The Pitfalls of Experience: Balancing Past Knowledge in Decision-Making

The most important factor that determines a business's value is the knowledge and experience it gathers over time. Beyond making profits, a business should aim to gain as much knowledge and experience in its field as possible.

For example, during a purchasing process, the responsible person or department will want to make the best future decision using their current knowledge and experience. They will consider their past experiences when making comparisons.

Imagine our business is buying a new packaging machine to replace an old one. We have already evaluated and decided on the basics of the new machine, such as price, performance, and technical support. Finally, we need to review our past experiences with the old machine. Suppose the gauge on the old machine's lid frequently broke down, disrupting production. Based on this experience, we would pay special attention to the gauge on the new machine.

Now, let's get to the main point. We need to understand how our past experience with the faulty gauge can affect our choice of the new machine. We all know that repeating the same issue could stop our entire production and cause customer or revenue loss. This is where we make a common mistake: letting our past experience overly influence our new decision.

On the positive side, our experience with the old machine seems to give us a crucial insight to avoid the same problem again. We make sure the new machine doesn’t have a gauge on its lid. But here, we fall into the trap of focusing too much on the old problem. By concentrating on one specific feature, we might ignore other potential issues in the system.

In short, by only focusing on the gauge, we might miss other possible problems. When we fixate on where we had issues before, we might invite new problems that could disrupt production for months.

The issue with the gauge on our old machine led us to choose a new machine without a gauge. However, by focusing only on the gauge, we ignored potential problems like overheating or issues with moving parts.

Experience is very valuable in decision-making. But, while following our experience, we don't want to face new problems. In decision-making, it's important to consider the effect of past problems but not to focus too much on them and miss other potential issues.