By: Mia Xu with Valor Ventures
Predictive analytics and data analysis are experiencing a moment of glory right now. Never before have data collection and assessment been more accessible or actionable. However, it’s also not that easy. Using data ethically and accurately requires a process, context clues, and a plan of action. Here are some ways to think about how to use your data via the process of superforecasting to improve your business outlook and also improve your bottom line.
What is superforecasting?
Superforecasting: The Art and Science of Prediction is a book written by Philip Tetlock & Dan Gardner. It talks about how to use limited resources to make your predictions as accurate as possible. Based on the results shown by a program called “A Good Judgement Project,” people who have been trained with forecasting skills make better predictions than people who have not. Therefore, with proper training and practice, everyone can be a superforecaster.
Why forecasting and making predictions are important
Forecasting is needed for both our personal and professional lives. For instance, you may want to predict the 2020 presidential election result if you are interested in politics, or you may want to see how much revenue you can make by the end of next quarter to foster company growth. With forecasting, you can be more prepared and purposeful, which leads to accuracy and efficiency in your work and life.
Three tips for superforecasting
- Break down complicated questions into smaller ones so you can find answers that will help you make predictions incrementally. It’s often easy to get overwhelmed when making a key decision about the future, so instead of tackling the big problem as a whole, break it down into the smaller components so that you can feel confident in your justification and reasoning for making a final decision on the big idea.
- Use an outside view to jump into your prediction and inside view to generate a more specific prediction based on the uniqueness of the question. So often in business we make decisions as key stakeholders in the company’s strategy or operations without considering how our consumers may be impacted by or view the problem at hand. When looking at a question from the consumer’s perspective, it provides us with better context on what questions need to be answered internally and what solutions can be created to solve them.
- Be open-minded about feedback and failures since everything changes over time. It is always beneficial to keep digging and updating your predictions, but also make sure you are not under- or overreacting to information. It’s important to keep in mind that the forecasting is a way of making predictions. While you can better at making them, you won’t always be right and you’re sure to make mistakes as well. Understanding this should take the pressure off making a decision and enables you to recover after making a mistake or two. One person can’t know it all either. Make the best use of your time when you bring talented people together, and create an environment where everyone feels safe and comfortable to bring up diverse perspectives.