2017 : WHAT SCIENTIFIC TERM OR?CONCEPT OUGHT TO BE MORE WIDELY KNOWN?
Father of Behavioral Economics; Recipient, 2017 Nobel Memorial Prize in Economic Science; Director, Center for Decision Research, University of Chicago Graduate School of Business; Author, Misbehaving
The Premortem
Before a major decision is taken, say to launch a new line of business, write a book, or form a new alliance, those familiar with the details of the proposal are given an assignment.?Assume we are at some time in the future when the plan has been implemented, and the outcome was a disaster.?Write a brief history of that disaster.?
Applied psychologist Gary Klein came up with “The?Premortem,”?which was later written about by Daniel?Kahneman.?Of course we are all too familiar with the more common postmortem that typically follows any disaster, along with the accompanying finger pointing. Such postmortems inevitably suffer from hindsight bias, also known as Monday-morning quarterbacking, in which everyone remembers thinking that the disaster was almost inevitable. As I often heard Amos?Tversky?say, “the handwriting may have been written on the wall all along. The question is: was the ink invisible?”??
There are two reasons why?premortems?might help avert disasters. (I say?might?because I know of no systematic study of their use. Organizations rarely allow such internal decision making to be observed and recorded.) First, explicitly going through this exercise can overcome the natural organizational tendencies?toward groupthink and overconfidence. A devil’s advocate is unpopular anywhere.?The?premortem?procedure gives cover to a cowardly skeptic who otherwise might not speak up.?After all, the entire point of the exercise is to think of reasons why the project failed.?Who can be blamed for thinking of some unforeseen problem that would otherwise be overlooked in the excitement that usually accompanies any new venture??
The second reason a?premortem?can work is subtle. Starting the exercise by assuming the project has failed, and now thinking of why that might have happened creates the illusion of certainty, at least hypothetically. Laboratory research shows that by asking why?did?it fail rather than why?might?it fail, gets the creative juices flowing.?(The same principle can work in finding solutions to tough problems.?Assume the problem has been solved, and then ask, how did it happen? Try it!)?
An example illustrates how this can work. Suppose a couple years ago an airline CEO invited top management to conduct a?premortem?on this hypothetical disaster:?All of our airline’s flights around the world have been cancelled for two straight days. Why??Of course, many will immediately think of some?act of terrorism. But real progress will be made by thinking of much more mundane explanations. Suppose someone timidly suggests that the cause was the reservation system crashed and the backup system did not work properly.??
Had this exercise been conducted, it might have prevented a disaster for a major airline that cancelled nearly 2000 flights over a three-day period. During much of that time, passengers could not get any information because the reservation system was down. What caused this fiasco??A power surge blew a transformer and critical systems and network equipment didn’t switch over to backups properly.?This havoc was all initiated by the equivalent of blowing a fuse.??
This episode was bad, but many companies that?were?once household names and now no longer exist might still be thriving if they had conducted a?premortum?with the question being:?It is three years from now and we are on the verge of bankruptcy.?How did this happen??
And, how many wars might not have been started if someone had first asked:?We lost.?How??
