Why sometimes, I've believed as many as six impossible things before breakfast.
- The Red Queen in Lewis Carroll's Through the Looking Glass
As a graduate student, I was privileged to have two mentors. One of them--Doug Medin--shared with me a secret of his ability to find unexplored research questions. He said that when he notices that everyone in the field has reached a consensus about the answer to a question, he tries believing the opposite for a while to see where that gets him.
Over the years, I have gotten a lot of mileage out of that tip. It really causes you to see the world in a different way, because it plays around with psychological mechanisms that cause confirmation bias, which is the tendency to interpret the world in ways that are consistent with your existing beliefs.
As valuable as the tip can be when doing research, it can be even more important in business. I was reminded of this recently watching the movie version of Michael Lewis's The Big Short, which tells the story of the collapse of the mortgage market (and the securities based on those mortgages) in 2007. A key element of the collapse was that nobody believed that there was any chance that defaults on mortgages could rise to record levels. Consequently, many people ignored warning signs of impending doom. Instead, they focused on information consistent with their belief that the mortgage market was healthy.
In general, of course, the world does not change in radical ways, and so confirmation bias is valuable. That is why it is still part of our psychological makeup. If confirmation bias were not usually helpful, our evolutionary ancestors who reasoned that way would probably have been wiped out.
To help give you confidence in your core beliefs, though, it is useful to start by being explicit about the assumptions you are making about the success of your business. What factors must be true in order for your company to act the way it does? Make a list of these assumptions.
Then, pick one. For a week, walk around trying to convince yourself that the opposite of that belief is actually true. Let the power of confirmation bias work to try to shake you out of your most deeply held beliefs.
When you try this exercise, one of two things will happen. Most likely, after a week of trying to believe the impossible, you will conclude that it was (indeed) impossible. Having subjected your belief to this scrutiny, you can feel even more confident that it holds.
Every so often, though, you will find that there is also evidence that supports the opposite of your core beliefs. Pay attention to that evidence. What does it say about the soundness of your business model? Are there things you should be doing differently than you are now? Are there changes on the horizon that threaten your success?
As an example, consider the telephone. A mere 20 years ago, communication stocks were riding high. Homes and businesses had to have phones, and there was a race to provide high-speed internet access to people's homes. Few people thought that the traditional phone market was in danger of collapse. Indeed, even science fiction movies in the 1990s (which are created by people whose job is to envision the future) generally missed out on the idea that in the future everyone would be connected to the phone system and internet all the time via wireless connections.
In this era, it would have been useful for people in the communications industry to have spent more time thinking about whether a world with far fewer wired phone lines was likely. This kind of thinking might have enabled the market leaders to stay on top of new trends. Instead, powerful juggernauts in the industry faded. Even once-powerful AT&T was ultimately purchased by a competitor.
It has become commonplace to warn leaders of successful companies not to become complacent. Perhaps the best way to avoid resting on your laurels is to question your deepest assumptions by spending time trying to believe the opposite of what you currently assume to be true.