Your employees can see the future.
No, they can’t tell you who’s going to take the 2024 presidential election or when Krakatoa will erupt next. But they can tell you about something that matters much more deeply to your business: how your current corporate goals are likely to turn out.
Your employees are experts in their jobs. They can foresee, better than even their own managers can, the obstacles and opportunities that relate to their daily work. At Khorus, one of our prime objectives is to assist leaders in unlocking this insight—their employees’ ability to see the road ahead—and applying it to enhance company performance.
Prediction is a critical skill for today
In a knowledge economy, prediction is a critical skill. Your employees are engaging customers, designing software, generating leads, developing creative solutions—all in a highly dynamic environment. In this reality, you can’t engineer a system that delivers predictable results, like Henry Ford could. You need to harness employee insight into how things are going and what’s going to get done.
At Khorus, we help leaders gather and visualize predictive intelligence from every corner of the company. It’s an amazing thing to watch our customer organizations get better and better at forecasting outcomes together. This discipline gives leadership, especially the CEO, the closest thing they’ll ever get to a crystal ball for the business. With this intel, leaders can steer capably through even the rockiest terrain.
How to Build a team of superforecasters
In their book Superforecasting: The Art and Science of Prediction, Philip Tetlock and Dan Gardner examine the traits of “superforecasters,” individuals who excelled in a series of real-world forecasting contests. The book convincingly argues that forecasting is a skill anyone can cultivate and learn.
Superforecasting ends with a set of experimentally proven “commandments” for aspiring superforecasters. Though the forecasting contests described in the book typically center around geopolitical questions—e.g., “Will North Korea detonate a nuclear device before the end of this year?”—Tetlock’s commandments apply to organizations looking to increase the predictability of their outcomes as well.
Here is a short primer on the relevant commandments for organizational superforecasters and how you can apply them in your own team.
1. Work in the “Goldilocks zone” of prediction.
Tetlock and Gardner note that great forecasters carefully select the outcomes they will predict. They don’t guess at outcomes too far down the road, nor do they waste time forecasting very near-term outcomes that are almost certain. They create value by choosing problems that are important and somewhat challenging to predict, but not too outlandishly far in the future.
Apply this in your organization by setting goals on a quarterly basis. Ninety days is good timescale for asking employees to predict what they can deliver, whether it’s $27,000 in new bookings, a 5 percent reduction in customer churn, or 5,000 beta users of a new app.
It wouldn’t be helpful to have them predict what they’ll get done today: that should be relatively clear, and doesn’t matter too much to management. And there’s no sense in asking them what goals they will have met in a year or two—too much could change in the meantime. But predicting where they’ll be in ninety days keeps them focused on the future and gives valuable intel to leadership.
2. Break down the problem into its component parts.
The forecasters described in Superforecasting break complex problems into manageable pieces. Want to predict how many piano tuners there are in Chicago? First, predict the number of pianos in Chicago, how many times a year they need tuning, how many hours of work a piano tuner would need to make a good wage—and so on. When you aggregate these simpler predictions, you arrive at a well-reasoned forecast for the tougher question.
Similarly, organizations with predictive power translate broad corporate goals into component parts, then have employees forecast those more manageable outcomes. Your marketing associate probably can’t, out of the blue, predict whether the company will meet its revenue number this quarter. But he can predict how many leads he will contribute to the pipeline in the next ninety days—something that itself predicts future revenue.
So, dismantle your company goals into supporting goals for each part of the team; then, have employees regularly forecast whether those supporting goals will be achieved on time. You can then distill those predictions into an overall likelihood for your corporate objective.
(Khorus makes this process visual and very simple with the Performance Dashboard.)
3. Balance inside and outside views.
Although we are all experts in our own work, we can also mislead ourselves. In companies just getting started with forecasting, it’s not uncommon for an employee to predict each week that a goal will definitely be achieved—until suddenly the prediction changes to “zero likelihood of achievement” one week before quarter-end.
What happened? The employee likely took an inside view, and perhaps mixed it with a bit of over-positivity or magical thinking. Once again, follow the lead of Tetlock and Gardner’s superforecasters. As they write:
Superforecasters are in the habit of posing the outside-view question: How often do things of this sort happen in situations of this sort?
Encourage employees to balance their own expertise with an outside view. Rather than predicting what they hope or wish to happen, suggest that they create psychological distance: Would someone else in my position be able to achieve this outcome? Have I achieved this type of outcome in the past?
4. Update forecasts with degrees of probability.
Superforecasters engage in what Tetlock and Gardner call “belief updating”: they revisit their initial forecasts and calibrate them based on new information. The authors write:
The best forecasters tend to be incremental belief updaters, often moving from probabilities of, say, 0.4 to 0.35 or from 0.6 to 0.65, distinctions too subtle to capture with vague verbiage, like ‘might’ or ‘maybe,’ but distinctions that, in the long run, define the difference between good and great forecasters.
By the same token, we recommend having employees update their goal forecasts on a weekly basis and getting more granular than “I’m pretty sure I’ll get there.” In Khorus, we do this by having employees rate the Likelihood of each goal on a color-coded 5-point scale. This enables employees to communicate nuanced changes in forecasts—say, moving a bookings goal from dark green (“It’s definitely happening”) to light green (“I feel fairly confident this will happen”).
They can also use more radical updates to signal that something has suddenly come up. A prediction downgraded from green to orange, for example, triggers the type of employee-manager conversation that is highly valuable to any organization.
5. Own your forecasting failures.
And finally: Superforecasters constantly do postmortems on their failures. They don’t rationalize or excuse them; instead, they look closely to see where they went wrong and what it means for future predictions.
Similarly, it’s important to sit down with employees and talk over predictions that turned out to be inaccurate. (It’s a good idea to debrief on forecasting wins as well.) An especially important point for managers here: don’t punish forecasting failures, except in the rare case that they are clearly the result of negligence or refusal to communicate.
Prediction is a skill that can be learned with practice. It may not come naturally to everyone at first. But if you discuss in a positive, nonpunitive way how your employee might learn from his forecasting failure, you’re going to help him become a superforecaster more quickly.
Predictable company performance is the CEO’s holy grail. Unfortunately, no amount of planning, controlling, or micromanaging will help you see the future. Instead, you must learn to leverage your own employees’ predictive ability to turn your company into a superforecasting machine.
This may sound like a geeky or technical pursuit. But as applied via a system like Khorus, it’s practical, simple, and supportive of both employee performance and engagement. As one of our customers said, employee forecasting offers leadership “a confidence indicator on whether something will be achieved, before you can even measure it numerically.” Best of all, the process only takes a few minutes of employee time each week.
If you’re interested in learning more about Khorus, we’d love to talk to you.