The Selection Bias That Might Be Leading You Astray

There's an interesting phenomenon related to how you see yourself in relation to competitors, and it makes me smile. I do the same thing, so I'm addressing this to myself, too, and we can all smile together.

This is a very harmless phenomenon on its face, but it's doing you some damage when you lean on it to inform your positioning.

The Harmless Game

What I'm referring to is a classic selection bias about how good you are. You hear this when a new prospect or client compares you to the firm they have just fired, moving their account to your agency. They'll say things like:

• "Things started out really well with that firm, but slowly they quit innovating."
• "We felt like they weren't giving us their best work."
• "They seemed to rely on the work from previous years and kept giving us more of the same."
• "They didn't take a wholistic approach and we had to keep stepping back in to keep it on track."

You absorb this feedback and it makes your head swell, but it shouldn't, because it's a classic definition of selection bias:

• You hear this when the previous firm's reputation is at its lowest.
• You hear this when your reputation is at its highest.
• You are ignoring the fact that your clients are probably saying the same things when they leave you.

It's a rigged game. You're sampling opinions at a very specific point in time, and in doing so you are tipping the scales in your favor because you aren't averaging those positive results with the negative ones you are also receiving. When the new client chooses you, they are smart and making a logical choice. When the existing client leaves you and chooses someone else, they are the problem and you defensively ignore their feedback (if you even hear it).

The Unfortunate Impact

All that is fairly harmless...except if you start really believing that you are that different from the other firms. And trust me, I hear this all the time. Probably two or three times a week when conducting a Total Business Reset or a New Business Audit. I'll ask a client what makes them unique, and they'll say something like this:

"We consistently get feedback that we are better at strategic planning than other firms. In fact, we're so good, that we are regularly asked to clean up the messes that other shops create."

This comparing of yourself to other firms and then relying on those perceived differences is what I call the "More Better" mistake. It's a distinction without a difference, and it's not a meaningful distinction. There are so many better ways to differentiate yourself in the market than relying on a classic selection bias error.

I'll leave it like this: you are a lot better than all the other firms, as long as you ask everybody at exactly the right time to rig the results. That makes me smile.