“The tendency to see patterns in randomness is overwhelming…”
Daniel Kahneman’s Thinking, Fast and Slow made many “best of 2011” lists this year, and deservedly so. Plenty of books on the systematic faults of the human mind have made the rounds, from Ariely’s Predictably Irrational and its followup to Nassim Taleb’s Fooled by Randomness and The Black Swan.
Fooled by Randomness was a great book marred by the pompousness of its author. In fewer words (and with much less ego), Kahneman covers similar territory in more depth and backed by better research:
How many good years should you wait before concluding that an investment adviser is unusually skilled? How many successful acquisitions should be needed for a board of directors to belive that the CEO has extraordinary flair for such deals? The simple answer to these questions is that if you follow your intuition, you will more often than not err by misclassifying a random event as systematic. We are far too willing to reject the belief that much of what we see in life is random.
I will do my best to remember the above quote whenever I jump to conclusions about a startup, an entrepreneur, even an A/B test.
There’s too much in the book that’s applicable to anyone starting a business, or interpreting analytics from your website, or trying to make rational decisions. Instead of quoting from every chapter, why not just check it out for yourself? (No affiliate link, I promise.)