Inference in Business

- Understanding the ladder of inference helps you make informed decisions- rather than relying on your
own assumptions and interpretations.

Breaking Down the Rungs

What are the specific rungs of the ladder inference? What specific steps exist? The most common
model involves breaking down the ladder into the following seven rungs.
Step 1: Observe Data
There are reality and facts all around you, and the first step in the ladder is to observe that information.
Example: Student did not turn in the assignment.
Step 2: Select Data
It’s not often that we use all available reality and facts to make decisions. We have the tendency to zero in
on specific pieces of information, or perhaps even cherry pick certain pieces that better suit our
preferences or agenda.
Example: Noticing the student did not turn in the assignment, the teacher determines the absence of
the assignment means they did not complete it.
Step 3: Add meaning to Data
We assign the meaning to that information based on our own past experiences, and beliefs.
Example: In not completing the assignment, the teacher interprets this information as indifference to
their education and not valuing classroom time.
Step 4: Make Assumptions Based on Meaning
After that, that equips us to make assumptions-to ignore all of the other realities and facts and jump to
conclusion about what is happening.
Example: The teacher assumes they do not care about their work and the student is lazy.
Step 5: Draw Conclusions
From there, we transform our own assumptions into firm conclusions- again, without considering all of
the facts and realities we could’ve been presented with at the very beginning.
Example: The teacher concludes the student does not care about how they are doing in class and is
not interested in making up the assignment.
Step 6: Adopt Beliefs based on Conclusions
Based on those conclusions we drew, we adopt beliefs about the situation. We then use those beliefs and
experiences to shape future judgments about similar scenarios.
Example: The teacher believes the student will not care about making up the assignment.
Step 7: Take Actions
With all of that in mind, we take action. But again, we’re operating based on our own assumptions- rather
than fact.
Example: The teacher gives the student a zero on the assignment. However, the student apologizes
and requests to make it up. The situation is reevaluated, and the teacher decides to have a
discussion with the student to gather more information.