END THE YEARWITH A LOOK BACK
The benefits of a positive mental attitude, or PMA, have been known for at least 80 years.
In his 1937 book, Think and Grow Rich , Napoleon Hill emphasized the value of positive thinking as a key contributor to success. Countless authors and speakers have followed in his footsteps.
The answer – in terms of finding balance between pessimism and optimism – is “Backcasting,” a planning technique that acts as a counterpart to the premortem. Backcasting was described by professional poker player Annie Duke in her outstanding book Thinking in Bets (which is more about life and business strategy than poker). While the premortem focuses on what could go wrong – by imagining failure and working backwards – the backcasting technique focuses on what could go right, along with the plans to make it happen. To do a backcast, start with an audacious goal, one that could take months or even years to reach. Now imagine it is months or years into the future, and the goal has been realized. (Annie Duke suggests picturing the front page of a newspaper, with something like XYZ GOAL ACHIEVED as the bold headline.) You then ask, “How did it happen?” And you work backwards from the goal to the present day. As with the premortem, when you backcast, you start by imagining a future state – one that doesn’t yet exist but has the plausible
Maintaining PMA enables a sharper focus on short-term and long-term goals. It increases energy levels and reinforces self-discipline. Best of all, it helps sustain momentum when the path is rocky or times are tough. These factors are vital to success, and a common contributor to failure when missing. So, it’s no wonder so many elite soldiers and athletes – occupations where consistent performance is paramount, and sometimes life-or-death – swear by the benefits of PMA. This points to an issue with “The Premortem,” a risk management technique where you imagine an endeavor failed, and then try to picture what went wrong. It’s undoubtedly an excellent risk management tool. But focusing on what can go wrong, while helpful and sometimes crucial, is not a great way to generate PMA. Too much negativity can kill passion and creativity and momentum. With an absence of PMA, performance can suffer. And yet, in the field of investing especially, we know that risk management is a requirement, and that Pollyanna optimism can be dangerous. So, the question becomes how to find a balance.
By Dr. Richard Smith
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American Consequences 65
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