How to predict the future in 3 steps
One of the fascinating things that sets humans apart from all other animals is our ability to think about and predict the future. Our ability to imagine and make plans. But as betting companies everywhere know, we aren’t always that good at it.
On our wedding days we all swear that this is forever. But 40% end in divorce. What’s more, these stats rise to 60% for 2nd marriages and 70% for 3rd marriages. We don’t learn. Just ask Elizabeth Taylor’s 7th ex-husband. But there are things you can do to better deal with the future.
For example, shortly after I’d proposed to my wife at a sunset picnic overlooking our favourite beach, I suggested we should see a relationship counsellor once a year – If you get your car serviced, why not get your relationships serviced? We’ve just had our 3rd service and no breakdowns yet.
One of the major problems with predicting the future is called the Planning Fallacy. When we plan projects, or launch businesses, we underestimate the time, money and effort needed. Take the Opera House. It was 10 years late, 14 times over budget, and its architect walked out and never came back.
We’re also overconfident. A researcher named Tetlock had hundreds of experts predict the results of a wide range of upcoming events like elections and sports matches. He found that even these experts’ confident predictions were in fact no better than tossing a coin.
The problem here is not only that most people are over confident in their ability to predict the future – but also they don’t learn from their previous poor predictions.
Psychologist Dan Gilbert asked people how much their preferences for music, hobbies and so on had changed over the last 10 years, and people reported quite a bit of change. You used to like Motorhead and now you like Mozart.
He then asked how much they thought they’d change their preferences in the next 10 years and people in every age group said, “not much at all”. Although we know our preferences changed in the past, right now we think we have become the human we will be for the rest of our days.
Well I’ve got news for you. Today’s version of you, right here, right now is just a work in progress. It’s far more likely than you’d care to admit that on 16th July 2024 you’ll be at home with a cup of cocoa nodding along in agreement with Alan Jones.
This subject is important to me as the mission of my business is to help the world make better decisions. So my day job is to help people learn how to think about the future and make decisions accordingly.
What you can do to predict the future better
Now, I don’t like my name, I’m actually a Robin – which gets confused with a girl’s name. I recently received a letter from Tony Abbott addressed to Mrs Robin Pyne. So when my daughter was born I wanted to give her not a name we liked, but a name she’ll like when she grows up.
1. The outside view
To pick her name, I found a baby name site where they have surveyed thousands of people about whether they like their name. We used our own subjective judgement to make a top 5, but then used this outside view, this objective data, to pick emma’s name.
It turns out if your parents called you Emma, there’s an 87% of chance of you liking your name when you grow up, but only 56% if you’re born Robin. Getting this outside view & learning from other people’s mistakes is powerful and easy to do.
2. Know your base rates
I launched X or Y last year, fully aware that most businesses fail. I did 2 things to minimize risks. First, I interviewed people with businesses that were similar and established what I call base rates. The numbers which make a business live or die.
For example, I found out that you need to meet about 10 new people to end up with one new paying client. And it can take up to 2 years for that first meeting to turn into a booking for training. Knowing these base rates has been very helpful.
3. Plan to fail
I also did what’s called a pre-mortem. This is where you imagine its 12 months in the future and your business has died. Then you imagine looking back and telling the story of why it died. Our brains are amazing at filling in the gaps in a story.
This technique surfaces 30% more risks than just looking at a business plan. It helped me identify and offset some risks I hadn’t thought of, for example someone said, your business could have failed because you got sick. With the outside view, base rates and pre-mortem, you’ve got 3 ways to predict the future better.
In 1900, 5% of deaths were caused by things in people’s direct control, like smoking. By 2000 we had massively increased our life expectancy, but around 50% of the things we die of are due to short-sighted decisions we make about diet, smoking and so on.
If there’s one person I’d love to help make better decisions, it’s my pen pal Tony Abbott. He seems to be think only about the short term, to ignore other people’s views, and to think facts are only incidental to decision-making.
So, Mrs Tonya Abbott, come and having a coaching session with me and I’ll show you how to make better decisions about not just your future, but the futures of all Australians, even those who don’t own mining companies. Yours sincerely, Mr. Rob Pyne.
The above is a transcript of my Ignite Sydney talk on 16.7.14