We all strive to make better decisions at work. We hope to estimate the correct predictions. We try to guess which social media campaign will garner more online traffic, or which sales pitch will win over the client? We also try to guess when is a good time to talk to the boss about your leave? All these choices will yield better results if we aim for the one with the highest probability.
So, what is the meaning of thinking probabilistically?
It is the capacity to think critically of probability of an event by eliminating uncertainty and using deductive logic. For instance, if you want to plan a social media campaign for a product, you need to be able to decide the best method by eliminating unsure platforms and guessing by deduction which are the methods which worked for a similar product or market before.
In general, research suggests, the best starting point for predictions ¬— a key input into decision making — is to ask “How often does that typically happen?”If your company is considering an acquisition, it should start by asking how often acquisitions enhance the acquirer’s value or otherwise further its goals.
The idea with both prediction and judgment is to get away from the subjectivity. Instead, you want to take the “outside view,” where you start with similar cases before considering the specifics of your individual case.
This objectivity towards the potential probabilities also comes with an unbiased analysis of the situation, considering a holistic perspective. A popular study on prediction and probability in decision making was done by Philip Tetlock of the University of Pennsylvania. He found that those who preferred to consider multiple explanations and balance them together before making a prediction performed better than those who relied on a single big idea.
Tetlock’s study also found that domain expertise and practise helped people perform better in using probability to arrive at decisions. To take the earlier instance of social media campaign, it is more apposite if you are an expert in digital marketing and have experience with previous campaigns to arrive at better choices.
Improving your ability to think probabilistically will help you better express your uncertainty and to numerically think about “How often does this usually happen?” this will aid critical decision making.
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