What biases can influence your industry analysis?

1 Confirmation bias

Confirmation bias is the tendency to seek, interpret, and favor information that confirms your existing beliefs or hypotheses. It can lead you to ignore or dismiss evidence that contradicts or challenges your assumptions. For example, if you believe that your industry is stable and predictable, you might overlook signs of disruption or innovation from new entrants or substitutes. To reduce confirmation bias, you should actively seek out alternative perspectives, test your hypotheses with data, and expose yourself to constructive feedback and criticism.

3 Availability bias

Availability bias is the tendency to judge the likelihood or importance of something based on how easily it comes to mind or how vividly it is presented. It can make you overestimate or underestimate the impact of events or trends that are salient or memorable, but not necessarily representative or relevant. For example, if you focus your industry analysis on the most recent or sensational news stories, you might neglect the underlying or long-term factors that shape your industry. To overcome availability bias, you should use data and statistics, not anecdotes and stories, to support your analysis, and seek out a balanced and comprehensive view of your industry.

4 Framing bias

Framing bias is the tendency to be influenced by the way information is presented or worded, rather than by its actual content or meaning. It can affect your perception and evaluation of your industry by creating positive or negative associations or implications. For example, if you read an industry report that uses optimistic or pessimistic language, you might adopt a similar attitude or mood without considering the facts or arguments behind it. To counter framing bias, you should analyze the information critically, not emotionally, and compare different sources and viewpoints.

5 Hindsight bias

Hindsight bias is the tendency to believe that past events were more predictable or obvious than they actually were. It can impair your learning and improvement from your industry analysis by making you overconfident or complacent about your knowledge or judgment. For example, if you look back at your industry analysis and think that you knew all along what would happen, you might ignore the mistakes or gaps that you made or the uncertainties or risks that you faced. To prevent hindsight bias, you should document your assumptions and reasoning, review your outcomes and feedback, and acknowledge your limitations and biases.

Industry analysis is a powerful tool for strategic thinking, but it is not immune to biases. By being aware of and addressing the common biases that can influence your industry analysis, you can enhance your accuracy, credibility, and effectiveness as a strategist.

6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?