We can’t see the future, but with the right framework we can spot failure before it happens. That turns out to be most of what we need.
I stood in the grocery store, paralyzed in front of the paper napkins. I don’t know why napkins did it, but at that moment, buying them when I might not make payroll seemed frivolous.
I didn’t buy them. I did make payroll. And for the years since, I never forgot the feeling.
For the longest time, I thought that was just how it is. Land a major new customer, but awake at night waiting for the inevitable Very Bad Thing to happen. My employees, customers, partners, wife, kids, all depended on me pulling off the near-impossible feat of seeing around corners.
“All I want to know is where I’m going to die, so I’ll never go there.”
– Charlie Munger
How To See The Future
Munger famously told us that finding the answer is often easier backwards than forwards. So let’s do that.
After the Harrowing Napkin Incident I stumbled on two papers that pointed the way. One, a HBR article, the other in the Journal of Behavioral Decision Making. In the years since, I’ve come to realize that we can tell the future, at least enough to make far better decisions. And I now sleep better at night.
I’ve abstracted this into just four steps. If you have ten minutes, you can do it too. This process was developed from all kinds of things you now don’t need to care about: Decision Science, Fault Tree Analysis, Anticipatory Failure Determination, Intelligence Tradecraft and Red Teaming (but if you want all the details, link at the bottom).
Start big-picture with the company, then use it for any big initiative. Here’s how it works:
Step 1: Write the Death Certificate (1 min). Pick a date 12–18 months out. Write one sentence: “It’s [date]. [company/project] failed. Either it blew up, or it just went nowhere.” Not “is struggling.” Failed or died. There’s actual research (which I’ll spare you) that imagining something has already happened, rather than might happen, improves your ability to identify the real reasons by about 30%. It’s important that you don’t game out how it “could” fail – for this exercise it DID fail.
Step 2: Write the Obituary (4 min). Timer on. Write ten causes minimum. Two rules:
- Quantity, not quality. The first four are the ones you already worried about. You’ll start to struggle, and get real answers, at around six.
- No conditions, only causes. “The market softened” is a condition – every competitor could write the same sentence. “Our three largest customers all deferred renewal past Q3” is a cause. Name an actor doing a specific thing.
Step 3: Be the Saboteur (2 min). “Someone is paying me a lot of money to make this fail. I have insider access and ordinary means. What’s my plan?” Whatever your saboteur reaches for first is your structural weak point.
Step 4: Fix the Future (3 min). Look at your list and ask two questions: which of these actually kills you, versus merely hurts? And which wouldn’t you see coming until it was too late? The ones showing up in both answers are your top three. Now make a table:
- Problem
- One Change to Fix Now: For each Problem, what one change would fix the problem before it happens?
- Tripwire: How you will see it coming and be able to react, phrased as “If [this happens] by [date], then [do this].”
- Named Owner: Who is responsible
What This Is, and Isn’t
This is not a vote on whether to proceed. Don’t use this as a judgment of whether you should do something. This is for things you’ve already decided to do, or are doing – it’s preventing bad outcomes, not passing judgment.
Timing. Run this after you know what you’re likely to do but before you’ve committed. Too early and there’s nothing concrete to attack; too late and it’s a postmortem with better lighting.
Don’t preempt the team. If you run this with your team, you’ll get a sanitized list, because you’re the boss. Everyone writes silently before anyone speaks, and the CEO shares last (or isn’t in the room) for step 2.
This is the simple version. It’ll help you stop the really bad stuff, but it won’t tell you how likely each outcome is, and it can’t tell you if there’s one root cause sitting under several of your failure modes.
Back of the Napkin
I just gave you a four-step cheat code I didn’t have in the paper goods aisle. But I did do a primitive version of Writing the Obituary. The ten failure modes showed me the way – most were the ones I already knew about: downsize the team, go pitch upsells…
Turns out, two of our five biggest customers were the problem – sucking up team time, abusing their contract scope, causing morale problems – and we didn’t have room for new customers paying market rates. Choosing to walk away from revenue in the face of a payroll cliff wasn’t a place I would have looked unless I was forced to.
I fired two bad clients. The team breathed a sigh of relief, and three weeks later one new client replaced the missing revenue entirely, at better margins.
The above was the version I used for most of my career. But if you want an enterprise-grade version, it’s free in my CEO Workbench resources. Access it here: https://rajjha.com/for-founders/ in the Team &. Leadership section under “Failure Mode Protocol”.
