Better judgments Part 4

Our judgments only become useful when we employ them to make forecasts. Forecasting and judgment are inextricably intertwined. We assess our forecasting skill by finding out what happened as a result of the conclusions we came to. We can only do that systematically if we record our forecast of what will happen and then see if it does. Won’t it become very boring when we discover that our forecasts are little more than 50% right? What will drive us to keep up the disciplines of making the forecast and recording it?

We live in an age of games. From physical, competitive sports to cerebral card and board games to educative mind games, we discovered that challenges are a great way to learn. Whether competing with others or ourselves, beating the odds to be classified as winners makes us proud, motivated, satisfied. Games have spread to management but are poorly devised missing the key to game-learning – a successful game must be bigger than life.

It must also contain a qualitative element to allow the timid to make a “perhaps” call in the early stages. Some will do so all their lives but we should be helping a majority to understand the excitement and adrenaline rush of taking risks. Our clear objective is BE BOLD. Educational and management processes that aim to eliminate risk also reduce progress and fun. Early pioneers didn’t say “perhaps”. They said “go for it”. Sometimes they lost but their judgment improved faster by doing so than because they avoided mistakes. Trial and error may seem an old-fashioned route to success but it is a tested one.

Increased numeracy has made many episodes of life more measurable. With it has come much spurious and misleading measurement. That is no reason for not trying to codify as much as we can. A scale of between 0 and 10 may be a poor way to qualify a top violinist’s performance but it is better than merely describing it as ‘lovely’. So with our forecasts we are better to rate the probability of their being correct simply, than not at all.
Our subsequent judgment of the success or otherwise of the outcome will be equally subjective but if we cannot be honest with ourselves who will we be honest with?

In establishing a forecast there are two measures we have to make. The first is the importance of the forecast itself. Not taking an umbrella and getting wet may be a minor matter for a youngster. For a golden oldie, susceptible to pneumonia, it can be life threatening. These two people will rate the importance of the forecast differently. Then there is the accuracy of the forecast itself. Whether it rains or not is pretty clear cut but forecasting how well an employee is going to do is a quite different matter. Not only is the forecast subjective but the outcome is largely a matter of opinion.

Each of our forecasts has therefore to have one scale showing its importance and another scale showing how well our forecast worked out. This is how we judge our forecasting record. In a simple comparison of forecasts, for example about employing people, the “issue rating” is not about how important individuals are, it is about how important their job is in relation to the business for which they will work. Then we make our forecast and rate how likely it is to happen. Finally we check, at suitable intervals, how our forecast has worked out.

We hear a lot about “understanding where people are coming from”.

With better forecasting we can hopefully better judge where we are all going to.