“Superforecasters are perpetual beta.” – Superforecasting
This is meant to be more of a book report, than a review. In particular, I want to highlight three lessons from the book, Superforecasting: The Art and Science of Prediction by by Philip E. Tetlock and Dan Gardner that I found impactful. This also serves as a way for me to recall influential points in the book.
Forecasting is near and dear to my heart. Although I have evolved my view a bit over the years. One thing is for certain in my financial forecasts. I am wrong. It’s just a matter of how “wrong”. But in many cases, the most important part of forecasting is not the absolute accuracy of the forecast, it is the discipline and planning the forecasting process instills.
Three take-aways from the book:
- Forecasting Is Not Mystical
“Foresight isn’t a mysterious gift bestowed at birth. It is the product of particular ways of thinking, of gathering information, of updating beliefs. These habits of thought can be learned and cultivated by any intelligent, thoughtful, determined person.”
This kind of reminds me of how strategy is sometimes viewed. Forecasting and strategy have a bit of mystical aura. In practice though, both are bit less sexy than most folks think. They are hard work. They are an incremental process.
If you think someone is going to hike up to the mountain top and come down with the answer, prepare to be disappointed. If someone tells you they can go to the mountain top and come down with the answer, be highly skeptical.
- Forecasting As A Skill
Similarly to the first point, forecasting is a skill. And skills require consistent practice to build and maintain.
“Superforecasting demands thinking that is open-minded, careful, curious, and—above all—self-critical. It also demands focus. The kind of thinking that produces superior judgment does not come effortlessly. Only the determined can deliver it reasonably consistently, which is why our analyses have consistently found commitment to self-improvement to be the strongest predictor of performance.”
One of the tools I use to assist in my forecasting practice is the Stagger chart – that I learned about in Andy Grove’s book, High Output Management.
- An Ensemble Approach
Good forecasters assimilate lots of external information. Constantly. And update their views accordingly. See my incremental comment earlier.
“Now look at how foxes approach forecasting. They deploy not one analytical idea but many and seek out information not from one source but many. Then they synthesize it all into a single conclusion. In a word, they aggregate. They may be individuals working alone, but what they do is, in principle, no different from what Galton’s crowd did. They integrate perspectives and the information contained within them. The only real difference is that the process occurs within one skull.”
And asking questions is an important part of getting additional information.
“Practice “constructive confrontation,” to use the phrase of Andy Grove, the former CEO of Intel. Precision questioning is one way to do that.”
And do not expect a consensus view (a major pet peeve of mine).
“A smart executive will not expect universal agreement, and will treat its appearance as a warning flag that groupthink has taken hold.”
A few other recent book reviews: