Hedgehog or Fox as Forecaster- Which are you?
In Thinking Fast and Slow, Daniel Kahneman cites Philip Tetlock, blasting the idea that experts are particularly good forecasters. His analyses of top-notch portfolio managers demonstrate his theory that luck, and the interplay of many variables, make it impossible for even experts to do better than chance. We want to believe that the past is prologue to the future, that we can forecast if we have enough of the right data. We vary in how strongly we fall for this unconscious bias.
Hedgehogs have a limited but cohesive worldview; everything fits neatly into their thinking. They are confident about today, and tomorrow. They are reluctant to admit error in prediction, and when proven wrong, minimize it or palm it off as “just wrong on the timing”. This is a comforting but dangerous worldview. It makes for overconfident, overly optimistic projections of the future.
Foxes are more complex thinkers; they see events as driven by the interactions of a broad array of variables, and acknowledge the strong role of luck in outcomes. They are not as sure of their interpretations of the past, nor as confident about the future, as Hedgehogs. This is not a very comforting way to think of the world, but Foxes make less serious errors of judgment and prediction then Hedgehogs do.
- Be a Fox not a Hedgehog. Cover your bases, and be prepared for things to work out worse than all your hard work would lead you to expect. Oh and by the way, the more “expert” a person is, the more likely he is to be led astray by this tendency to be overly confident about one’s ability to predict the future. You worked hard to be an expert in your field, don’t let that sneaky overconfidence bias derail you!
- Market Optimism to Hedgehogs. Understanding that most people think they are better that they are at predicting the future, and are overly optimistic, can influence your marketing messages to them. Show how your product is a means to that bright future they know is in the works. This is what most marketing does today, now you know how it speaks to peoples’ biases.
- Market Prevention to Foxes. Marketing can put people in a Fox mindset, and address the need to protect the future. Ex.: an ad to the tune of “Oh what a lucky man he was”, shows a happy Dad nearly killed by a bus (and he promptly buys life insurance).
Nufer Marketing Research: Put the power of a Psychologist’s insight to work in your marketing research. Call me to discuss this post, and your marketing issues.