Pretty much everyone knows what a post-mortem is, but what, exactly, is a pre-mortem?
Wikipedia says it is a ‘managerial strategy in which a project team imagines that a project or organization has failed, and then works backward to determine what potentially could lead to the failure of the project or organization’. Theoretically, it could be used to imagine successful outcomes, too.
In simple terms, instead of looking back after something has happened and assessing the decisions taken after the fact, a pre-mortem begins when a major decision looms and the people making it are asked to imagine a wide range of outcomes (both good and bad) in order to reverse engineer the process to address potential obstacles that might not have otherwise been contemplated – before taking action.
The technique breaks the shackles of possible groupthink. Instead, decision-makers are tasked with reducing the chances of failure due to heuristics and biases. Problems like overconfidence can be overcome by analyzing the magnitude and likelihood of each threat and taking preventive actions to protect the project from snags that might otherwise have been called ‘blind spots’.
Much like advisors who ask prospective clients to imagine themselves working with that advisor for three years, looking in the future (e.g. yearend 2024) and imagining what would have had to have happened in order for the engagement to have been a good use of the client’s time, energy and money, the exercise can be motivational. A useful pre-mortem is simply an application based on the much older concept of ‘prospective hindsight’, where participants ‘look back from the future’ to identify problems or bask in positive outcomes before they occur and contemplate the necessary steps in order for that outcome to be realized.
This is what central bankers ought to be doing now. Their grand experiment over the past 21 months or so has been to allow inflation to run hot to avoid raising rates, because that would almost certainly destroy the fragile rebound we are now experiencing. The pre-mortem operates on the assumption that the ‘patient’ has died and looks backward to ask what went wrong. I’m getting this awful feeling that when the economy comes crashing down, our central bankers will insist the operation was a success – even though the patient died! A pre-mortem would likely involve raising rates sooner in order to make the inevitable crash less severe when it happens.
Usually, the pre-mortem exercise is used in the context of risk management. Pre-mortem analysis seeks to identify threats and weaknesses via the hypothetical presumption of near-future failure. Here’s my invitation to you…
Think about how you think 2022 will play out, in economic terms. Maybe even take a moment to write things down. Be as specific and detailed as possible. Now, do the same exercise as though those things have already happened. In other words, instead of looking forward from today, look backward from a year from today. See anything different? No one can reliably see the future, but we can all imagine what it might entail. If forewarned is forearmed, maybe we can all take steps now to warn ourselves about what might lie ahead.