Have you ever fallen down the Wikipedia rabbit-hole or got sucked into a YouTube marathon? Have you ever sought one answer online and found 20 more questions you wanted the answer to? Have you ever told yourself that you will be starting an online business, project, or milestone just as soon as you have collected enough relevant data?

I sure have!

I admit it. I have a problem. I am addicted to learning. Wikipedia is my catnip. I could look up the true story that the movie Schindler’s List was based off of and the next thing you know I’m reading Wikipedia articles on Oskar Schindler, World War II, The Battle of Midway, the attack on Pearl Harbor, the Reciprocity Treaty of 1875, Ulysses S. Grant, and on and on and on. I love to learn!

Unfortunately, I sometimes do this in my business life as well. I feel compelled to keep learning instead of taking action.

Don’t get me wrong, learning is a good thing, but it is absolutely possible to have too much knowledge, especially when you’re starting an online business, new project, or new milestone. And I can prove it!

 

Starting an Online Business: How Horse-racing Can Help Us

 

Let me tell you the story of a study that was done regarding horse racing*. Here’s the summary:

• The study identified 88 pieces of information that could be acquired from a horse’s past performance.
• They invited 8 experienced horserace handicappers to take part in the study.

They ran 4 tests:

• In the first test the handicappers were given their choice of 5 pieces of information from the 88 available pieces. This is all they could base their predictions on.
• In the second test they were given their choice of 10 pieces of information.
• In the third test they were given 20 pieces of information.
• In the fourth test they were given 40 pieces of information.

So what were the results?

• In the first test the handicappers were correct 17% of the time, and they rated the confidence in their decision at 19%. That’s pretty good calibration!
• In the second test, with double the amount of information, they were still only correct 17% of the time.
• In the third test, with quadruple the amount of information than the first test, they still only managed to be correct 17% of the time.
• In the fourth and final test they had the most information of any of the tests and they were right… Wait for it… 17% of the time.

The conclusion: Having more information did nothing to improve how often they were right.

Does that mean the additional information was meaningless? Actually, it’s worse than that! The additional information actually increased their confidence in their predictions!

As mentioned, they had 19% confidence in their selections for the first test. But then as their results stayed flat at 17%, their confidence increased test after test until it hit a high of about 33% in the final test.

Since the handicapper’s level of confidence is a key determination for how much they would bet on a race, that higher level of confidence would have resulted in less money in their pocket at the end of the day.

What does this mean to you?

First of all it means that whether you’re starting an online business, new project, or new milestone, you’re just wasting your time trying to collect more “data”. You are much better off getting just the data you need and then moving on to taking actual action.

Secondly, it means that collecting too much data may result in confirmation bias, causing your confidence to be higher than it should be, which in turn could impact the decisions that you make.

So get JUST the information that you need and then TAKE ACTION! Not only will you be moving to success faster, you’ll probably also do it more effectively due to better decision making!

Now go make us proud!

* Results are taken from author Paul Slovic’s 1973 manuscript titled “Behavioral Problems of Adhering to a Decision Policy”.