What Bullet Holes in Airplanes Can Teach You About Making Better Business Decisions


I don't experience much cognitive dissonance these days, but the following story from a book I am reading (and will review later) slapped me upside the head. I'm normally very good with problems like this, so when I didn't immediately understand it, I was surprised. I'll pose the problem below, and make you click through for the answer.

During World War II, statistician Abraham Wald tried to determine where to add extra armor to airplanes. Based on the patterns of bullet holes in returning airplanes, he suggested that the parts not hit should be protected with extra armor. Why?

Wald was looking at what is sometimes called "dead evidence." He reasoned like this… if these planes are returning, we know that if they are hit in the spots they have been hit, they can still fly. The planes that did not return must have been hit in different places. So put the extra armor wherever the returning planes were not hit.

I think most people would have a natural inclination to put the armor where the returning planes had been hit. The real answer is simple, but counterintuitive. It's called "dead evidence" because it is what people ignore when they make these judgments. For instance, you may see a story on tv about how to survive a plane crash. The producers will interview 10 plane crash survivors, and figure out what they did in common, then recommend that you do that too. What they don't think about is how many people did those same things, but still died in the crash. The dead can't be interviewed, so we will never know.

How can you use this in your business? Think about the dead evidence. Don't look just at winners, look at losers to see if they did the same things as the winners. Don't just look at what the top companies in your industry are doing, look at what all kinds of different companies are doing. Sometimes you can learn more by looking at failures than at successes.