I just finished Annie Duke’s latest book, How to Decide. For those that don’t know who Annie Duke is, she rose to fame as a professional poker player in the United States having won over 4 million dollars during the course of her career. She stopped playing poker in 2012 and is now an author and successful consultant to businesses and entrepreneurs.
The purpose of the book is to help readers become more effective decision-makers by thinking critically and more objectively when making decisions. I don’t want to spoil the book by summarizing it in its entirety, but I feel compelled to share one of my favorite chapters of the book called “The Power of Negative Thinking.” The objective of the chapter is to teach readers how to think positive, but plan negative. One of the techniques for doing this is to perform a premortem. The term, premortem, was first coined by the psychologist, Gary Klein, who is a research psychologist famous for pioneering in the field of naturalistic decision making. Just as a postmortem is used to determine the cause of death in someone or something, a premortem is performed before a goal or task is established as an attempt to figure out why something may die or fail.
Per the book, “In a premortem, you imagine yourself at some point in the future, having failed to achieve a goal, and looking back at how you arrived at that destination.” To begin a premortem exercise you start by picking a goal you’re currently considering and a reasonable timeframe for making that goal happen. Then, you imagine that things didn’t work out. Next, you list the top five reasons why you failed to achieve that goal because of your decisions and execution. And finally, you list an additional five reasons you failed for reasons that were out of your control.
For example, let’s assume you are considering buying an investment property that you plan to sell in a few years. The investment could fail because you 1). failed to thoroughly research property values in the area; 2). you paid too much for the property; 3). you didn’t accurately manage the budget for the project; 4). you chose the wrong partner; and/or 5). you hired a bad contractor.
The reasons outside of your control may be 1). the real estate market in your area takes a nosedive; 2). the house burns down; 3). the nation’s economy goes into a tailspin and everyone stops buying real estate; 4). you get injured on the job site and you’re no longer able to manage the project; and/or 5). there’s a natural disaster (like a hurricane or tornado) that wipes out all the homes in your area.
When you take time to add this style of thinking to the current methodology you use to plan out your goals, it serves to complement your planning by helping you to more fully understand the path to reaching your objectives.
There’s so much more helpful information in this book, so I highly recommend it. Annie wrote another book called Thinking in Bets that I plan to start tomorrow. I will provide a summary on it once I’ve completed it.
Cheers – KM