Category: thinking fast and slow

When reading Michael Lewis great book about Daniel Kahneman and Alex Tversky, The Undoing Project, Lewis references several times the Yom Kippur War. The war had a big influence on the thinking of Kahneman and Tversky.

The references particularly piqued my interest because I was too young to understand what was happening during the conflict but it did not make its way into most history texts when I was in school. It was also interesting because in a matter of days it went from a war that looked like it could destroy Israel, there were rumors they were even considering the nuclear option, to a war where the entire Egyptian Third Army was encircled.

With changes on the battlefield that dramatic there had to be fantastic lessons in decision making so I decided to learn more about the conflict. By reading The The Yom Kippur War: The Epic Encounter That Transformed the Middle East by Abraham Rabinovich, I learned how the Yom Kippur War is a great case study in the biases and paradigms that form the foundation of Kahneman’s Thinking, Fast and Slow.

The danger of overconfidence

The Yom Kippur War highlighted one of the biggest errors in decision-making, over-confidence. If Israel had not mobilized its reserves shortly before the war started, the odds at the beginning of war would be in the Arabs’ favor by several orders of magnitude. The 100,000 Egyptian soldiers and 1,350 tanks west of the Suez canal faced 450 Israeli soldiers in makeshift forts and 91 Israeli tanks in the canal zone. On the northern front, where Israel faced Syria, the Syrians enjoyed 8 to 1 superiority in tanks and far greater in infantry and artillery.

The limited forces Israel deployed on both the Syrian and Egyptian fronts opposite vastly larger enemy armies reflected a self-assurance induced by the country’s stunning victory in the Six Day War. Israel believed it had attained a military superiority that no Arab nation or combination of nations could challenge.

Even when war appeared likely, the Israelis moved only a small number of forces to face the Syrians. Abramovich quoted the Israeli Chief of Staff, Dado Elazar as saying “’We’ll have one hundred tanks against their eight hundred, that ought to be enough.’ In that sentence, Elazar summed up official Israel’s attitude towards the Arab military threat.“

This overconfidence almost led to the collapse of the Israeli military. Abramovich wrote, “a common factor behind all these failings was the contempt for Arab arms born of that earlier war, a contempt that spawned indolent thinking.“

The reality was that the Egyptian and Syrian forces were not like their predecessors in earlier conflicts, but instead had the most modern Soviet weapons and a more disciplined and professional military. The overconfidence that prompted the Israeli military to not take seriously its opponents put its soldiers in an untenable position that led them initially to be overwhelmed.

Impact on your life

Given that you probably do not lead an organization with tanks and artillery, you may ask why should I care whether the Israeli military was overconfident. The lesson, however, that is pertinent is that underestimating your competition could be disastrous. Just because your competitor has not been able to develop a product in the past that is of comparable quality to your product, does not mean that they will never have that capability. You may dominate the market but your competition is working on ways to jump over you.

You also may underestimate their likelihood to want to compete in certain market sectors. You may have gained 80 percent of the racing game market after pushing your top competitors away so you move your development to sports games because you now own racing games. Do not assume they do not have a secret project to create a new racing game that will suddenly make your product obsolete.

Confirmation bias

The Yom Kippur War highlighted one of the biases that Kahneman and Tversky have regularly wrote about, confirmation bias. Confirmation bias is when you ignore information that conflicts with what you believe and only select the information that confirms your beliefs.

In the Yom Kippur War, Egypt and Syria were able to almost overwhelm the Israelis because the Israelis did not expect to be attacked by overwhelming force. Although the Arab states did launch a surprise attack, it should not have been a surprise. Both Egypt and Syria mobilized huge numbers of forces (which was visible to the Israelis), while multiple intelligence sources and even the leader of Jordan warned the Israelis an attack was imminent. It was confirmation bias, however, that kept the Israelis from believing they would be attacked and preparing for it (until the last minute).

First, the Israelis ignored any information that did not support their theory that they would not be attacked. Abramovich writes, “Eleven warnings of war were received by Israel during September from well-placed sources. But [Head of Military Intelligence] Zeira continued to insist that war was not an Arab option. Not even [Jordan’s King] Hussein’s desperate warning succeeded in stirring doubts.”

Explaining away every piece of information that conflicted with their thesis, they embraced any wisp that seemed to confirm it.  The Egyptians claimed they were just conducting exercises while the Syrian maneuvers were discounted as defensive measures. Fed by this double illusion—an Egyptian exercise in the south and Syrian nervousness in the north—Israel looked on unperturbed as its two enemies prepared their armies for war in full view. Abramovich writes, “the deception succeeded beyond even Egypt’s expectations because it triggered within Israel’s intelligence arm and senior command a monumental capacity for self-deception. ‘We simply didn’t feel them capable [of war].’”

As I mentioned above, examples of decision making flaws were abundant on both sides and Egypt also suffered greatly because of confirmation bias. When Israel began its counter-attack that eventually led to the encirclement of the 3rd Army, the Egyptians President Sadat only looked at data that supported his hypothesis. Given the blow the Israelis had received at the start of the war and the fact that they were heavily engaged on the Syrian front, the Egyptians were thinking in terms of a raid, not a major canal crossing.  An early acknowledgement of the Israeli activity could have stemmed the attack and possibly left the Egyptians in the superior position but they only saw what they wanted to see.

Impact on your life

I come across confirmation bias almost weekly in the business world. One example you often see in the game space is when a product team is looking to explain either a boost in performance or a setback. If the numbers look good, they will often focus on internal factors, such as a new feature, and “confirm” that this development has driven KPIs. If metrics deteriorate, they will often focus on external factors, maybe more Brazilian players, that confirm the problem is outside of their control. These examples of confirmation bias often lead to long delays identifying and dealing with problems or shifting too many resources to reinforce features that do not have an impact.

Not acknowledging or seeking reality

Another major decision making flaw that the Yom Kippur War highlights is avoiding reality. One of the leading Israeli commanders did not venture out of his bunker and relied on his own pre-conceptions of what was going on rather than the actual situation. Rabinovich writes that “although he was only a short helicopter trip from the front, [General] Gonen remained in his command bunker at Umm Hashiba, oblivious to the true situation in the field and the perceptions of his field commanders. As an Israeli analyst would put it, Gonen was commanding from a bunker, rather than from the saddle.”

On the Egyptian side, to avoid panic, the Egyptian command had refrained from issuing an alert about the Israeli incursion. Thus, the Israeli forces were able to pounce on unsuspecting convoys and bases. There had been a number of clashes involving Israeli tanks and the paratroopers but no one in Cairo—or Second Army headquarters—was fitting the pieces together.

Thus, rather than successfully defending against the Israelis, the Egyptians left their troops blind to what was happening.

Impact on your life

If your game or product is not performing, you need to understand what is really happening. I have often seen products soft launched in tier three markets that show poor KPIs. Rather than reporting these KPIs to leadership, they will proceed with the real launch in tier one markets. This pre-empts the product team from fixing the product and also wastes money with a failed launch.

Assuming the past is the same as the present

Another decision-making bias demonstrated in the Yom Kippur war was assuming the past would repeat. As I wrote earlier, the Israelis would assume the Arabs would fight poorly because they did in previous wars, including the Six-Day War in 1967, where Israel routed the Arab States. They thus did not prepare their forces for any different type of opponent or different weaponry.

This bias also contributed to their failure to realize they would be attacked imminently. When General Shalev, assistant to Israel’s Commander in Chief, was warned of a likely attack, he reminded the so-called alarmist that he had said the same thing during a previous alert in the spring, “you’re wrong this time too,” he said.  Because a previous alert was wrong, the Israeli high command discounted a clear danger.

Impact on your life

In the game space, you frequently see decisions made based on looking in the rear view mirror. I have seen many executives decide to make a type of game – first person shooter, invest express sim, tower defense, etc – because these are the hot type of games. Then when their game comes to market and fails, they do not understand why they always seem to be behind the trends.

Key takeaways

• The Yom Kippur War provides examples of key errors in decision-making, by both sides, that can be leverages in business.
• One of the key learnings is that over-confidence can be fatal. Underestimating your competition because you have dominated them can allow them to gain a superior position.
• Another key error in decision making is confirmation bias, picking out the information that confirms what you want to believe and disregarding the data that conflicts with your hypothesis.