Overconfidence Bias in Business: Why Doubting Your Assumptions Protects You

Every day brings new cases from companies passing through our investment pipeline at Rostelecom or through strategic sessions at Product Lab. You’d think everything has already been seen and analyzed. But no — history repeats itself once again.

Overconfidence Bias in Action: A Real Business Case

We recently reviewed a case of a company that was building forecasts based on trends and success in one particular niche. The success was real — the product had strong demand in one specific segment.

The reasoning seemed logical: if a product works in one segment, it should naturally “land” in an adjacent one, right? Think of it this way — if your bakery’s buns are flying off the shelves, surely your pastries will too. Except that’s not how it works.

And that’s exactly what happened: the company’s forecasts were built on the assumption that demand in new categories would mirror demand in existing ones. But there was no evidence to support it. The result — ambitious plans, and zero validated value for new customers.

Why Our Brains Resist Doubt

I’ve made this mistake myself. That’s just how our minds work: the brain hates uncertainty. It would rather slap a label on something than dig into the details — because doubt is stressful, and stress is uncomfortable.

But the more confident we are about the future, the greater the risk we’re actually taking. Nassim Taleb called this the Black Swan effect — the stronger the conviction, the more brutal the reality check when it arrives.

How to Protect Your Business from Overconfidence Bias

The takeaway is straightforward:

Not sure you’re doubting enough? Start questioning. Not confident about demand? Run a test. No evidence to support your assumptions? Then the evidence simply doesn’t exist yet.