model and failed.

To look at this another way, survivors - in any context - are likely to make up a smaller number of people than the sum total of those who were involved.

It's essential that you understand this, whether you're trying to hack your business or your life.

Why is this so important?

It's important because the successful, or even the marginally successful, may not be the people to study, never mind to emulate.

Sounds counterintuitive, right? Why would anyone study those who are unsuccessful? What could the unsuccessful possibly teach you that the successful couldn't.

The answer is that the survivors - the successful - misrepresent the group of people that you're studying.

For instance, successful business people are not a representative sample of the total number of people who tried to have a business. And so what that means is that you have no way of knowing if what they did was the reason why they succeeded.

That must sound even more confusing.

If people didn't succeed by what they did, then how did they make it?

And the answer is that you don't know.

The bias comes from assuming that you do. That simply by looking at the successful you can figure it out.

But here's the thing: If two people do the same thing, but only one succeeds, then it’s not the strategy that made the other successful. It has to be something else.

You have to think carefully about this. It's not easy to understand unless you do.

In statistics, we say that correlation - that is the strength of the relationship between two things - is no indication that one thing caused the other. There's another concept which could explain it. It's called covariance. Covariance is a million dollar word that simply means that two things happen simultaneously; and what we know is that often there can be any number of things that occur together, but that there's something else that actually causes them.

You know this to be true in your own experience; but it's where superstition comes from.

For instance, some people believe that Friday, the 13th is an unlucky day, but you never hear about Thursday, the 12th, or Wednesday, the 11th. Why? It's because something happened in the annals of history that people remembered well enough to decide that that day was unlucky, and the tradition is with us today.

What does that have to do with survivor bias, or creating a successful business?

This illustration is important because when you yield to survivor bias, you're doing the same thing as the people who attributed bad luck to a particular day in the year.

In the case of Friday, the 13th, you're forgetting about all the years in your life, never mind anyone else's, where nothing bad happened on that day. In other words, you're singling out one day and generalizing that it's true in every other case.

When it comes to creating a successful business,  you miss the fact that many people did what the successful did, but still failed.

But you don't hear about them. You only hear from the survivors. And so that means that whatever it was that made them successful probably was for some other reason. And unless you study both groups, you'll never be able to determine if what seems to be the thing that made them successful actually was.

David McRaney, author of Your Are Not So Smart, says that the advice business, for example, is run by people who have survived, but that all of them are telling you their stories with 100% hindsight. None of them knew at the time that they made their “big” decision that they would experience the huge success that they did, and so they can’t tell you what you should do because they don’t know either.

To be successful, you have to understand the failures as well as the successes. This will give you a more balanced perspective.

It'salso  another reason that you shouldn’t be afraid to fail yourself.

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