We’re constantly talking about human psychological biases. We also mention Nobel laureate Daniel Kahneman, famous for his pioneering work on the psychology of decision-making, quite a bit. So, when Daniel Kahneman says that something is his favorite de-biasing technique, we’re paying attention.
The technique he claimed as his favorite is called a premortem, and it’s our favorite, too. The premortem addresses biases that a traditional risk register cannot. Not only that, but it’s a flexible tool that can be used in nearly any scenario where a decision is being made.
So, what is a premortem? How are they conducted? What makes them so great? And when can you use them? Let’s start at the beginning.
What Is a Premortem?
We’re all familiar with the postmortem. You lost a sale. A client churned. Your latest product release was a disaster. You conduct a postmortem to figure out what went wrong. It can’t save that customer or that product release, but by figuring out what went wrong, you can avoid making similar mistakes in the future.
The obvious issue with the postmortem is that a sale or a product (hopefully not an actual person) has already died. What if you could do a postmortem before anything actually went wrong? That was exactly what cognitive psychologist Gary Klein was thinking when he created the premortem method of risk analysis.
The concept of a premortem is simple. At the beginning of your sale/project/product development—once you have a solid plan and blueprint for moving forward but before you’ve invested much time and money—pretend that it has already spectacularly failed. Now answer this question: why did it fail?
While the premortem began gaining popularity in 2007 after Klein published the idea in Harvard Business Review, he created the method back in the 90s. It was developed to help Klein’s company have more successful projects, but has since been employed by wildland firefighters, the US Army, portfolio managers on Wall Street, and Pixar.
What’s So Great About Premortems?
The magic of the premortem lies in its ability to eliminate many of the biases that usually plague us when we’re just beginning an endeavor.
Groupthink
Humans like to maintain cohesion and reach consensus when they are part of a group. This can mean failing to look at something critically so as to avoid conflict.
Confirmation Bias
As soon as we’ve made a plan for how to accomplish something, we can fall victim to confirmation bias. From that point on, we will give more credence to information that aligns with that plan.
Optimism Bias
We tend to overestimate the likelihood of experiencing positive events and underestimate the likelihood of experiencing negative events.
Social Desirability Bias
We tend to answer questions and give feedback with what we think people want to hear. This means that if we’re the only ones who see a risk to a project, we might not mention it for fear of seeming too negative.
The premortem erases all of those biases. The project already failed. Everyone must provide reasons explaining why. You’re not allowed to be positive.
Premortems play a trick on your brain, treating the failure more like a memory rather than a possible outcome. And the brain falls for it. The research Klein based his technique on showed that by using “prospective hindsight,” people’s ability to correctly identify the reasons for a future outcome increases by 30%. And it only takes an hour.
How to Conduct a Premortem
- Have a plan.
You have to have something to do a premortem on. It works best once you’ve decided on a path. That could be your approach to a sale, your plan for a product release, or your idea for a startup. - Assemble the group.
Get people together who are involved in the plan. Try to include people with different perspectives. For example, if you’re doing a premortem on customer renewal for one of your largest clients, include marketing, sales, customer success, and product. - Set ground rules.
Act with candor. There is no blame. Equal participation from everyone is expected. - Set the stage.
Tell your group that it’s 12 months from now (the time will vary based on what you’re doing a premortem for) and your project has failed spectacularly. Each person, on their own, needs to make a list of at least five reasons why the project failed. Nothing is off limits. There are no wrong answers. - Go around the room.
Go from person to person getting possible reasons for failure. Each person shares one item from their list, then go to the next participant. Keep going until every answer has been shared. - Dig in.
Make sure you’re not looking at just the symptoms of the problem. You want to get to the root cause. Your startup may fail due to lack of funds. Keep asking “why?” Why don’t we have funds? Because our product didn’t sell. Why didn’t our product sell? Because we didn’t identify the right ideal customer profile (ICP). Sometimes you’ll find that several of the reasons for failure have the same root cause. - Rank the items.
Rank each reason for failure on both likelihood and impact. - Create action plans.
Based on your likelihood/impact assessment, create action plans for how to avoid that problem. Start with those that have a high impact and a high likelihood.
A Premortem for Sales
The DRIVE information-gathering framework is essentially a premortem for your sale. Let’s say you lost a sale. Think of all the reasons why that could happen.
- You weren’t working with the right decision-maker. (Decision, Level 1)
- Your prospect decided it was easier to stay with the status quo. (Impact, Level 2)
- There aren’t enough people available at the prospect company to implement your solution. (Resources, Level 2)
Making sure you have answers to all of DRIVE’s questions becomes your action plan for preventing a lost sale.
A Premortem for Customer Success
Even when you have a great customer success plan in place, churn can happen. A blog from customer-success platform Vitally explains it well. Your customer success plan is something you do early with your customer, and it’s always positive in nature. Churn analysis is something you do at the end of the relationship. It’s done internally, and it’s negative in nature.
You need something in the middle of these two pieces—that’s your premortem. It’s done early, like a success plan, but it’s internal and negative, like churn analysis. It can save you from having to do that churn analysis.
You Get a Premortem! You Get a Premortem! Everybody Gets a Premortem!
Premortems are great for analyzing sales health and customer churn risk, but wait, that’s not all. They are also useful for product releases, startup creation, complex projects, major strategic decisions, and changes in business processes.
Are you considering hiring for a new position? Premortem. Are you considering adding to (and spending a lot more on) your current tech stack? Premortem. Are you thinking of moving across the country to be closer to your significant other? Premortem. And I’m not kidding.
Premortems assume failure. They give us permission to voice what we normally can’t say. They fake out our brains in such a way that biases are eliminated and we can look at things more objectively. And if you and your significant other can’t handle it, you’ll never survive wedding planning.
Want to use the DRIVE information-gathering framework as a premortem for your deals? Our online DRIVE course is free right now!