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How Cognitive Bias Affects Your Career Decisions

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A large and growing body of research, suggests that our reasoning processes are far from perfectly “rational.” Over the past few decades, studies have pointed to a number of cognitive biases that affect our decision making in general, and there’s no reason to believe this doesn’t include career decisions. This means that an important part of designing a process for choosing a high impact career has been looking into the extent to which these biases tend to affect peoples’ career decisions, and what can be done about them.

It turns out that we likely don’t know as much as we think we do, and our judgements can often be mistaken in ways that affect our career decisions negatively. Just being aware of this also doesn’t help much. Rather we need to be more sceptical of our decisions than we might be inclined to be, and take a more systematic and evidence-based approach to career choice.

Our key observations and recommendations

Here I’ll summarise the key points of this post, before going into more depth and outlining the evidence behind each in more detail.

The main ways in which biases impact on career choice:

  • We think too narrowly about what our options are and how to compare them
  • We have a tendency to continue on paths that are no longer beneficial, and resist change even when it’s the best option
  • We’re likely to misjudge how likely we are to be successful in different career paths
  • In general, we put too much weight on gut judgements, and too little weight on evidence

The main problems these cause:

  • People end up in careers where they have less impact than they otherwise could: missing options that aren’t obvious, neglecting relevant considerations, continuing in low impact paths for long periods of time, and misjudging impact in terms of chances of success and where skills are most useful.
  • People end up in less satisfying careers than they could: missing plausibly good options, misjudging or missing the factors relevant to satisfaction, and reluctance to leave a job despite it not being enjoyable.

The best ways for dealing with this:

  • Broaden your horizons by using a framework for generating ideas, talking to other people and thinking through some reasons what you currently think might be wrong
  • Be systematic: list the factors relevant to your decision and try using a formula
  • Learn from mistakes, but make sure you’re not just staying on a path just because it’s consistent with your previous experience to do so.
  • Take a more evidence-based approach: look at base rates, predictors of success and job satisfaction, try to estimate and quantify the impact of different paths
  • In general, question your intuitions and always check them using the above methods
  • Justify your decision to someone else: ideally to multiple others. We’re incredibly good at justifying things we want to believe to ourselves, but other people are more likely to spot biases and flaws in our arguments. (Although it’s worth noting that if we’re so good at rationalising to ourselves, we may be pretty good at doing so to other people: so whilst this is a helpful tool, it’s not necessarily a foolproof one.)

Cognitive biases in career choice

Narrowmind

1) We often think too narrowly when considering what options are available to us, and what’s important in comparing them.

What’s the evidence for this?

There’s evidence that in decision making, we “narrow frame” in two ways: first, we think too narrowly about what options are available to us. Second, we think too narrowly about what our objectives are in comparing those options. This is supported both by direct studies, and by the existence of more general biases: the availability heuristic, causing us to focus on options that are readily available; anchoring, a tendency to overweight the first piece of information given; status quo bias, an irrational preference for the current state of affairs, and the sunk cost fallacy, the tendency to assign more weight to options we’ve already invested time and effort into.

Why is it a problem for careers?

If you don’t consider all your options, how can you be sure you’ve chosen the best one? If people consistently fail to think through all the opportunities available to them, it seems highly plausible that many could be in better suited and higher impact careers than they are currently.

As explained above, it’s not just about missing options: it’s about how you compare them. If you neglect an important consideration when comparing options, you might end up favouring the wrong one for the wrong reasons. There’s risk of a compound effect here: first thinking too narrowly about what options are available to you, and then on top of this thinking too narrowly about how to evaluate this already limited set of options, your chances of choosing a suboptimal career are greatly increased.

What can you do about it?

Take some time to broaden your horizons. Using a framework such as our 5 types of career (or even better, multiple different frameworks) to generate options early on will help ensure you consider a wide range of alternatives. Widen your perspective by talking to and comparing options with other people: the more diverse the range of people you consult, the better. As well as thinking through the pros of each of your options, think too about why they might not be so great: what are some reasons you might be wrong about this option?

60-wrong-way-610x457

2) We often continue on paths or in careers for too long when it would actually be more beneficial to change.

What’s the evidence for this?

A bias known as the sunk cost fallacy: a tendency to continue doing something that’s no longer beneficial simply because we’ve already invested a lot of time or money in it. This is irrational because the time or money is already spent, and therefore irrelevant to the decision you’re now making: they are sunk costs.

Why is it a problem for careers?

Suppose you’ve spent years working and studying to get a dream job, only to realise you could be doing something completely different that would have much more impact. The thought of abandoning all those years’ effort is hard, right? It’s tempting to continue with what you’ve already invested in, hoping things will improve. But you can’t get the years you’ve spent already back: and by continuing you’re probably just wasting more. Abandoning sunk costs in your career can be incredibly difficult, but it’s important if you want to make as much difference as possible. You need to be able to identify when your preference for a certain career is for good reason, and when it’s just because of past commitments.

What can you do about it?

The bad news is that it doesn’t seem like simply knowing about the sunk cost fallacy, thinking hard about it, or talking it over with people, will help very much. The good news, though, is that sunk costs can be fought if you try hard enough and think about your decisions in the right way:

  • Ignore the past: think about where you are now, the qualifications and experience you have, as if they just appeared from nowhere.
  • Think about the future: make a list of the pros and cons of each of your alternatives from now own.
  • Justify your decision to someone else: it’s much harder to justify biased decisions to someone else!

Success-next-exit

3) We’re likely to misjudge our chances of success in different career paths

What’s the evidence for this?

When judging our chances of success, we tend to use something called the representativeness heuristic: asking “how much do I seem like the sort of person who would be successful in this field?” The problem with this approach is that, no matter how much you look like the kind of person who would be successful, if the chances of anyone succeeding in your field are low, you’ll likely be overestimating your chances. This is known as base rate neglect: neglecting to consider the underlying probabilities or base rates. No matter how much you seem like the sort of person who would single-handedly find a cure for cancer, your chances of doing so are minute simply because the chances of anyone doing so are so small.

There’s also evidence from studies that we tend to be overconfident in general: most people think they’re better than average, and underestimate the time it will take them to complete a given task.

Why is it a problem for careers?

Being successful in whatever you do is obviously crucial to making an impact. The existence of base rate neglect plus overconfidence suggest that we’re likely to overestimate our chances of finding a cure for malaria, becoming head of the world’s most cost-effective charity, or completely revolutionising academic incentives, to give a few examples. But this doesn’t mean that no-one should do these things. What we need is to be able to accurately judge our chances of success: aiming high, but not too high.

What can you do about it?

The suggested approach should help you judge your chances of success in a given field or career:

  1. Work out which factors (personality traits, skills and abilities) are most relevant to success in the field you’re considering
  2. Find ways to objectively measure yourself on these factors
  3. Given this information, narrow down your reference class to those similar to you
  4. Get your “base rate” from this class

For more detail on how to do this, see an earlier post on how to judge your chances of success.

Trsut-your-gut

4) Although conventional wisdom emphasises the importance of “going with your gut” in career decisions, we should be sceptical of at least some of our intuitive judgements.

What’s the evidence for this?

There’s a large body of research that’s emerged over the past couple of centuries in what’s now known as the “heuristics and biases” tradition, investigating the shortcuts (heuristics) that underlie our intuitive judgements and how they can go awry (resulting in biases.) Most gut judgements are based on rules of thumb, which when applied in the majority of situations allow us to make surprisingly accurate judgements with little time and effort. However, when we apply these shortcuts blindly, they can sometimes go wrong. This is a well established phenomenon across a variety of situations, so it seems pretty likely to impact our career decisions. Research also suggests that intuitions are most likely to lead us astray when we’re less experienced, the situation in which we’re making decisions is highly unpredictable, and we don’t get good feedback on our choices. Career choice arguably fits all three of these criteria most of the time.

Why is it a problem for careers?

The key point here is that if we let gut judgements guide our decisions without questioning their basis, we’re operating somewhat blindly. If we don’t know what shortcuts underlie our judgements, then we can’t be sure what factors are guiding our decisions. For any big career decision, there will be a number of different important factors to consider, and it’s highly unlikely that the rules of thumb we use implicitly will manage to incorporate them all. This means if you just “go with your gut”, it’s pretty likely you’ll be missing some important considerations, which in turn means your decision might not be as good as it could be. If you want to be sure you’ve chosen the career where you can have the most impact, the career you’ll enjoy the most, or the career where you’ll be most successful (or like most of us – all three!) you need to make sure you go through all the relevant considerations. Your “gut” can’t do this (at least, not all of the time.)

What can you do about it?

Double-check your intuitions against more systematic methods and by getting more evidence. You might, for example, try explicitly listing all the factors that are important for your decision, and then attempt to score different options on these factors and compare them. Even if you don’t necessarily use this to determine your decision, it will likely highlight some factors that your first impressions miss, and flag the areas where you need to get more information.

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About the Author

This article was written by Jess Whittlestone of 80,000 hours. 80,000 is a platform that intensively researches into how graduates can make the biggest difference possible with their careers, both through overall career choice and within a given field. They work with academics at the University of Oxford, and have given one-on-one coaching to over 200 people. see more of Jess’s work.

Callum Connects

Benjamin Kwan, Co-Founder of TravelClef

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Making music to create a life for his family, Benjamin Kwan, started an online tuition portal and his music business grew from there.

What’s your story?
I am Benjamin and I’m the Co-Founder of TravelClef Group Pte Ltd, a travelling music school that conducts music classes in companies as well as team building with music programmes. We also run an online educational platform which matches private students to freelance music teachers. We also manufacture our own instruments. I started this company in 2011 when I was still a freshman at NUS, majoring in Mechanical Engineering.

I was born to a lower income family, my father drove a taxi and was the sole breadwinner to a family of 7. I have always dreamed of becoming rich so that I could lessen the burden placed on my father and give my family a good life.

After working really hard in my first semester at NUS, my results didn’t reflect the hard work and effort I put in. At the same time, I was left with just $42 in my bank account and it suddenly dawned on me that if I were to graduate with mediocre results, I would probably end up with a mediocre salary as well. I knew I had to do something to gain control of my future.

During that summer break, I read a book “Internet Riches” by Scott Fox and I knew that the only way I could ever start my own business with my last $42 would be to start an online business. That was how our online tuition portal started and after taking 4 days to learn Photoshop and website building on my own, I started the business.

What excites you most about your industry?
Music itself is a constant form of excitement to me as I have always been an avid lover of music. As one of the world’s first travelling music schools, we are always very eager and excited to find innovative ways to a very traditional business model of a music teaching.

What’s your connection to Asia?
I was born and raised in Singapore and I love the fact that despite our diversity in culture, there’s always a common language that we share, music.

Favourite city in Asia for business and why?
Hands down, SINGAPORE! Although we are currently in talks to expand to other regions within Asia, Singapore is the best place for business. I have had friends asking me if they should consider venturing into entrepreneurship in Singapore, my answer is always a big fat YES! There’s a low barrier of entry, and most importantly, the government is very supportive of entrepreneurship.

What’s the best piece of advice you ever received?
I have been blessed by many people and mentors who constantly give me great advice but right now, I would say the best piece of advice that I received would be from Dr Patrick Liew who said, “Work on the business, not in it.” This advice is constantly ringing in my head as I work towards scaling the business.

Who inspires you?
My dad. My dad has always been my inspiration in life, for the amount of sacrifices that he has made for the family and the love he has for us. He was the umbrella for all the storms that my family faced and we were always safe in his shelter. Although my dad passed away after a brief fight with colorectal cancer, the lessons that he imparted to me were very valuable as I build my own family and business.

What have you just learnt recently that blew you away?
You can not buy time, but you can spend money to save time! With this realisation, I was willing to allow myself to spend some money, in order to save more time. Like taking Grab/Uber to shuttle around instead of spending time travelling on public transport. While I spend more money on travelling, I save a lot more time! This doesn’t mean that I spend lavishly and extravagantly, I am still generally prudent with my money.

If you had your time again, what would you do differently?
I would have taken more time to spend with my family and especially my father. While it is important to focus our time to build our businesses, we should always try our best to allocate family time. Because as an entrepreneur, there is no such thing as “after I finish my work,” because our work is never finished. If our work finishes, the business is also finished. But our time with our family is always limited and no matter how much money and how many successes we achieve, we can never use it to trade back the time we have with our family.

How do you unwind?
I am a very simple man. I enjoy TV time with my wife and a simple dinner with my family and friends.

Favourite Asian destination for relaxation? Why?
Batam, it’s close to Singapore and there’s really nothing much to do except for massages and a relaxing resort life. If I travel to other countries for shopping or sightseeing, I am constantly thinking of business and how I can possibly expand to the country I am visiting. But while relaxing at the beach or at a massage, I tend to allow myself to drift into emptiness and just clear my mind of any thoughts.

Everyone in business should read this book:
Work The System, by Sam Carpenter. This book teaches entrepreneurs the importance of creating systems and how to leverage on systems to improve productivity and create more time.

Shameless plug for your business:
If you are looking for a team building programme that your colleagues will enjoy and your bosses will be happy with, you have to consider our programmes at TravelClef! While our programmes are guaranteed fun and engaging, it is also equipped with many team building deliverables and organizational skills.

How can people connect with you?
My email is [email protected] and I am very active on Facebook as well!
https://www.facebook.com/benjamin.christian.kwan

This interview is part of the ‘Callum Connect’ series of more than 500 interviews

Callum Laing is an entrepreneur and investor based in Singapore. He has previously started, built and sold half a dozen businesses and is now a Partner at Unity-Group Private Equity and Co-Founder of The Marketing Group PLC. He is the author two best selling books ‘Progressive Partnerships’ and ‘Agglomerate’.

Connect with Callum here:
twitter.com/laingcallum
linkedin.com/in/callumlaing
Download free copies of his books here: www.callumlaing.com

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Entrepreneurship

Before you enter a Startup or before you choose your founding team or new hires read, “Entering Startupland” by Jeff Bussgang

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Before you enter a Startup or before you choose your founding team or new hires read “Entering Startupland” by Jeff Bussgang.

Jeff knows how to spot and groom good culture, as the book session was held in Zestfinance a company he invested in and now, “The Best Workplaces for Women” and for “The Best Workplaces for Tech”, by Fortune.

These are the questions during the Book Launch.

How to know if a hire including the founder is Startup material?
Jeff says to watch for these qualities.

First, do the hires think like an owner?
Second, do the hires test the limits, to see how things can it be done better?
Are they problem solvers and are biased toward action?
Do they like managing uncertainty and being comfortable with uncertainty? And comfortable with rapid decision-making?
Are they comfortable with flexible enough to take in a series of undefined roles and task?

How do we know if we are simply too corporate to be startup?

Corporate mindsets more interested in going deep into a particular functional area? These corporate beings are more comfortable with clear and distinct lines of responsibility, control, and communication? They are more hesitant or unable to put in the extra effort because “it’s not my job”.

If you do still want to enter a startup despite the very small gains at the onset, Jeff offers a few key considerations on how to pick a right one.

He suggests you pick a city as each city has a different ecosystems stakeholders and funding sources and market strengths. You have to invest in the ecosystem and this is your due diligence. Understand it so you can find the best match when it arises.
Next, to pick a domain, research and solidify your understanding with every informational interview and discussion you begin. Then, pick a stage you are willing to enter at. They are usually 1)in the Jungle, 2) the Dirt Road or 3) the Highway. The Jungle has 1-50 staff and no clear path with distractions everywhere and very tough conditions. The Dirt Road gets clearer but is definitely bumpy and windy. Well the Highway speaks for itself, doesn’t it?

Finally Please – Pick a winner!

Ask people on the inside – the Venture Capitalists, the lawyers, the recruiters and evaluate the team quality like any venture capitalists would. Would you want to work for the team again and again? And is the startup working in a massive market? Is there a clear recurring business model?

After you have picked a winning team and product, how would you get in through the door?

You need to know that warm introductions have to be done. That’s the way to get their attention. Startups value relationships and people as they need social capital to grow. If you have little experience or seemingly irrelevant experience, go bearing a gift. Jeff shared a story of a young ambitious and bright candidate with no tech experience who went and did a thorough customer survey of the users of the startup she intended to work with. She came with point-of-view and presented her findings, and they found in her, what they needed at that stage. She became their Director of Growth. Go in with the philosophy of adding value-add you can get any job you want.

And as any true advisor would do, Jeff did not mince his words, when he reminded the audience that, “If you can’t get introduced you may not be resourceful enough to be in startup.”

Startupland is not a Traditional Career or Learning Cycles

Remember to see your career stage as a runs of 5 years, 8 or 10 – it is not a life long career. In Startup land consider each startup as a single career for you.

Douglas Merrill, founder of Zestfinance added from his hard-earned experience that retention is a challenge. Startup Leaders to keep your people, do help them with the quick learning cycles. Essentially from Jungle to Dirt road, the transition can be rapid and so each communication model that starts and exists, gets changed quickly. Every twelve months, the communication model will have no choice but to break down and you have to reinvent the communication model. Be ready as a founder and be ready as a member of the startup.

Another suggestion was to have no titles for first two years. So that everyone was hands-on and also able to move as one entity.

Effective Startupland Leaders paint a Vision of the Future yet unseen.

What I really enjoyed and resonated with as a coach and psychologist was how Douglas at the 10th hire thought very carefully what he was promising each of his new team member. He was reminded that startups die at their 10th and their 100th hires. He took some mindful down time and reflected. He then wrote a story for each person in his own team and literally wrote out what the company would look like and their individual part in it. In He writing each of the team members’ stories into his vision and giving each person this story, it was a powerful communication piece. He definitely increased the touch points and communication here is the effective startup’s leverage.

Douglas and Jeff both suggested transparency from the onset.

If you think like an owner and if you think of your founding team as problem solvers. Then getting transparent about financials with your team is probably a good idea. As a member of a startup, you should insist on knowing these things
Such skills and domain knowledge will be valuable. There is now historical evidence of people leaving startups and being a successful founder themselves because they were in the financial trenches in their initial startup. Think Paypal and Facebook Mafia.

What drives people to enter a startup?

The whole nature of work is changing. Many are ready to pay to learn. Daniel Pink’s book Drive showed how people are motivated by certain qualities like Mastery, Autonomy and Where your work fits into big picture. Startups do that naturally. There is a huge amount of passion and the quality of team today and as it grows then the quality of company changes.

The Progress principle is in place, why people love their startup jobs is not money rather are my contributions being valued? Do I see a path of progress and do I have autonomy over work and am I treated well?

Find out more about StartupLand on Amazon

And learn from Zestfinance

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