Pre-mortem: find the hole before the market does

A pre-mortem is a small piece of time travel. You assume the idea failed, and you ask what happened. The exercise is old in planning rooms because people are kinder to a plan than they are to a wreck. On an investment idea, the same tilt shows up as soon as you want the claim to be true.

Start from the wreck

Write this at the top of the page: “It is six months from now and this idea failed. What happened?” Then answer in facts, not in adjectives. “Sentiment turned” is an adjective wearing a coat. “The supplier renewed the contract at a higher price, and that input is most of the cost” is a fact you can go and check today.

Give yourself a few paths, not one dramatic ending.

• The fact was wrong. The number you trusted was a slide, not a filing.
• The fact was right and already in the price. You were not early. You were late and loud.
• The timeline was wrong. The catalyst is real and two years away, and you sized the idea as if it were this quarter.
• You were holding a tip. The work on the page is someone else’s conclusion with your name under it.

Kill criteria belong in ink

A kill criterion is the fact that ends the claim. It is not a feeling of discomfort and it is not a round number you invent to feel disciplined. “I will reconsider if it falls” is not a falsifier. A falsifier sounds like: “The claim dies if the renewal is unsigned by the date in the footnote.”

Write it before anything is at stake. Afterward, you will be very good at explaining why the criterion no longer applies. The page is there to interrupt that talent.

What the pre-mortem will not do

It will not tell you the future. A careful pre-mortem can still sit next to a bad outcome, and a skipped one can sit next to a lucky win. The review, later, is whether you did the thing you said you would do when the fact showed up. That is process. It is not a forecast, and it is not a reason for anyone else to copy the idea.