From Annie Duke’s “Thinking in Bets”
To prepare for the future, mentally time travel.
- “One of our time-travel goals is to create moments like that, where we can interrupt an in-the-moment decision and take some time to consider the decision from the perspective of our past and future.”
- “We can then create a habit routine around these decision interrupts to encourage this perspective taking, asking ourselves a set of simple questions at the moment of the decision designed to get future-us and past-us involved. We can do this by imagining how future-us is likely to feel about the decision or by imagining how we might feel about the decision today if past-us had made it. The approaches are complementary; whether you choose to travel to the past or travel to the future depends solely on what approach you find most effective.” (p. 187)
- “Business journalist and author Suzy Welch developed a popular tool known as 10-10-10 that has the effect of bringing future-us into more of our in-the-moment decisions. “Every 10-10-10 process starts with a question. . . . [W]hat are the consequences of each of my options in ten minutes? In ten months? In ten years?” This set of questions triggers mental time travel that cues that accountability conversation (also encouraged by a truthseeking decision group).” (p. 188)
- “We can anticipate and prepare for negative outcomes. By planning ahead, we can devise a plan to respond to a negative outcome instead of just reacting to it. We can also familiarize ourselves with the likelihood of a negative outcome and how it will feel. Coming to peace with a bad outcome in advance will feel better than refusing to acknowledge it, facing it only after it has happened.” (p. 189)
You must use scenario planning.
- “The reason why we do reconnaissance is because we are uncertain. We don’t (and likely can’t) know how often things will turn out a certain way with exact precision. It’s not about approaching our future predictions from a point of perfection. It’s about acknowledging that we’re already making a prediction about the future every time we make a decision, so we’re better off if we make that explicit. If we’re worried about guessing, we’re already guessing. We are already guessing that the decision we execute will result in the highest likelihood of a good outcome given the options we have available to us. By at least trying to assign probabilities, we will naturally move away from the default of 0% or 100%, away from being sure it will turn out one way and not another. Anything that moves us off those extremes is going to be a more reasonable assessment than not trying at all. Even if our assessment results in a wide range, like the chances of a particular scenario occurring being between 20% and 80%, that is still better than not guessing at all.” (p. 210)
- “After identifying as many of the possible outcomes as we can, we want to make our best guess at the probability of each of those futures occurring. When I consult with enterprises on building decision trees and determining probabilities of different futures, people frequently resist having to make a guess at the probability of future events mainly because they feel like they can’t be certain of what the likelihood of any scenario is. But that’s the point. The reason why we do reconnaissance is because we are uncertain. We don’t (and likely can’t) know how often things will turn out a certain way with exact precision. It’s not about approaching our future predictions from a point of perfection. It’s about acknowledging that we’re already making a prediction about the future every time we make a decision, so we’re better off if we make that explicit.” (p. 210)
- “Poker players really live in this probabilistic world of, “What are the possible futures? What are the probabilities of those possible futures?” And they get very comfortable with the fact that they don’t know exactly because they can’t see their opponent’s cards. This is true of most strategic thinking. Whether it involves sales strategies, business strategies, or courtroom strategies, the best strategists are considering a fuller range of possible scenarios, anticipating and considering the strategic responses to each, and so on deep into the decision tree.” (p. 211)
- “This is true of most strategic thinking. Whether it involves sales strategies, business strategies, or courtroom strategies, the best strategists are considering a fuller range of possible scenarios, anticipating and considering the strategic responses to each, and so on deep into the decision tree. This kind of scenario planning is a form of mental time travel we can do on our own. It works even better when we do it as part of a scenario-planning group, particularly one that is open-minded to dissent and diverse points of view.
Diverse viewpoints allow for the identification of a wider variety of scenarios deeper into the tree, and for better estimates of their probability. In fact, if two people in the group are really far off on an estimate of the likelihood of an outcome, that is a great time to have them switch sides and argue the other’s position. Generally, the answer is somewhere in the middle and both people will end up moderating their positions. But sometimes one person has thought of a key influencing factor the other hasn’t and that is revealed only because the dissent was tolerated. In addition to increasing decision quality, scouting various futures has numerous additional benefits.” (p. 211) - “First, scenario planning reminds us that the future is inherently uncertain. By making that explicit in our decision-making process, we have a more realistic view of the world. Second, we are better prepared for how we are going to respond to different outcomes that might result from our initial decision. We can anticipate positive or negative developments and plan our strategy, rather than being reactive. Being able to respond to the changing future is a good thing; being surprised by the changing future is not. Scenario planning makes us nimbler because we’ve considered and are prepared for a wider variety of possible futures. And if our reconnaissance has identified situations where we are susceptible to irrationality, we can try to bind our hands with a Ulysses contract. Third, anticipating the range of outcomes also keeps us from unproductive regret (or undeserved euphoria) when a particular future happens. Finally, by mapping out the potential futures and probabilities, we are less likely to fall prey to resulting or hindsight bias, in which we gloss over the futures that did not occur and behave as if the one that did occur must have been inevitable, because we have memorialized all the possible futures that could have happened.” (p. 211)
Try backcasting.
- “Just as great poker players and chess players (and experts in any field) excel by planning further into the future than others, our decision-making improves when we can more vividly imagine the future, free of the distortions of the present. By working backward from the goal, we plan our decision tree in more depth, because we start at the end.” (p. 219)
- “They “found that prospective hindsight—imagining that an event has already occurred—increases the ability to correctly identify reasons for future outcomes by 30%.” (p. 219)
- “In backcasting, we imagine we’ve already achieved a positive outcome, holding up a newspaper with the headline “We Achieved Our Goal!” Then we think about how we got there.” (p. 220)
- “Let’s say an enterprise wants to develop a three-year strategic plan to double market share, from 5% to 10%. Each person engaged in the planning imagines holding up a newspaper whose headline reads “Company X Has Doubled Its Market Share over the Past Three Years.” The team leader now asks them to identify the reasons they got there, what events occurred, what decisions were made, what went their way to get the enterprise to capture that market share. This enables the company to better identify strategies, tactics, and actions that need to be implemented to get to the goal. It also allows it to identify when the goal needs to be tweaked. Backcasting makes it possible to identify when there are low-probability events that must occur to reach the goal. That could lead to developing strategies to increase the chances those events occur or to recognizing the goal is too ambitious. The company can also make precommitments to a plan developed through backcasting, including responses to developments that can interfere with reaching the goal and identifying inflection points for re-evaluating the plan as the future unfolds.” (p. 220)
Try premortems.
- “We all like to bask in an optimistic view of the future. We generally are biased to overestimate the probability of good things happening. Looking at the world through rose-colored glasses is natural and feels good, but a little naysaying goes a long way. A premortem is where we check our positive attitude at the door and imagine not achieving our goals.” (p. 221)
- “Backcasting and premortems complement each other. Backcasting imagines a positive future; a premortem imagines a negative future. We can’t create a complete picture without representing both the positive space and the negative space. Backcasting reveals the positive space. Premortems reveal the negative space. Backcasting is the cheerleader; a premortem is the heckler in the audience.” (p. 222)
- “Despite the popular wisdom that we achieve success through positive visualization, it turns out that incorporating negative visualization makes us more likely to achieve our goals. Gabriele Oettingen, professor of psychology at NYU and author of Rethinking Positive Thinking: Inside the New Science of Motivation, has conducted over twenty years of research, consistently finding that people who imagine obstacles in the way of reaching their goals are more likely to achieve success, a process she has called “mental contrasting.”” (p. 223)
- “Oettingen recognized that we need to have positive goals, but we are more likely to execute on those goals if we think about the negative futures. We start a premortem by imagining why we failed to reach our goal: our company hasn’t increased its market share; we didn’t lose weight; the jury verdict came back for the other side; we didn’t hit our sales target. Then we imagine why. All those reasons why we didn’t achieve our goal help us anticipate potential obstacles and improve our likelihood of succeeding.” (p. 224)
- “The key to a successful premortem is that everyone feels free to look for those reasons, and they are motivated to scour everything—personal experience, company experience, historical precedent, episodes of The Hills, sports analogies, etc.—to come up with ways a decision or plan can go bad, so the team can anticipate and account for them.” (p. 224)
- “Conducting a premortem creates a path to act as our own red team. Once we frame the exercise as “Okay, we failed. Why did we fail?” that frees everyone to identify potential points of failure they otherwise might not see or might not bring up for fear of being viewed as a naysayer. People can express their reservations without it sounding like they’re saying the planned course of action is wrong. Because of that, a planning process that includes a premortem creates a much healthier organization because it means that the people who do have dissenting opinions are represented in the planning. They don’t feel like they’re shut out or not being heard. Everyone’s voice now has more value. The organization is less likely to discourage dissent and thereby lose the value of diverse opinions. Those who have reservations are less likely to have resentment or regret build if things don’t work out; their voices were represented in the strategic plan.” (p. 224)
- “It may not feel so good during the planning process to include this focus on the negative space. Over the long run, however, seeing the world more objectively and making better decisions will feel better than turning a blind eye to negative scenarios. In a way, backcasting without premortems is a form of temporal discounting: if we imagine a positive future, we feel better now, but we’ll more than compensate for giving up that immediate gratification through the benefits of seeing the world more accurately, making better initial decisions, and being nimbler about what the world throws our way.” (p. 226)