Capital Allocators – Inside the Institutional Investment Industry Gary Klein with Paul Sonkin and Paul Johnson – Conducting Pre-Mortem Analysis (Capital Allocators, EP.109)
Sep 23, 2019
Gary Klein, a cognitive psychologist and founder of Shadow Box, is joined by finance experts Paul Johnson and Paul Sonkin. They delve into the Pre-Mortem method of risk assessment, highlighting its origins in the Air Force and its significance in avoiding investment failures. The trio discusses enhancing decision-making through tools like Shadow Box training and Cognitive After-Action Reviews. They critique common risk mitigation techniques and emphasize the necessity of fostering a candid dialogue in teams to improve outcomes and reduce overconfidence.
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Fighter Pilot Expertise
- Gary Klein worked with fighter pilots to understand expertise after the Arab oil embargo limited flight time.
- Pilots, now relying on simulators, realized their intuitive decision-making didn't follow procedures they taught.
Checklists and Tacit Knowledge
- Checklists are helpful for well-defined tasks, but expertise involves developing tacit knowledge for unpredictable situations.
- Effective training helps individuals move beyond rule-following and embrace adaptability and resilience.
Effective Simulation
- Effective simulator training does not require perfect realism.
- Focus on creating challenging scenarios that test decision-making skills, not visual fidelity.
