How Business Pre-Mortem Planning can Solve Survivorship Bias

Your team is preparing to launch a new initiative. You have studied the market leaders, reverse-engineered their strategies, and built a plan modelled on their success. Yet, a nagging thought persists, "What about the companies that tried this and failed?"

By focusing only on the survivors, you are basing your strategy on a dangerously incomplete picture.

This is the trap of Survivorship Bias––a logical error that makes the lessons from failure invisible. How do you make those crucial, hidden lessons visible? You conduct a business pre-mortem.

I. The Core Idea

How The Business Pre-Mortem Prevents Failure

The most effective way to ensure a project’s success is not to focus on the pathways to victory, but to proactively identify and eliminate all the pathways to failure. (🔗Inversion Mental Model)

The core idea behind a business pre-mortem is prospective hindsight: the counterintuitive act of imagining your project has already failed in the future in order to understand how to save it in the present. It is a systematic method to analyse what went wrong: intentionally creating a safe, structured environment to explore potential disasters and allowing your team's experience, skepticism, and critical thinking to become its asset.

II. The Everyday Analogy

Resilient Planning

Imagine you are planning a complex, multi-city vacation. A success-only approach would involve booking flights and hotels for an ideal itinerary. This is the equivalent of studying successful competitors.

A resilient, pre-mortem approach is different. After booking the ideal trip, you ask your family,"Imagine it’s the end of the vacation and it was a total disaster. What went wrong?" Immediately, the real risks surface:

• The connecting flight was canceled, and we had no backup plan.

• We lost a passport, and we didn't have digital copies.

• Everything was more expensive than we had budgeted for.

  
  

By identifying these potential points of failure in advance, you can build a more robust plan, i.e. buying travel insurance, making copies of documents, and adding a budget buffer. The pre-mortem does the exact same thing for a business project, transforming a fragile plan into a resilient one.

III. The Practical Toolkit

Conducting a Business Pre-Mortem

This framework, developed by psychologist Gary Klein, is a simple but profound process for overcoming team overconfidence and identifying risks before they become realities.

Let's put it into practice. Create your own Pre-Mortem Plan following the 5 steps guideline below.

Step 1: Preparation and Briefing

Gather the entire project team after the plan has been finalised, before execution begins. Ensure everyone has a complete understanding of the project's goals, timelines, and key components. The facilitator sets the stage by emphasising that the goal is not to critique the plan's creators, but to collectively make the plan stronger.

Step 2: Imagine Complete Disaster

This is the critical psychological shift. The facilitator makes an announcement,"The project is over. It has been a complete and utter failure; we were an embarrassment to the company." This is presented not as a possibility, but as an established fact. This framing is essential because it legitimises dissent and frees team members from the social pressure of appearing pessimistic or disloyal.

Step 3: Individually Generate Reasons for Failure

Each team member now has 5-10 minutes to individually and silently write down every plausible reason they can think of for this disastrous outcome. Why did the project fail so spectacularly? The reasons could be technical, logistical, political, or market-related. The individual brainstorming prevents groupthink and ensures a wide range of ideas are captured.

Step 4: Consolidate and Prioritise Risks

The facilitator goes around the room, asking each person to share one reason from their list, which is recorded on a central whiteboard. This continues until all unique reasons have been collected. The team then discusses the list, grouping related items and identifying the most critical, high-probability risks.

Step 5: Revise and Strengthen the Plan

The project plan is then revised to directly address the key vulnerabilities unearthed during the exercise. The output is not just a list of worries, but a set of actionable changes to the plan, new contingency plans, or areas that require deeper investigation.

IV. The Deeper Dive

The Foundational Case of the Missing Bullet Holes

The logic behind the pre-mortem is best illustrated by a foundational case study from World War II. The U.S. military wanted to add armour to its bomber planes to improve survivability. They analysed the planes that successfully returned from combat, meticulously mapping the patterns of bullet holes. The data showed damage was heavily concentrated on the wings, tail, and central body. The intuitive conclusion was to reinforce these areas.

However, the mathematician Abraham Wald identified this as a fatal error caused by Survivorship Bias. The military was only analysing the survivors: the "silent evidence" was the location of damage on the planes that were shot down and never came back. Wald correctly deduced that the areas with the fewest bullet holes on the returning planes, such as the engines and cockpit, were the most vulnerable, since hits to those areas were catastrophic.

He advised the military to reinforce the parts that appeared untouched on the survivors. This historical account is the perfect proof of concept for a pre-mortem: by focusing on the failures (the missing planes), Wald was able to identify the true risks that a success-only analysis had completely obscured.

This same logical error echoes across many other domains:

In Finance

Investment fund performance charts often exclude funds that have failed or been merged away. Studies from financial research firms like 🔗Morningstar have consistently shown this bias artificially inflates reported average fund performance, often by over a percentage point annually.

Over the long term, this creates a misleading picture of the real average returns an investor can expect.

In Entrepreneurship

The stories of college-dropout founders are central to startup folklore. The statistical reality is stark: data from industry analysts like 🔗CB Insights indicates that approximately 90% of startups ultimately fail. By focusing on the handful of famous outliers, we ignore the silent evidence from the overwhelming majority, creating a flawed and dangerously optimistic blueprint for success.

In Medicine & Health

We hear testimonials about unconventional treatments from the people they worked for– the survivors. This creates a distorted perception of efficacy because we don't see the silent graveyard of failures. This is most evident in drug development, where according to analyses from the 🔗Biotechnology Innovation Organization, approximately 90% of drugs that enter human clinical trials ultimately fail to receive FDA approval.

V. The Advanced Context

Overcoming the Organisational Blind Spot

A pre-mortem is a powerful tool, but it is not a panacea. To use it wisely, an expert must understand its limitations and the deeper systemic biases it seeks to overcome. While the technique is excellent for identifying known risks, its effectiveness is constrained by both human psychology and the nature of complex systems.

• A pre-mortem is only as good as the honesty of its participants.

• If poorly managed, the exercise can make the team so engrossed in imagining every possible negative outcome that they become paralysed and afraid to take necessary risks.

• The pre-mortem is designed to surface risks that you can anticipate if you think hard enough. However, it is largely incapable of predicting 🔗Black Swan events: high-impact, low-probability events that are outside the realm of regular expectations.

Ultimately, a pre-mortem is a tool to identify latent errors and hidden flaws within a plan or an organisation. However, as sociologist Charles Perrow's Normal Accident Theory suggests, some failures are inevitable in tightly coupled and complex systems; no amount of planning can eliminate all risks.

The expert-level understanding of its purpose is to build resilience and humility.

It forces a team to confront the illusion of control, to respect the complexity of the world, and to build a plan that is not only designed to succeed but also robust––perhaps even 🔗Antifragile––enough to gracefully absorb the impact of unforeseen problems.

Sources, Further Reading & Disclaimer

Tversky, A., & Kahneman, D. (1974).

🔗Taleb, Nassim Nicholas. The Black Swan: The Impact of the Highly Improbable

🔗Klein, Gary. (2007). "Performing a Project Pre-mortem" (Harvard Business Review)

🔗Munger, Charlie. A Lesson on Elementary, Worldly Wisdom

🔗Moore, A. W., & Hunt, G. (2021). "A push of the past affects the back-pull of the present in palaeontological analyses" (Nature)

🔗Fraiberger, S. P., et al. (2018). "Quantifying reputation and success in art" (Science)

🔗Castilla, E. J., & Benard, S. (2010). "The Paradox of Meritocracy in Organizations" (Administrative Science Quarterly)

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