In his book The Art of Thinking Clearly, author Rolf Dobelli writes that hindsight bias can be described as the “I told you so” phenomenon. In retrospect, everything seems clear and inevitable. 

One notable example of hindsight bias is the 2008 financial crash. In 2007, economic experts painted a positive picture for the coming years. But twelve months later, the financial markets imploded.

When those same experts were later asked about the crisis, they offered a range of explanations: from corrupt rating agencies and lenient validation of mortgages, to poor monetary policy and low capital requirements. In hindsight, the causes seemed obvious.

Here’s another, more mundane example: “Sylvia and Chris broke up, have you heard? It was never going to work, they were just so different.”

Or: “They were just so similar.”

Or: “They spent too much time together.”

Or even: “They barely saw one another.”

As Dobelli notes, overcoming hindsight bias is not easy. Studies suggest that people who are aware of the bias fall prey to it as often as everyone else.

But he does offer a few tips to help you recognize the influence of hindsight bias, and appreciate just how bad we are at making predictions:

1. Keep a journal: Write down your predictions – for your career, your weight, political changes, the stock market, and so on. Then, occasionally compare your predictions to actual developments. As Dobelli puts it: “You will be amazed at what a poor forecaster you are.”

2. Read history: Don’t read the “retrospective, compacted theories compiled in textbooks.” Instead, read the diaries, historical documents, and oral histories from a given period. And if you like the news, try reading newspapers from five, ten, or twenty years ago – you will get a better sense of how unpredictable the world really is.

In an essay titled Managing Oneself, management expert Peter Drucker writes that most people think they know what they’re good at, but they are usually wrong. 

As he points out, this is a problem because a person can only perform well using their strengths: “One cannot build performance on weaknesses, let alone on something one cannot do at all.”

Within a few years, this exercise will illuminate your strengths, and leave you with the following 5 actionable conclusions: 

Place yourself in contexts where your strengths can produce maximum performance and results.

The feedback analysis will highlight those areas where your existing knowledge and skills are no longer adequate and need to be updated.                     

People who are very knowledgeable in one area sometimes look down on knowledge in other areas, or they believe that simply being smart is a substitute for actual experience in a given field. Feedback analysis will reveal those cases where poor performance is the result of such arrogance.

This involves those things you do, or fail to do, that “inhibit your effectiveness and performance.”

Drucker gives the example of a person not achieving the results they wish simply because he or she lacks manners. As Drucker notes, many otherwise smart people don’t grasp the importance of manners as the “lubricating oil” of an organization.

For Drucker, no matter our strengths, each of us has “an infinite number of areas in which we have no talent, no skill, and little chance to become even mediocre.” 

You should concentrate your efforts on areas of high competence and high skill: “It takes far more energy and far more work to improve from incompetence to mediocrity than it takes to improve from first-rate performance to excellence.”

Author and entrepreneur Derek Sivers writes on his blog that: “We so often make big decisions in life based on predictions of how we think we’ll feel in the future, or what we’ll want.”

But as Sivers notes, your past self is your best indicator of how you actually felt in similar situations. 

For Sivers himself, this works best as nightly routine. Take a few minutes to write several sentences on what you did that day, and how you feel. Don’t only write about dilemmas or drama – include the daily facts of life.

As he puts it: “This is important because years from now you might be looking back, wondering if you were as happy or as sad as you remember during this time.” 

You can’t trust distant memories, but you can trust your daily diary.

“What else is history for if not to remind us about our better dreams.“

- Author and media theorist Neil Postman in his book Building a Bridge to the 18th Century: How the Past Can Improve Our Future