With GBW, I like to look at year over year traffic stats for our blog. Anyway, there was an interesting feature of the game that falls into today’s topic. You might got on a hot run one week and go on a bad run the next. This isn’t surprising really — the brain is a wonderful pattern-recognition machine and it serves us phenomenally well in this way…usually. Oracle Analytics has a clustering model that can evaluate groups with similar traits. Then focus on how you can improve over time. The point here is to be aware of what’s happening when you go on a good or bad run. Next up we will take a look at the Gambler’s Fallacy. Okay, maybe it’s not that dramatic, but you can have a few swings. If you’ve just closed three deals in quick succession, does that mean you are on a hot streak or is it just a random series of events that will even out over the course of the year? High-performance pushes biobased products and its industry to the forefront. Seeing shapes in a cloud would be the simplest example. Commentators would judge that a player shooting several successful free throws in a row was on a hot streak when in fact their success was at or close to the norm. It seems like inquiries come in streaks. A new business idea; 3. Last week I talked about good and bad breaks in life. It seems that way, but is it actually happening? What is it? The Clustering Illusion is a cognitive bias that sees some people fall into the trap of getting on fire or going on hot runs or getting a hot hand. The illusion is central to what is also known as the “hot hand fallacy”, which became famous in basketball but could easily apply to almost any sporting endeavour. Where might you see it occur in real life? If you made two three-point shots in a row the announcer would proclaim, “He’s heating up!”, It was exciting because if you then made a third shot in a row you would be, “On FIRE!”. I don’t gamble much, but sometimes you play a game and you hit a few wins in a row and you feel like you can’t lose and that you’re on some kind of run. Stock Market Predictions; 2. In other words, clustering illusion bias is the bias that arises from seeing a trend in random events that occur in clusters that are actually random events. Your lucky outfit; 5. We all are subject to illusions and biases. You don’t want to get caught up in what’s happening in the short-term and start making decisions that will negatively affect the future. Online MarketingEntrepreneurSalesLeadershipLife. Clustering Illusion – This is the tendency to see patterns in random events (or clouds). Customer clustering uses purchase transaction data to track buying behavior and then create new business initiatives based upon findings. It was a nice feature that made the game fun, but it is also an example of how some of us tend to fall into the trap of Clustering Illusion. And you don’t want to overreact to a bad run either. You don’t want to get on a good run, take out a loan and bank on that run lasting for years and years as you spend money on things that you maybe don’t need. When you’re on a bad run you feel like you’re the worst leader in charge of the worst business in the world. When it starts to be particularly detrimental is when the person involved believes they have helped that success come about — it often leads to persisting with behaviour that was erroneously linked to successful outcomes. But year over year is a pretty good measure of solid growth. Every week I look at a different cognitive bias and discuss what it is and how to counter it. Then back things down into daily habits that will help you reach those long-term goals. And the opposite is true as well. Why guess? I think it was also a popular arcade game that was in our local bowling alley. Which deep learning framework is the best? In business I’ve noticed that I can get caught up in the Clustering Illusion. Predicting a lottery; 4. It comes down to this: humans have a tendency to under predict the amount of variability in small samples of random data. I play golf today and you feel like sometimes you’re just on a run that is amazing. This post is the tenth part of a series of business-friendly posts, looking at cognitive biases and how they impact our ability to communicate and operate effectively. Perform small experiments Be doubtful; 4. 1. The same thing occurs in sports. If you want to know more please feel free to connect or check out a collection of cognitive biases here. The clustering illusion is the tendency to erroneously consider the inevitable "streaks" or "clusters" arising in small samples from random distributions to be non-random. Humans have a tendency to assume streaks or patterns are non-random in small samples of what are really completely random distributions. We try to create order from chaos. Get more data; 2. The typical marketing goal is to emphasize and retain low-risk, high-value and high-profit customers – this “premium” cluster representing 10-20 percent of total buyers often produces 50-80 percent of a company’s profit. Focus on long-term analytics and always keep a big picture perspective on business. Clustering Illusion is a human tendency to perceive random data sets to be non-random and revealing a pattern. We then believe that this small sample size represents the larger population. Imagine believing that your negotiation activity was the reason why several big business deals closed in a row when in fact other factors were in play and the timing was pretty much random. Compatible Partner; 6. You get all kinds of swings in traffic day to day, week to week and month to month. During WWII, it was commonly believed that bombs were targeted at particular areas as people looked for and saw patterns, but it was in fact a random distribution. Horoscope and astrology; How to counter clustering illusion? If you are building an argument and need to demonstrate success in some way, try hard not to get caught up interpreting a cluster of data as a streak or pattern of success — it will be easily picked apart by someone who knows what they’re talking about.


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