Annie Duke: prediction

Transcript context

…I wanted to touch on a different framework that I've heard a lot of companies actually using, and something that comes up in product a lot is this idea of pre-mortems, which is essentially think ahead of time what might go wrong. Can you talk about this? Because I think that it's something that's easy to implement, really powerful, and a lot of people are actually doing this. Yes, okay. So a pre-mortem is great, but only if you attach a pre-commitment with it. So I just want to be super clear about that. What you find with pre-mortems, this actually work. I actually did this work with Maurice Schweitzer and Linnea Gandhi, who are both at Penn. Then when you have people do pre-mortems, it generally doesn't actually change their plan very much or it changed their behavior. So I think that we have the feeling that if you do a pre-mortem and you think what are the ways that things might go wrong, that that's going to change your plan, but probably not unless you're specifically using it for that purpose and you say, "Okay, we're going to do this, but let's think about how we might change our plan in light of this information. " But I think what's actually more important than that is what a pre-mortem allows you to do is to set up kill criteria. So kill criteria are just a set of signals that you might see that would tell you that it's time to pivot or stop because once we actually launch something, we're very, very slow to decide to quit. I'm sure that everybody has felt that way before. Things go on way too long, even like they're over budget and you've blown the timeline. And when you finally shut it down, you realize you should have done it a lot earlier. And this is true across the board because of a variety of biases. The most well-known, and probably the biggest influence is something called sunk cost, which is that feeling, but then I'll have wasted all the time and effort that I've put into this already. So it's taking into account what you've put in in the past and deciding whether to continue on in the future. So what we want to do is actually just get better at that thing. So understanding that when you've gotten to the pre-mortem process, you probably are going to launch it, like it's probably going to be the case. Use the pre-mortem to set up kill criteria. So I'll give you an example from a sales team that I worked with. Basically, I sent them out a prompt, all the IC is a prompt that was, imagine that you got a lead through an RFP or RFI and you worked on it for six months. And now, it's six months later and the deal is dead. Looking back, you realized they were early signals that that was going to be the case, what were they. So this is a pre-mortem. What are the things that you saw that would tell you that this was going to go south? And they came up with all sorts of ideas. Notice this doesn't mean they're not going to start off pursuing the lead, right? But they saw, they came up with all sorts of signals. So I'll just give you three of them. The RFP RFI was clearly written with a competitor in mind, so they felt that was a very bad signal that was probably going to go badly. Another one was the customer didn't want to demo, they only wanted to talk about price. Obviously, that's quite bad. And another one was after the first few meetings, they couldn't get a decision maker in the room, right? ustomer didn't want to demo, they only wanted to talk about price. Obviously, that's quite bad. And another one was after the first few meetings, they couldn't get a decision maker in the room, right? So it was a much longer list than this, but those are three. So for each of those, that now becomes a kill criteria if I see this thing and now you attach an action with it. So in the case of price, they actually just said, "We should kill it." If they literally don't want to demo and they're only asking about price, they're just trying to beat up somebody else on price like we're a box-checking exercise. So there, they just said, "We're going to kill it. We're not going to pursue the deal anymore." So this is great because salespeople will pursue deals forever and leadership is like, "Well, why did you stop pursuing that deal?" And they get in trouble for it. So this is going to help with that problem, right? In the case of the RFP RFI was written with a competitor in mind, they have an action associated with that as well, which is ask them directly if they're working with a competitor and how far down the road they are, depending on the answer you would kill or pursue. In the case of we couldn't get a decision maker in the room, offer up executive alignment at the next meeting. And if they say sure, great. And if they say no, kill. So that's actually what I feel is the best use of a pre-mortem is to say, I'm going to try to figure out what those signals are along the way that things are going badly. And now instead of just hoping that when I see those signals, I actually act rationally, which is a hope that it will not come true. That's why there's many people who climb Everest in the middle of a blizzard, even though they shouldn't be doing that. Use the pre-mortem to now create structure around those signals that you've spotted and commit to actions that you're going to take if you see those signals. And I think that's the best use of a pre-mortem.…

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