We sat in the meadow looking up at the dark granite pyramid of a mountain, trying to identify the trail criss-crossing up its right shoulder – Forrester Pass. The sky had been blue all day, but now in late afternoon, clouds were gathering, as they do in the Summer in the high Sierra Nevada mountains of California. We were concerned about the weather.
Looking at our detailed 7.5 minute USGS topographic map, we could see that we had about two miles to go and about 500 feet to climb to get the saddle of the 13,180' pass. Oxygen was already thin and we were feeling the accompanying light-headed blur. The clouds slowly grew as we watched, forming on and around the big mountain.
Some old-timers arrived at the meadow from the same direction we had just come. They surveyed the mountain, the pass, the clouds. Then they pitched their tent. "We're in no hurry," they said, "looks to be a short nasty storm comin’ in the next few hours. We’ll just camp here and cross on over in the morning."
My group conferred. "It is only two miles – we can do that in an hour," someone remarked. My friends and I – all teenagers – scrutinized the topographic map more closely, paying particular attention to the contour intervals. "Look here," said another, "just after the pass, the terrain drops steeply. Once we cross the pass, we will get to lower elevations quickly." We knew that the intensity of afternoon storms was strongly dependent on altitude, and figured we could find shelter on the other side of the pass as soon as we descended. "In a couple of hours, we will be over the pass, and at a lower elevation than we’re at now," my friend summed up.
We had a shared vision, confidence, and a plan. Given a sense of security from our detailed topographical map, we heaved on our 50-pound packs and began our nearly fatal mistake as we climbed up out of the meadow towards the pass.
What went wrong? We had a detailed map: the USGS 7.5 minute quadrangles are legendary. We had a clear and reasonable set of assumptions: a couple of hours until the storm, knowledge that we were fast hikers, knowledge about how weather varies with altitude. We had an executable plan: hike over the pass and drop to lower elevation. We had vision and passion: our group was ready to go, we weren’t old-timers, we were teenagers and so of course in a hurry.
Wasn’t all this sufficient for good decision making? It’s a common standard:
1. Good information backed by an authority;
2. Defendable assumptions leading to a reasonable scenario how things will unfold;
3. A clear plan that works given the assumptions;
4. A strong champion who can mobilize the organization.
As a business example, consider launching a new product. Typically a company will:
1. Get market and customer data from analysts with a good reputation and customer-needs research;
2. Develop defendable assumptions for price, market share, cost, timeline, etc. and put them in a business case to show how the business will make loads of money;
3. Create a business plan and milestones for executing to win;
4. Rally people around the vision and excite them about making it work.
Yet 70% of product launches fail. Often this is blamed on a failure to execute. But this is rarely the reason. We were nearly killed on Forrester pass and product launches often fail for the same reason: not understanding the future. On Forrester pass, we focused on the topographic map. But this was a map of what we knew. This focus on what we knew was the mistake. The map of the future is a map of what one does not know, of uncertainty. We needed a map of the potential weather and the consequences. The crucial factor -- the weather, was the most unknown, the most important, and the factor most hidden by our very reasonable assumption of "a couple of hours." The fact is there are no facts about the future and we are foolish to act as if our assumptions are true.
Daniel Kahneman won the 2002 Nobel Prize for his work in the psychology of judgment and decision making in uncertain situations. While it is an act of great hubris to summarize the life's work of a genius and an entire research industry in a single word, I'll take a stab: overconfidence.
People are very systematic in how they make these kinds of judgements, but also biased. The biggest bias is overconfidence:
1. Too often people believe their own assumptions.
2. Too often people fail to find evidence that would disconfirm their preconceived notions.
3. Too often people focus narrowly and fail to account for broader factors.
4. Too often people anchor on their first estimate and fail to adjust sufficiently to account for uncertainty.
These biases of overconfidence occur in everyday situations, in dramatic ones like my teenage experience on Forrester Pass, and in business situations. In fact, these problems of overconfidence are prevalent and part of human nature. It is as if we are all a little light-headed from lack of Oxygen when contemplating the future.
Yet these biases can be corrected for by having the right tools. What is needed is a map of the future to guide our actions and remind us that we are all explorers in this fundamentally uncharted land: a map of uncertainty.
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