When intuition can help the decision making process

Want to live the future backwards? A lesson learned during my course at Stanford is how intuition affects our decision making, positively and negatively. And the need for strategies to manage these feelings. Stanford Professor, Hayagreeva 'Huggy' Rao, introduced me to Gary Klein’s brilliant tool, called the premortem. The idea is to discuss all the things that can go wrong with a project before getting started. Effectively you 'put all the underground doubts above the ground.’

The pre-mortem rounds off my series on the decision making process and is a structure to manage the gut instincts of your team and determine whether they are useful.

What is a pre-mortem?

A premortem in business comes at the beginning of a project rather than the end. While gut-led decisions can often lead to disaster, in the case of a premortem people are encouraged to tap into their work experience and intuition and aid the decision making process. These feelings and knowledge help a team determine the likely reasons for the potential failure of a project.

A diverse team imagines that a project has failed before it starts. The team then brainstorms all of the possible reasons that the project can fail and assigns a probability to each potential cause. For the highly likely reasons for potential failure, the team needs to develop countermeasures to protect the project.

What inspired Klein's pre-mortem?

Research conducted by academics (Mitchell, Russo, Pennington in 1989) found that prospective hindsight—imagining that an event has already occurred—increases the ability to correctly identify reasons for future outcomes by 30%. This work helped Klein to develop the premortem technique, which employs prospective hindsight.

When to use the analysis?

Premortem analysis can be used for all projects that have a significant impact on your company either financially, politically, or culturally. The project to be analyzed should have an obvious scope, defined goals, a specific time frame for implementation, and identifiable risks to the organization should the project fail.

How to run a pre-mortem?

Gary Klein outlines the process for constructing a Pre-Mortem in his book The Power Of Intuition: How To Use Your Gut Feelings To Make Better Decisions At Work.

Step 1 Preparation: Get key members of your team together, the ones most likely to be part of the project team responsible for the new initiative.

Step 2 Get the team to imagine a terrible failure of a project: The plan to launch a new product is a complete failure and waste of money. It is so bad; no one is talking to each other. The question to everyone is why did it not work out?

Step 3 Determine the reasons for failure: Each person is asked to write down all the reasons they think the failure occurred, giving them only a short time to generate a full list. Klein explains that this is where the differing intuitions of the team members come out.

‘Each has a unique set of experiences, scars, and mental models they bring. The collective knowledge in the room is far greater than that of anyone person.’ Klein has found that this activity helps the group share experiences and strengthens their understanding of the difficulties.

Step 4 Consolidate the lists: Each person shares one item on their list. After each person has shared one thing, continue to go around the room, sharing one reason each time, until everyone has finished their lists. By the end of this step, the list should include everyone's concerns.

Klein explains that this process liberates people who might otherwise be afraid of looking like they're not a team player. ‘Now, everybody is being asked to think about failure. So instead of looking like a bad teammate, you're pulling in the same direction as everyone else.’

Step 5 Revisit the Plan: Address the two or three items of most concern to the new product launch project and then schedule another meeting to generate ideas for avoiding or minimizing the other problems.

Step 6 Regularly consult the list: Take the list out every few months to familiarise the team to the problems they predicted might be occurring and of course, do something about them.

Just like the premortem helps a team to pick up early signs of trouble in a project, data analytics like Phocas helps a business to stay on track of its data and quickly find variances in sales or stock from the year before.

For information about the premortem you can get Paul Klein's book here.

Another perspective from Rob Liu, the founder of LifeClub is here.