Two forecasting fails

Fail One

Only envisaging one potential outcome. As a realist with an optimistic bias, I catch myself with this one more often than I would like. I only picture the successful outcome. The positivity sometimes serves me well, but it also makes for a bigger/slower adjustment if things don't go as anticipated. ‘Foreseeing’ only a good outcome can be like “she’ll be right” - it works well if it goes well. A better version is to forecast 3 versions. Ideal, Worst Case, Something in between. Considering each version gives a more robust ‘Plan A’ that will handle a broader range of possibilities.

Fail Two

Over-thinking it. Some people go down a rabbit hole of trying to envisage every possible outcome. The endless “what if” leads to second guessing your chosen path of action. There's lots of research highlighting the many negative aspects of too many options - over forecasting has the same effect. Forecasting is about considering what might be possible or at risk. It’s not about trying to accurately catalogue all eventualities.

Bonus Fail

Freaking ourselves out. Some leaders ask me what the most dire forecast is that we should consider. I reckon it depends on what you can handle as an individual or a team. If you can discuss a really dire, worst case scenario, and treat it as just a thought experiment, that’s useful. But if going there will cause sleepless nights and endless tilting at windmills (origins) (epic sounds), don’t go. That’s exactly the opposite of what the exercise intends. Go as far down the rabbit hole as is useful, but don’t get stuck down there with an overdue rabbit.

Fear of Forecasting?

Breakfast. A leader I admire. Deep conversation about the state of the world. Great way to start the day. The best leaders I know are unafraid to forecast. They are not trying to predict the future, instead thinking about various possibilities and how they might respond in the face of them. Last week, one such conversation turned to how Western Australia has been relatively immune to several large global crises.

GFC - Mining economy shielded us

COVID - distance and sparse population shielded us

Energy Crisis - Abundant natural resources shielded us

Each of these, and other crises have had an impact here, but not like elsewhere. Sometimes we seem to think we are a bit bombproof. The conversation over breakfast explored a number of current global and local factors that could impact us in bigger ways.

Solid leaders play out many eventualities. Not as a glass half empty. Not as fear mongering. As a way of being prepared for more than one possibility.

Forecasts are rarely 100% (just watch the weather) but that’s not the point. Pre-thinking about many possibilities makes it more likely you’ll handle the ones that arise.

Finding Unusual Links

What have financial forecasting, survival and leadership capacity got to do with each other? This Friday I’m joining Michael Ford, CEO of Castaway Forecasting on Nick Samios’ Lunch Money podcast.

We’ll be exploring what leaders can do in messy, unpredictable and uncertain times. Among other mindsets, we’ll be talking about the value of forecasting possible outcomes to the situation you are in. This isn’t about predicting the future. It’s about maintaining mental flexibility to deal with a range of possibilities. Let’s take a doomsday prepper and an athlete who is sure they will win. Both are forecasting.

The pessimistic prepper invests time and resources to be ready for a bleak future. If their scenario comes true, it’s the best ‘I told you so’ story in history (assuming there’s anyone left to tell). Any other scenario will likely see them completely unprepared.

The athlete’s envisaged win is way more positive than the prepper, but if reality strays from their perfect outcome, they may be just as stuck.

Leadership includes the capacity to imagine many different outcomes, play them through and anticipate what you might do differently. The key is not to buy into them. Winning forecasts add pressure if you are losing. Doomsday forecasts add pressure if something unanticipated comes along. Consider many possibilities. Hold them lightly and accept whatever reality throws at you.

If you’d like to listen to the Lunch Money podcast episode here’s the link.