I bring Daniel Kahneman back into the conversation. He offers a specific strategy to address Housel’s observation about plans often going awry. Kahneman (2011) suggests that a Pre-mortem analysis be done before the decision is made to venture into new territory (a new project, strategy, way of approaching recurrent problems, etc.). The pre-mortem can be a very powerful tool to use when addressing the matter of Risk and Anticipation. According to Kahneman (2011, p. 264):
“The procedure is simple: when the organization has almost come to an important decision but has not formally committed itself, [Gary]Klein proposes gathering for a brief session a group of individuals who are knowledgeable about the decision. The premise of the session is a short speech: ‘Imagine that we are a year into the future. We implemented the plan as it now exists. The outcome was a disaster. Please take 5 to 10 minutes to write a brief history of that disaster.’”
While the premortem is best done (as Kahneman suggests) with a knowledgeable group, it also can be effectively used by a leader who addresses several critical matters based on a negative scenario. I offer the following provocative pre-mortem questions:
One year from now you are reflecting back on why this venture failed: (1) What did your competitors do that contributed to the failure? (2) What ended up not being a strength for you – or it was a strength that was used too often or inappropriately? (3) What are several possible unanticipated impacts that had a negative impact on your venture? (4) What were your areas of relative ignorance or your misleading biases? What could you have learned more about before starting this venture? What outside data might you have used (for example, the processes and outcomes of similar projects done in other organizations or done in your organization at another point in time)? (5) What did the change curve look like? Was it deeper or longer than anticipated? What could have been done to reduce the depth or length of the change curve (see description of change curve below)?
These are difficult – quite challenging—questions to ask of a leader who is about to embark on a new venture. These questions are directly aligned with (yet also expand on) the spirit of organizational learning and reflective practice that are often associated with Chris Argyris (1982), Donald Schön (1984), and Peter Senge (2006) (of Fifth Discipline fame). While the emphasis is usually placed on learning from one’s mistakes and more recently (with the emergence of appreciative inquiry) learning from one’s successes, there is also the possibility of anticipatory learning — which is what Klein and Kahneman are encouraging with the use of pre-mortem analysis–and is similar to Otto Scharmer’s (2016) “learning from the future”.
Regret and Risk can be managed, but it often requires the kind of hard, slow, systemic, and reflective thinking to be found in a pre-mortem analysis.
Envy
I propose that Envy plays a major role in casting a shadow over money. As we view from up close or from afar the monetary success of another person, our baseline regarding money is likely to change, as are our feelings about the money we have already made, our regrets about money we didn’t make, and money we have lost.
Envy and Shifting Baselines: In devoting some attention to the destructive shadow of Envy, I first consider the impact of Envy on our baseline. I return to the observations made by Morgan Housel about money. Another of Housel’s (2020, p. 41) titles speaks to the matter of shifting baselines: “The hardest financial skill is getting the goalpost to stop moving.” He expands on this pronouncement (Housel, 2020, p. 41):
“If expectations rise with results there is no logic in striving for more because you’ll feel the same after putting in extra effort. It gets dangerous when the taste of having more–more money, more power, more prestige—increases ambition faster than satisfaction. In that case one step forward pushes the goalpost two steps ahead. You feel as if you’re falling behind, and the only way to catch up is to take greater and greater amounts of risk.
Modem capitalism is a pro at two things: generating wealth and generating envy. Perhaps they go hand in hand; wanting to surpass your peers can be the fuel of hard work. But life isn’t any fun without a sense of enough. Happiness, as it’s said, is just results minus expectations.”
