How to Make Better Predictions

This past weekend, Punxsutawney Phil predicted an early spring.  Some freezing Americans no doubt jumped for joy.  Soon the good, warm weather would return.  Thank God for the wisdom of Punxsutawney Phil.

Of course rational folks like us see the Groundhog Day tradition for what it is:  a little bit of fun designed to take away the stress of a politically-charged nation and a host of global problems that keep us awake at night.  Punxsutawney Phil now joins his fear-soothing fictional peers Santa Claus, the Easter Bunny, and professional wrestlers.  He is a peer of the giraffe that selects Superbowl winners and the octopus that picks the winning presidential candidate.  But when it comes to making real, important decisions, sometimes we rely on data and processes not that far removed from the good people of Punxsutawney.

Here are the most common ways we make our predictions:

• What we know
• What we think we know
• What happened in the past
• What our peers think will happen
• What our assumptions tell us

Now there is nothing wrong with any of those methodologies, but without fully exploring and looking for objective data, we might find ourselves getting into trouble.  Here are some suggestions for making the best use of those methodologies:

1. What we know.  What do you ACTUALLY know?  What objective data have you collected to make your decision?  Look at numbers.  Accurate numbers rarely lie.
2. What we think we know.  What do you THINK you know?  What are your data points based on?  Have you taken yourself out of the emotion to look at it from another perspective?
3. What happened in the past.  Past performance is often an indicator of future behaviors or actions.  But it’s not always going to fall in that pattern.  Keep this perspective as just ONE data point.  Don’t make all of your decisions on what worked in the past.
4. What our peers think will happen.  Who are your peers?  Are they stuck in the same thought patterns that you are?  Are they willing to break from your tribe and present a contrary opinion?  Vet your peers.  Communicate objectivity and expect the same from them.
5. What our assumptions tell us.  Assumptions are the sum total of all the above methodologies.  It’s your hypothesis. But remember, every hypothesis needs testing to guarantee validity.  Relying on successful assumption leads to arrogance…which will eventually lead to a bad decision.

This week, take a look at your ability to predict situations.  Analyze the way you look at data.  As The Boss, your success is tied to your ability to be wise.  Don’t leave that to chance!