#91 The future is uncertain but in us we have a key
Why we should look beyond the belief that the future is unknowable
Dear reader,
This newsletter is back after a week’s hiatus. One of my goals this year is to dig into primary research on decision science to understand better not just the best decision-making practices and protocols but the thinking that led up to them.
Having led teams and worked in groups across business functions, I’ve come to realize that few things are as under-used for making sound decisions than time-travel techniques.
So, let’s make a dent in that.
The paradox
We tend to explain the past and predict the future.
Our explanations are long and detailed; our predictions, short and mostly about the outcome.
Our explanations uncover the why; predictions, the what.
It seems obvious why it is so. We know the past. We know what has happened and we employ causal reasoning to determine why things turned out the way they did. In contrast, the future has not happened yet, so it is uncertain and unknowable. That’s why our explanations for the past are nuanced and predictions for the future, cursory.
👉We can detail why the 2016 US elections brought Trump to power. But we cannot with anywhere the same level of confidence account for factors that will determine the fate of the 2024 US elections (Trump again?).
👉We can itemize the reasons that led to the last successful product launch in our company. But we will find it hard to do the same for the next upcoming launch.
👉We can pontificate why the last Diwali party we hosted was a doozy but we cannot pinpoint the things that will make the next one a smashing success for the same set of friends.
First off, why does it matter if people can explain the past better than they can account for the future?
The future is shaped by the choices we make and the actions we take today. How can we make choices that will make the future better, not worse? By seeing better what events and causes shape the future. But because the future has not happened, we cannot really see the chain of events that will lead to it, can we?
We cannot see the future but the future is shaped by our choices in the present. Therein lies the paradox.
The idea
In 1988 a study was published with the title Back to the Future: Temporal Perspective in the Explanation of Events. I’m willing to bet the title rode on the 1985-released blockbuster movie of the same name. This paper did not just riff on the movie name. It had something to do with what the move was about as well–time travel. The study put forward an interesting question. Do people see better by ‘taking a backward perspective on a future event’? In other words, does mental time travel help make better decisions?
For those who detest sci-fi or are unfamiliar with the general idea of mental time travel, don’t fret. There’s no talk of relativity or black holes awaiting you.
Humans have a unique trait: to be able to move back and forth in time and imagine oneself at a point in the past or future. As a kid, I used to spend hours daydreaming and building castles in the air. As an adult, while meeting old buddies after years, I do not hesitate to turn the calendar back and live a few hours in the past. I’m sure I’m not alone.
All this says is that mental time travel is a pretend game. A game that if you learn to play can help you make better choices, choices that may bring you a better future. Most of us don’t. We stick to daydreaming and reminiscing.
What the study suggested is that maybe we can turn this thing we as humans into something more productive, like a decision-making tool.
In all honesty, it only took a first step (remember this was in the 1980s) and later research built on it. But in the spirit of this piece, travel back to 1988 and imagine the potential of the findings of the study at that point.
What is prospective hindsight?
The official term for time travel in the context of decision-making is prospective hindsight. Don’t be cowed down by it either.
Prospective hindsight involves ‘generating an explanation for a future event as if it has already happened’. The as if is the pretend part. You leap forward in time, then you look back. You travel across time.
Now, this study, as well as some research preceding it, suggested that we can see more ahead if we pull this mental trick of time travel.
Hmm… What is it then? Does prospective hindsight somehow unlock new information? Is it just eyewash?
Well, no and no.
The future is the future and we don’t know it—prospective hindsight or not. If we knew, it would no longer be the future.
Wait a minute—does that mean there’s something, like a protocol, that can help us penetrate the fog of uncertainty that is the future?
This time, let me say yes. (Caveats later. This is not a research paper. My goal is to make this stuff accessible to you.)
The techniques for prospective hindsight (there are a few) have been shown to work. In fact, they are all around you. You may have heard of pre-mortems, backcasting, thought experiments.
The study
The Back to the Future researchers did a neat little experiment. The scenario the experiment subjects were presented is clear enough for me to reproduce here.
Robert H. is an entry-level assistant with a limited business background. Hired for his potential, he is hard-working and shows great willingness to learn. However, to date his boss has been unimpressed with his performance. Robert has been assigned a new project, unrelated to anything he has done previously. If performed well and completed by the deadline, it will provide a valuable opportunity for him to show his ability to his superiors.
For this description, the researchers mapped out 8 different outcomes (past/future; certain/uncertain; positive/negative, which is 2 X 2 X 2 = 8) and asked the subjects to explain them.
Essentially the researcher did two things.
They gave subjects the same amount of information about the event (the same description), but with that information they airdropped them into different situations. They asked them to time-travel.
They gave subjects ample time. This is to exclude the possibility that subjects gave terse explanations because they didn’t have time to do so (and not because they didn’t have a good explanation).
In setting up the experiment so, the researchers tried to find an answer to a simple but interesting question:
Do we find it easier to come up with reasons for an event that has happened than for an event that may happen when what we know about the circumstances or situation around the event is exactly the same in both cases?
Let me rephrase it.
Do we find it easier to plan the route when the destination is known with certainty than when it may be uncertain?
They found that for the same amount of information available to them, the subjects thought differently about sure events than they did about uncertain ones. It is certainty that drove the detail in their explanations (time was not a constraint).
When we know an event has occurred we conjure richer explanations for it than when we can’t be sure about the outcome, for the same amount of situational information we have. Route planning becomes easier just by knowing the destination with certainty, compared to when we do not know the destination with certainty.
This is strange.
Logic tells us that the set of possible explanations for an outcome should only depend on the information/data at hand. And if we don’t have any information on the underlying factors or specific events that transpired (the route), our explanation should be the same for an outcome (the destination).
Note that in the experimental design, all subjects had exactly the same information about Robert H., the unfortunate entry-level assistant who couldn’t curry favors with his boss. The only difference between the subjects, after being given the same information, was that they were put in different situations. For some the destination was clear; for others, not.
What does this mean?
In the study experiment, the reasons why Robert H. failed or succeeded are equally uncertain. They are equally hidden from plain view. Why then did the subjects see more when we know that the event has happened compared to when it is yet to happen? Why are people more convinced about their causal reasoning for a sure event than for an uncertain event when they know just the same?
Because we think differently about sure and uncertain events. It matters to us whether something has happened or could happen. We find it harder to generate explanations for uncertain outcomes than for sure ones even when we know exactly the same in both cases.
In her book How to Decide, decision strategist Annie Duke says: ‘...looking back from your destination is a more effective way to plan the best route than looking ahead at where you are trying to go.’
Think of the sure event as being on the summit of a mountain. Looking down (or back, metaphorically), we can see the paths that led to the summit. We can also see alternative paths that would’ve brought us there as well as those that would’ve led to dead ends.
Think of the uncertain event as being at the base of the mountain and imagining a route all the way up to the summit. You may or may not scale the heights. You see what’s immediately ahead but not much after. You certainly don’t see the multitude of routes and the dead ends. Your view is blocked.
Looking up from the base, you may see a steep stretch immediately ahead and give up, ignoring the relatively easier climb later. Or the opposite. If you do so, you would be letting current conditions dictate your view of future conditions. What you’re assuming is that a steep climb now means a steep climb all the way through, and an easy hike up initially means it will remain so all the way up.
Historical foresight, the complement to prospective hindsight
As humans we tend to make up event chains to explain sure outcomes. Prospective hindsight uses this trait and turns it into a decision tool. What it does is ask us to imagine a point in the future when the outcome is sure and then demands that we, looking back, generate an event chain that could explain the outcome. If such time travel takes a leap into the future and works around the uncertainty by imagining an outcome as sure and then piecing together a chain of events backward, then there’s also the inverse of it where we leap back first. We omit information about the sure outcome and take already transpired events and make sense of them through scenario-building.
If prospective hindsight turns an uncertain outcome into a sure one and looks back at the chain of events that may have caused it, historical foresight does the exact opposite. It turns a sure outcome into an uncertain one.
Most consultants, young or old, would be familiar with the case study interview. Your interviewer takes a past event (an actual case based on their previous client work) and omits information about its actual outcome and asks you to analyze it. In doing so, she asks you to isolate the variables at play that could have a bearing on the outcome.
Let’s take two examples here.
A team of investigators is presented with the case of a chain of events at a nuclear plant and tasked with analyzing it for insight. The practice of traveling back into the past and imagining the future with just the information available at that moment (and no knowledge of the eventual outcome) can be used to siphon out a spectrum of possible outcomes (What else could’ve happened? What could we have controlled? Did we get lucky?), and not just learn from the minutiae of the specific outcome. Such a ‘historical foresight’ analysis has great learning potential as it tests the problem-solving and scenario-building skills of the investigators.
Now imagine you want to avoid disaster at a newly operational nuclear plant. The trick here is to imagine the worst catastrophe has already happened (sure outcome) and then work backward to uncover what hidden factors may have caused it, so that you can avoid them in the planning. Or stop operations altogether if the risk is substantial. Such a ‘prospective hindsight’ strategy of assuming an outcome with certainty and then seeking its causes can be used to anticipate what can go wrong with a family vacation or a product launch or a house purchase.
All this is good, but so what?
What is the role of uncertainty in accounting for the differences in explaining events? The most obvious answer is that the uncertainty is related to time. The past is sure, the future is not, and so we find it easier to explain the past. We can only truly explain something only when it has happened. We can never really know the future.
We know now that it is not time that drives uncertainty that in turn drives the depth in our explanations. It is simply uncertainty at work. If we can find ways to imagine future outcomes as sure, we can take uncertainty and its effects out of the equation. We can map out the future and work to move closer to our desired outcome and away from our nightmares.
Newsflash: Doing so is in character for us as humans. We do already have the ability to travel through time. We are known to wander off several times in the middle of the day. Instead of being lost in pipe dreams or getting stuck replaying the past, we can get more juice out of this ability of ours to travel across time.
Prospective hindsight has us using this natural facility to generate event chains to account for (pretend) sure outcomes. This helps us reduce overconfidence and prepare better for obstacles.
Historical foresight cuts the cord between the circumstances and the outcome it has already led to, and asks us to identify the underlying factors at play so that we could learn from it. This is useful because, you know, history repeats itself.
Previous issues of this newsletter have expended a fair number of words on various time-travel protocols that the best decision-makers have made a habit of. Now that you know why time-travel is a gift, go and encash it here and here.
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In other news, my interview on the Disrupt Show podcast has been split up into this, this, and this. Back in the days of Netscape, Jim Barksdale first pointed out that there were only two ways to make money: bundling and unbundling. Social media has put steroids into unbundling.
That’s all for this week, dear friends. See you next week. Until then, hit me with your comments and questions.