The overwhelming anxiety many of us feel on a day-to-day basis is at least partially due to the unprecedented uncertainty we are experiencing in almost every aspect of life. Expert advice and overwhelming amounts of data and information are leaving us with a sense of being unmoored.
Making decisions in such an ambiguous and fluid environment requires dynamic thinking. We need to critically evaluate the choices we make and the possible outcomes they may produce. One underused technique for doing so is to envision failure.
The Pre-mortem Analysis
Research has shown that humans, in general, are overconfident and have a default expectation of good outcomes. We don’t have trouble thinking about success. The use of prospective hindsight, in which we imagine looking back to the present from the future, offers a way to think rigorously about how our decisions can go wrong. In some circles, the technique is known as a pre-mortem analysis. The idea is to study what killed the patient before he actually dies, which, in my humble opinion, seems much more useful to the patient than understanding why he died.
When facing a tough choice, we can think through how each possible selection could go wrong in the future while describing a narrative, connected to the present, of how the path was derailed. The objective is to help diagnose potential failure before it happens. It’s about shifting our perspective to think through possible outcomes and the paths that might lead to them. The result should be a more robust (and, therefore, effective) decision-making process.
Envisioning Failure: In Practice
Consider a company that has been presented with a takeover offer from a larger competitor. One option is for the board to accept the offer. Thinking through a potential failure of that option might mean looking out five years and seeing that the combined firm fell apart because a nimbler, but smaller, competitor successfully pivoted when customer needs changed. Another option is to reject the offer and stay independent. In this case, potential failure might result from cost pressures on the business giving an advantage to size and scale, enabling the dismissed suitor to attract the firm’s current customers. A third option the company could pursue is to combine with a business in an adjacent industry to horizontally or vertically integrate. The management team and board could think through how this option could fail. And so on.
By rigorously considering how each option under consideration could lead to unmitigated failure, a pre-mortem analysis may help avoid the failure under consideration. What’s more, we can all use this technique, regardless of the decision we’re making.
Have you been offered a job in a different division of your company? How might accepting the offer go wrong? Thinking about making an investment in a rental property? What could result in a loss of your money? Contemplating a career change that involves earning a degree or certification? Think about how it could be the worst possible thing to do.
By flipping our perspectives on decisions from a focus on the positive to a focus on the negative, we increase our understanding of the actual decisions. If you think introducing such “false” disagreement into a decision-making process might be a waste of time, consider the wise words of Alfred P. Sloan, the legendary president, chairman and chief executive officer of General Motors. Upon finding his colleagues in complete agreement on a proposed decision, he adjourned a meeting, stating, “If we are all in agreement on the decision, then I propose we postpone further discussion on this matter until our next meeting to give ourselves some time to develop disagreement and perhaps gain some understanding of what the decision is all about.”
Navigating uncertainty is not easy. Envisioning failure is a technique that can help you and your team in your next meeting and, more importantly, it will generate the context in which you can think for yourself.
