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Some common biases we find in startup ecosystem

Humans have flaws in their reasoning, judgement, and memory. Many academics have found it perplexing that humans were intelligent enough to develop a probability theory but not reasonable enough to use it in their daily lives. There are cognitive illusions or biases that "lead to a reliably deviating perception, judgement, or memory from reality." That shift in our thinking, judgement, and memory happens at random, but its usually strong, difficult to prevent, and tough to reduce. In the same way that any other cognitive bias is described as "a systematic pattern of deviation from norm or rationality in judgement," an entrepreneur cognitive bias is characterised as "a systematic pattern of divergence from norm or rationality in judgement." Most of us are influenced by our own cognitive biases at various times during the day. We develop our own "subjective social reality" based on our perception of available stimuli while under the effect of cognitive bias. In many circumstances, rather than objective input, our built social reality impacts or drives our situational perceptions.

The brains attempt to simplify information processing often results in cognitive biases. Past experiences, societal pressures, internal beliefs, individual goals, emotions, and even limitations on the minds ability to comprehend information all impact them.

Overconfidence, the illusion of control, anchoring, confirmation bias, and optimism are the most typical cognitive biases that entrepreneurs face.

When our confidence in our judgements, conclusions, or forecasts is excessively great in comparison to their accuracy, we are said to be overconfident. When a person overestimates his or her effect on a result, it is called an illusion of control.

When an individual anticipates or estimates based on his or her experience or practice, he or she is said to be anchoring and adjusting.

Confirmation bias occurs when a person seeks, analyses, or recalls information in a way that supports their prior ideas, regardless of whether or not it is true.

Optimism is defined as a persons tendency to see the bright side of any situation and to seek out good information to reinforce positive parts of the situation. A large number of heuristics are involved in an entrepreneurs decision-making process, according to Rüdiger F. Pohls book "Cognitive Illusions," which lists 21 cognitive biases. Nobody can deny that decision-making based on quick and cheap "rules of thumb" or cognitive biases perform on par with very time-consuming procedures. Quick problem-solving approaches may undoubtedly be valuable and useful. There is no need to be pessimistic. Weve always understood how flawed we are, but lets take a look at what might lead to serious and systematic errors.

This article aims to highlight five of the most damaging prejudices that stymie the founders and early employees of businesses and sabotage organisational success. As a bonus, a set of strategies for overcoming such cognitive mistakes before they completely derail your goal is provided. Lets pretend youre an entrepreneur who has overseen a couple of successful product launch campaigns. He or she is aware of potential flaws and estimates completion time based on previous experience. The more planning time they have, the more overconfident they get, and the more likely they are to underestimate their ability to accomplish the launch in the time allotted. The worst part of the scenario is that the entrepreneur gets overconfident not just in his intentions, but also in his impact on the outcome. The illusion of control rises in scale with perceived knowledge and abilities as well as prior triumphs.