Keeping A Journal May Help you With Hindsight Bias
You may know by now that I have authored and released my second book “How To Journal Like A CEO: Career Success Through Journaling.” It’s available at Amazon and our Clear Vision website. In the book, I describe many reasons why journaling is great for you personally and also for your career. Today in my weekly article, I would like to expand on that thought and include a component not covered in the book. An extra for you, so to speak.
In studying neuroscience and the overall subject of human beings and elite performance, you learn and discover various biases that most human beings share in their thinking and perceptions. Today, I’d like to make a few points to you about hindsight bias and why journaling could benefit you with this particular bias. Let’s begin with an example from the last twenty years in which we all should be able to relate.
In 2005 and 2006, both housing numbers and economic numbers were beginning to decline. With this knowledge, economic experts predicted a very rosy picture for the next few years, but in 2007 going into 2008, the financial markets imploded. In recent years, when asked about the “Great Recession”, the same experts expound on the numerous reasons beginning in the 90s about why this took place. In other words, when they looked in hindsight, with the knowledge of the outcome, the reasons for the “Great Recession” seem very obvious, while in ’05-’06 it didn’t seem likely at all.
The hindsight bias can be one of the most insidious biases we have. It’s like someone you know who doesn’t know diddly squat about the situation, but they are the first to say, “I told you so!”. Everything seems clear and unavoidable in the hindsight bias. If a CEO becomes successful, even with the fortunate turn of events he had nothing to do with, then they will look back and think the success potential was higher than it actually was. Other times, when everything looks like a “Dewey vs Truman” election, where the newspapers pre-printed headlines with a Dewey victory, somehow, they never saw Truman winning. The same could be applied to the election in 2016. Nobody could have possibly dreamed that a single shot in Sarajevo in 1914 would have sparked a worldwide war. Now, with hindsight bias, somehow it seems like we should have obviously known that outcome was coming.
Hindsight bias makes us believe we are better predictors than we actually are, causing us to have high and mighty egos and take on too much risk. Overcoming the hindsight bias is not an easy thing to do. Studies show that people who are aware of it fall for it just as much as those who are not aware of its existence. Keeping a journal could help you with this bias. Writing down your predictions, your thoughts and views at the time and then compare them with actual outcomes. Since this article is about being bad at predictions, you can take solace when I say that you will probably be a poor predictor!
Keeping your journal about yourself and your thoughts about coming events will give you a record that you can use to look back on and reflect on just how unpredictable the world actually is. Add in the rapid pace of innovation and change, you add a whole new level of complexity in the business environment. This should be an aid to you in validating the idea that planning is way more valuable than plans.