Great decision-makers aren’t just bold and smart. They also tend to analyze large amounts of data in order to draw conclusions that others might miss.
Take Nate Silver, 37, a statistician with an impressive track record for making correct predictions in sports and politics. In the 2008 presidential election, he called the winner in 49 of 50 states; in 2012, he correctly picked the victor in all 50 races.
Silver doesn’t pretend to base his decisions on hunches. He rejects the notion that wise predictions require digging up hidden insights, codes or mysteries.
Instead, he looks for obvious factors that people overlook—often due to their own biases. For example, he has found that local weather forecasters overestimate the likelihood of rain. (They don’t want viewers to blame them for getting wet.) Silver checks National Weather Service data in the morning.
He often makes decisions that take advantage of others’ biases. When his Wall Street friends expressed anger over Facebook’s disastrous initial public offering in 2012, Silver realized they were allowing their frustration to trump their judgment. So he bought Facebook stock when it was out of favor.
For Silver, the lesson is to capitalize on any situation when others make decisions for the wrong reasons, letting their emotions interfere or irrationally aligning against a prudent course of action.
“There’s a lot of ways to take a lot of data, mangle what you’re doing with it, not ask good questions, and get yourself in trouble,” he warns.
— Adapted from “The Data Demystifier,” Jon Gertner, www.fastcompany.com.