Categories
business career entrepreneur success

Understanding Causality

Suppose a problem occurs in your department — how do you discover its cause? Do you think of the most likely cause, and gather evidence to back it up? Or do you step back from the problem and focus on patterns and feedback loops that lead to it?

All too often, instead of finding out what is happening, people assess what they think should be happening — an approach that can lead to confirmation bias.

Hypothesis testing

Confirmation bias happens when you look for information that validates your beliefs. It’s easier to confirm an idea than challenge it — but the danger is that you could miss critical information.

To help you avoid the tendency of confirmation bias, use hypothesis testing. In this method, you begin by asking a “what if” question, followed by a series of “if … then” hypotheses. It works like this. A marketing manager asks “What if increasing a campaign budget improves sales?”

She follows this with “If there’s a bigger budget, then we can afford more advertising, resulting in more sales.” She then states “If increasing the budget has no effect on sales, then we’ll have made a net loss.”

She then evaluates any data available to her to find out if her decision will have a positive or negative effect on the problem or objective at hand. This technique allows you to come up with a variety of hypotheses without sacrificing the ability to explore new ideas and approaches.

Read more on Medium.com

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s