Reprinted from Britten Coyne Partners Strategic Risk Blog
At Britten Coyne Partners, we provide clients with advice, education, and forecasting offerings to help them better anticipate, accurately assess, and adapt in time to emerging threats to their strategy and survival.
One of the points we stress is the importance of reducing overload by searching for high value information, and using it to update prior beliefs (e.g., estimates, forecasts, models). But what constitutes high value information?
We focus on two types.
The first is “high likelihood indicators.” In the face of an uncertain future, we often have a mix of probabilistic beliefs about different scenarios or outcomes that could develop in the future. High likelihood indicators are valuable because their presence (or absence) is much more likely to be observed in the case of one scenario or outcome compared to the others. Put differently, high likelihood indicators reduce our uncertainty about the future.
The second type of high value information is anything that triggers the feeling of surprise, which is usually evidence that is at odds with what our mental model of a system or situation would lead us to expect. Surprise is valuable because it increases our uncertainty about the accuracy of our mental models, and signals that we need to improve them.
Unfortunately, the feeling of surprise, and its ability to focus our attention on high value information, is very often fleeting. As Daniel Kahneman has noted, our “System 1” brain automatically seeks to make new sensory inputs cohere with our existing beliefs. This often happens very quickly; we find ourselves remembering feeling surprised, but forgetting what it was that triggered it.
For that reason, leveraging surprise requires us to call on “System 2”, our conscious deliberative brain. In our experience, the best way to do this is to write down the information that triggered the feeling of surprise, so that we can later consider its implications.