Using counterfactual thinking

- What's the point in thinking about what could've been or what might've happened? What's done is done. We've heard this. We've probably fought this. But don't drown your sorrows or celebrate too soon because this counterfactual thinking is how important insights are revealed that will improve your decision quality. Counterfactual thinking is systematically uncovering possible alternatives to outcomes from past events. It involves modifying what happened along the path to an actual outcome, assessing the consequences of the modification, and generating a counterfactual, alternative, event or outcome. Upward counterfactuals are ones with better alternative outcomes like if we hadn't launched after our competitor, we would now have 80% of the market share. Downward counterfactuals are alternative outcomes that are worse than what actually happened like if I hadn't taken that LinkedIn Learning course, I wouldn't have gotten that promotion. There are five steps to counterfactual thinking. One, identifying a prior event with an unexpected outcome. Two, identifying factors along the path to the outcome. Three, selecting one factor at a time to modify. Four, assessing consequences of each modification, and five, generating a counterfactual. Let's start with identifying an event with an unexpected outcome. Maybe your product launch wasn't as successful as you planned, your presentation was a bust, or your negotiation didn't play out in your favor. Unexpected positive outcomes count too. Maybe you didn't expect to get that promotion so soon. You didn't think that the launch would be so successful or you didn't expect to negotiate such favorable terms. We'll borrow ane example from Isaiah whose negotiation with his supplier, Stan, didn't have the outcome he expected. Isaiah was shocked and disappointed when Stan shortened Isaiah's payment terms from net-45 to net-30. What happened? Identify the factors along the path to the outcome. Include internal factors you controlled and external factors you didn't control. Including external factors helps you consider the impact of less predictable events in your decisions. For Isaiah, here are the internal factors he controlled. The first time Isaiah ever talked to Stan was during the negotiation. Isaiah asked to go from net-45 to net-90 day terms. Isaiah stressed how valuable the supplier was to their organization. Isaiah didn't control these external factors. Stan had just landed a huge contract with another company. New tariffs had impacted Stan's costs. Next, select one factor to modify. What if Isaiah had met with or talked to Stan prior to negotiating? Assess the consequences of the modified factor. If Isaiah had met with Stan, he might've learned about external factors impacting Stan's business that could've informed his negotiation. Generate a counterfactual, upward or downward, like Isaiah successfully negotiating 60-day terms. That's better than the net-30 terms that Stan did offer, an upward counterfactual. Repeat the process choosing different factors to modify. Remember, actual is not all that's possible. When generating your counterfactual, use questions like what could've happened? How might we have felt? How might we have reacted? Use counterfactual thinking exercises to uncover possibilities for next time. Conduct these exercises with your team and witness and improvement in decision quality.