The Dangerous Trap of Experience:
How vast expertise can lead to wrong strategic decisions
"Experience is simply the name we give our mistakes."
Oscar Wilde
Experience is when we declare the path we've taken as the only right one.
We believe that it makes us wiser.
We prefer to hire experienced workers.
But experience is a double-edged sword. Experience hinders us from making good strategic decisions.
Wrong future predictions
“The cinema is little more than a fad. It's canned drama. What audiences really want to see is flesh and blood on the stage.”
It wouldn't have been surprising if we had heard these words in 1916 from an armchair expert. But Charlie Chaplin himself, the man who 56 years later received the Honorary Academy Award for 'the incalculable effect he has had in making motion pictures the art form of this century,' said them.
Here are some other remarkable quotes:
“The wireless music box has no imaginable commercial value. Who would pay for a
message sent to no one in particular?” Associates of commercial radio and television pioneer David Sarnoff, responding to his call for investment in the radio, 1921.
“Television won't last because people will soon get tired of staring at a plywood box every night.” Darryl Zanuck, movie producer, 20th Century Fox, 1946.
And here, you can check out Steve Ballmer, then the CEO of Microsoft, laughing sarcastically at the first iPhone because “it doesn't have a keyboard.”
Six cognitive biases make experience a questionable ally in strategic thinking.
1. Illusion of Knowledge
What does it mean to be experienced in something? It means we've done it many times, hit the walls, and enjoyed our triumphs. The more experienced we are, the better we know what works. Unfortunately, the better we know what doesn't work, too.
This cognitive bias occurs when we overestimate our expertise in a particular area. As a result, we may see more flaws in every possible solution. Our knowledge gives us insight into more potential problems and complexities.
“No, son, it will never work out. We’ve already tried it.”
I conduct a few strategic offsites every month. And I’ve noticed that more experienced executives tend to meet bold ideas with a wry smirk more often than younger ones.
Experienced workers know about thousands of ways to make mistakes.
2. Negativity bias
This cognitive bias reinforces the previous one.
It refers to the tendency for people to give more weight to negative information and experiences than to positive ones.
“This new feature will ruin our business, the planet, or even the universe!”
So, experienced executives know very well what can go wrong, and they may overrate the likelihood of it happening.
Paraphrasing a proverb, experience makes mountains out of molehills.
3. Confirmation bias
It is “the tendency to search for, interpret, and remember information in a way that confirms one’s preexisting beliefs or hypotheses.”
Experienced people know what will and won't work, and they see only the signs confirming their beliefs.
This cognitive bias reinforces the previous two. That’s why experienced people are so hard to argue with.
You can't teach an old dog new tricks because the old dog refuses to admit that new tricks exist.
4. Overconfidence effect
Wikipedia describes the overconfidence effect as “a bias in which a person's subjective confidence in their judgments is reliably greater than the objective accuracy of those judgments, especially when confidence is relatively high.”
Evolution has taught us that knowledge and experience mean safety. Centuries ago, those who ‘knew things’ were less likely to be eaten by saber-toothed tigers.
We overrate our experience because it helps us feel confident and safe.
5. Effort Justification
My friend studied at a prestigious business school. The in-person modules were an absolute nightmare. All day long, participants listened to lectures and worked in seminars; at night, they made presentations.
My friend was totally exhausted but happy. She didn’t know that the school tortured them not to teach them better. Our brains can’t work intensively for more than four hours per day.
The school did it to make them feel proud of their outcomes, which, as she admitted later, weren’t that useful.
Quote from Wikipedia: “Effort justification is a person's tendency to attribute the value of an outcome they put effort into achieving as greater than the objective value of the outcome.”
If we’ve paid a high price for our experience, we’ll stick to it.
6. Overgeneralization or the Illusion of personal relevance
Once, a famous strategist who regularly writes on Medium received a comment from a reader who doubted that one of the strategist's ideas would work.
“I’ve tested the tool in several companies I worked for, and it works,” the strategist retorted sharply, leaving no room for argument.
There are around 300 million businesses on the planet. Even if a tool you advocate for works for thousands of them, it doesn't prove it works for all.
Pro Tips
These six cognitive biases drive us away from good strategic decisions like six wild horses. The more experienced we get, the more we become like a train that can only run on its tracks.
So, we should make a deliberate effort to overcome these biases.
Here is what you can do:
Find some experts with experience that is different from yours and invite them to your advisory board.
Listen to their opinions and take them seriously. Remember that your standpoint may be wrong.
Surround yourself with people from various backgrounds and create an atmosphere where they will feel comfortable expressing their doubts as soon as they have them.
Learn constantly. Read more.
Try not to use the words 'never' and 'always.'
Whenever you feel that you have a strong opinion, try to advocate the opposite viewpoint. It is a very useful mental exercise.
Remember yourself about these six cognitive biases. No one is immune to them.
Subscribe to this newsletter, stay tuned, and receive a book on strategic thinking for free in June!
Read also: Don't Shoot Yourself In The Foot. Strategic approach to cost cutting
Like the story? Restack it. Follow me on Substack notes – I post daily.
Visit my website. If you’re a Telegram user, join my channel.
Good examples of how cognitive biases and personal framings can influence strategy conversations and the ensuing decisions - a reminder that strategising is as much about people as it is about strategic thinking.
This is the best article I've read all week.