By Steve Moran
Oh how broken our minds are. … They play all kinds of tricks on us.
Things seem so obvious.
Looking back …
It seems so obvious that we would have high inflation now.
It seems so obvious that interest rates would be high.
It seems so obvious that occupancy would be struggling.
It seems so obvious that it was possible to build too many memory care communities.
We see things happen, like in the list above, that seem obviously inevitable in hindsight — but that we and most people completely missed or misjudged beforehand. This is hindsight bias; we all suffer from it.
The question is this: What can we learn from it?
- Hindsight bias + ego = poor decision-making. Just because you accurately predicted that memory care communities would end up being overbuilt (like I did) does not mean you will get the next thing right. Don’t let ego cause you to make unsupported decisions.
- Convincing yourself, through hindsight bias, that you knew what would happen makes it harder to learn from experience — to recognize and learn from mistakes.
- Hindsight bias is particularly hard on accountability. We get something right that others didn’t and wonder why they didn’t see what was obvious. (“Why didn’t you see it coming?”) We want to hold them accountable for something that we maybe got right more because we were lucky than we were skilled.
- Hindsight bias distorts memory. We know that other people are not nearly as good at remembering things as we are … except that research shows that we are much better at remembering things the way we want to remember them than how they actually happened. This means we end up either unfairly punishing others for wrongs they may not have committed or seeing ourselves as better and smarter than we really are.
- Hindsight bias hurts relationships. We see friends and acquaintances who did things, believed things, said things in the past — doing their very best at the time and when the standards were different — and judge them on today’s standards, ideas, and norms.
Simply being aware that we all suffer from hindsight bias will make us better leaders.