Backcasting and Premortem

A normal way of making decisions about the future is to imagine where you want to be and how will you get there by thinking about the goal and the objectives you need to achieve. You start doing it from the beginning. This is not the way to maximize the probability of getting there. What you should do instead, is to invert. Backcasting and premortem are better ways of doing things. They start from the future and move backward until you get to the beginning.

Backcasting

Backcasting means a process in which you move back from the positive outcome. You have an availability bias. One way it represents itself is that you focus more on the here and now and for the immediate future. Longer timeframes are more problematic for keeping the focus on the most important things. When you focus on the present, you consider only things that are in your mind right now. You can probably design a few next steps. This is not enough for successful planning. The better way to think is to start from the point in which you have already success. From this point, you start going backward. Ask questions like:

• Why did I get here?
• What events occurred?
• What decisions you had to make to get here?
• How I must have changed to get here?

You can probably understand the probability of accomplishing a goal better. Sometimes you can decide not to pursue the goal by seeing that it is too improbable related to the expected value of the success. You can also identify responses to developments that can cause interference in reaching your goals. For example, what you should do to get back on track when you move away from your goals. These slumps are facts of life. You cannot move straight toward a successful future. Progress has some fast movements and some slow points. Boredom and excitement have variations.

Premortem

Premortem is the exact opposite of backcasting. You start from the negative outcome and move backward toward the present. Premortem helps you to anticipate problems along your way. You can ask yourself the same questions about the future as you did in backcasting, but with a negative twist. For example, instead of asking ”Why did I get here” you can ask ”Why didn´t I get here?” You have better chances for success when you have thought about the negative scenarios. You can also imagine how some obstacles can become too hard to overcome. Dreaming about achieving a goal is not as efficient as doing the premortem. You can have positive goals, but it is better to think about the negative outcomes while having them.

Both have equal importance

Since backcasting and premortem are two sides of the same coin, you have to do both. Positive and negative outcomes have a combined probability of 100%. By doing both, you get a better view of the future. You reduce the probabilities of negative outcomes and increase the probabilities of positive outcomes. Failures and obstacles become less surprising and you have better chances to cope with them. It is easy to lie to yourself by focusing on backcasting and forgetting premortem. You cannot put your head into the sand and forget the negative outcomes. You will make better decisions by doing both.

This is all for now, until next week,

-TT

Thinking in probabilities

One way of understanding the world or your future is thinking in probabilities. Sometimes you do it without knowing it. For example, you go for lunch and choose from different options. You choose the option that you think has the highest probability of being the best one. If you have a habit to make the choice, it is your unconscious mind that does the decision. You did the probabilistic thinking before you established the habit or someone else did it for you, for example, your parents. You live in an uncertain world. You can make better decisions in it by assigning probabilities for different outcomes, and deciding which outcome to aim for.

The quality of your thinking and luck defines the outcome of your decisions

You can divide the probabilistic thinking into two different categories: Certain and uncertain environments. In certain environments, you know the exact probabilities and the best wins. In an uncertain environment, the exact probabilities are unknown and the worse player can win. You can put games like lottery, professional chess, and many games in the casino, like roulette or slot machines into the first category. In the lottery, and in the other games in the casinos, you have fixed probabilities and professional chess is very close to it. In theory, you can always find the right next moves. In practice, you cannot find them when there are enough pieces left on the chessboard. Most of the time, the better player doesn´t lose in chess. And novice practically never wins the expert. Luck doesn´t have a role in the outcomes, casinos do not lose money in these games.

There are always hidden and incomplete information in uncertain environments. You cannot calculate precise probabilities. When you make decisions in these environments, the quality of your thinking and randomness define the outcomes. Some people call randomness luck. It is easy to believe that you made an excellent decision when you were lucky. In these environments, even the best decisions can have undesirable consequences. In the short run, the quality of your thinking matters less in the outcomes than randomness. In the long run, vice versa. Time is the enemy of the bad quality thinking and the friend of the good quality thinking. In these environments, you always have to think about the probability of being lucky.

Think about the probabilities of different outcomes

Thinking about the probabilities of different outcomes increase your probability of being right and making the best possible choice for further action. The simplest situations have only two different outcomes. For example, getting a job after a job interview has only two possible outcomes. You either get it or not. You can think about what is the probability of getting this job and make a decision about spending some time to apply for another job. If you think that the probability of getting a job is high, you can postpone the other application. If you have a low probability of getting that job, you should apply for another job as soon as possible. In reality, things are normally not that simple. You can have multiple outcomes. These multiple outcomes can have different outcomes which have different probabilities. These secondary outcomes can be more important than primary outcomes.

Thinking about the probability of understanding what you are doing

In an uncertain world, you have to live with hidden or incomplete information. You also have to think about the probability of having the right information and about the probability of understanding what the information you have means. These probabilities are never a hundred percent. Certainty doesn´t exist in these environments. You have to add this to your thinking. Depending on the sources, you have different probabilities of having the right information. Official statistics and academic research have a higher probability of being right than getting the information from sources that ”quote” them. Sometimes these people don´t offer possibilities to check the information. To be honest, I have done this sometimes by pure laziness. Be careful of what you read.

You can find ways to verify if the information you have is right. The bigger problems is that you can misunderstand or misinterpet the things you read or hear. Reading text with a foreign language increases the probability of misunderstanding. Your psychological tendencies are even worse enemies. You can read only texts that confirm your beliefs. And you can have many other psychological things that can move you into a wrong conclusion. As you can see, you have to consider many factors, when you make a decision. The more important the decision is, the more factors you need to worry about the probabilities of being right.

Sources:

Thinking in Bets, Annie Duke

Thinking Fast and Slow Daniel-Kahneman

Have a nice week!

-TT