Premortems: Technique for Improving Strategic Thinking

I recently was looking through blogs from McKinsey Quarterly and ran across one of my favorites. It is entitled Bias busters: Premortems: Being Smart at the Start. The authors advocate the use of Premortems as a tool for identifying biases which can get in the way of good decision making. I agree as I use a similar process with clients who are developing strategies and transforming their organizations.

Reading the blog from McKinsey & Co. also brought back fond memories of a great man who originally taught me about Premortems. Marty Leaf was an accomplished lawyer in New York. He began his career as a trial lawyer and later expanded to handle dispute resolution as well as complex contract negotiations. Marty also provided a great service to humanitarian organizations such as the Buckminster Fuller Institute, Hunger Project and a United Nations NGO. Marty’s clients were typically large, well-known businesses, but also included a diverse group of individuals such as Lhamo Dondrub, the 14th Dalai Lama, John Denver and Werner Erhard.

I met Martin Leaf through a mutual friend, and then got to know him better as we sorted through some knotty corporate legal issues in New York. In addition to being excellent as an attorney and extremely bright and gracious, Marty was also fun to be around. As an example of his humor, when we were in a very tense moment sorting out this legal matter, I turned to Marty and had this exchange:

Me: “Marty, is it better to be dealing with a crook or a fool?”
Marty: “A crook.”
Me: “Why is that?”
Marty: “Because you can go have a nice meal with a crook since you know who you are dealing with, where it is much more difficult to deal with a fool!”

During this process Marty introduced me to his version of a Premortem. He said that at the completion of a trial, one of two things happen:

1. The winning side goes out to a fabulous restaurant to celebrate. During the meal the client toasts the legal team for their brilliance. After winning a big case, collecting the last of the fees is seldom an issue for the winning attorneys.
2. The losing side schleps back to the client’s offices, orders sandwiches, and immediately begins a postmortem to analyze what went wrong. Of course, the client’s opening presupposition is that the lawyers screwed up and lost the case. During the postmortem, however, new information often emerges which would have been helpful in the trial.

It was during one of these postmortems that it occurred to Marty that it would be a really good idea to have this conversation before they went to trial. Hence his use of the term Premortem. Marty graciously gave me permission to use the term, so I have for many years.

Marty’s view of a Premortem was designed to:

• Create strategic thinking from the future
• Discover information which existed in the company but was for some reason not being communicated upward
• Explore the blind spots and biases in the company’s thinking about the topic being litigated. It was easy for the legal team to be influenced by this mindset and not see the flaws in their client’s points of view

 

Create Strategic Thinking from the Future

Premortems are useful tools for vetting business strategies, designing a culture change and organizational transformation, as well as large capital projects. This value comes from creating a conversation regarding the future. One of the biggest challenges in helping executives develop strategies and plan for the execution of those strategies is confronting that the future is not knowable. Ironically for a trial lawyer this is easier, as the company either wins or loses the case. There are two clear and defined futures to consider.

In working with executives though, it is often more complicated since at the beginning they can think only from one place or future. Their thinking about the future is some form of a continuation of the past or present. Getting the executives to think from the future perspective, rather than just a continuation of the same from the past can be challenging since it is not knowable.

The future is not knowable because it has not happened yet. Since the future has not happened yet and is not knowable, it requires thinking strategically. That is, thinking without the comfort of analytical predictions which are based only on the past. Thinking strategically requires thinking from points in the future which are not necessarily a linear progression from the past. Given we naturally think from the past to today and project that forward, thinking from a future that is not necessarily like the past is a challenge. Hence, the value of being able to locate one’s thinking at a point in the future. In other words, providing a place to stand in the future in order to observe and think about big challenges to be faced in execution.

I find it useful to have executive teams think from two scenarios:

#1 Invented Future. Invented Future is created by executives to describe a future in which the intent of the organization is being fulfilled and stakeholders are thrilled. Conversations from the future rather than about the future provide a new and much improved perspective for strategic thinking. This Invented Future can be achieved through:

• Changes in mindsets
• Creativity and innovation
• Breakthroughs in how employees think about the business
• Improved listening to customers’ needs

 

#2 Failed Future. This provides opportunity for Premortem. This Premortem begins with a point in the future in which the strategies and execution plans have failed. Often there is a triggering event which led to the overall failure. These triggering events can include:

• Customers changing preferences for products and services
• Large customers being acquired or going out of business
• Digital disruption which radically reshapes the competitive landscape
• Global competitors entering a market with different financial drivers and product offerings

Discover “New” Information

A major risk to developing and executing strategies is critical information which is known by people in the organization but NOT communicated upward to decision makers in the organization. This dynamic can lead to catastrophic failures and safety issues. An excellent example of this is the case study of the events surrounding the deadly failure of NASA’s Columbia. In that case, managers who were responsible for safety were aware of issues which ultimately caused the disaster but chose not to communicate that information upward to those managing the mission.

Marty said that similar things happen in trials. During the trial the other side introduces facts or information which Marty and his team did not have. Often this new data was important to the outcomes. During the Postmortem, they discover that new facts and information existed within the client company but, for whatever reason, they were not communicated upward. The reasons for not disclosing this important information varied, but the consequences were still final.

A key question in conducting a Premortem is “What important data and information exists within our organization which we are currently not aware of but will be crucial in our strategic deliberations and execution?” I find that at first, there are blank looks on executive’s faces, but as we engage more people, we start to uncover very important information. This is among the reasons I recommend expanding the size of the group when planning execution of strategic projects.

Explore Biases, Blind Spots and Unproductive Mindsets

There is an abundance of evidence that cognitive biases are a major threat to strategic thinking. As an executive group begins to explore opportunities for growth, innovation and performance enhancement, it is useful to review some of the more common cognitive biases that could occur. If the group is candid, they will readily identify examples in which cognitive biases affected previous decisions. When a group can acknowledge the risks they face based on cognitive biases, it greatly expands its capability to think strategically. To illustrate the risks, I may ask the group to start with a future and then imagine how cognitive biases could negatively impact their conversations and deliberations.

I also use the term blind spots to encourage executives to explore dynamics in their thinking. Blind spots are often assumptions held by the group, but they have forgotten they are only assumptions. Challenging blind spots allows the group to uncover assumptions that need to be revisited and assessed. Among the most important set of assumptions to be revisited are those which involve external drivers that have huge impact on a company’s operations, as well as its customers. Examples include financial interest rates, number of housing starts, number of new autos built in a year, oil prices, number of active drilling rigs working on shore, etc.

Conclusion

Martin N. Leaf died in New York City after a long illness on May 23, 2015. At the time of his death he was surrounded by his family. The acknowledgements of the difference he made in people’s lives poured in. I loved one such acknowledgement which read,

“To Marty Leaf, a man for all seasons. You were a mighty influence in my life and the world”.

That sentiment expresses how many of us who knew Marty felt about him.

I hope this story about Marty has given you a new perspective about the use of Premortems. It is a simple, but highly effective tool in improving strategic thinking through identifying biases and blind spots.