Probablistic Thinking
One of the most powerful scientific ideas for prediction is the Bayes' Theorem. Most people's thinking is binary - 1 or 0, yes or no, true or false. This kind of thinking is prone to over-confidence and often results in wrong predictions.
Bayes' Theorem tells us to think in terms of the probability of an event happening and update that probability as we observe new events. For example, we are playing chess and we want to predict whether our opponent will attack from the left or right so that we can defend accordingly. For a start, the probability that we will be attacked from the left is 50%. Subsequently, we see that he move a pawn up on the left, and thus, we adjust the probability that we will be attacked from the left to 66%. However, after this, he moves his rook from the left to the right! Thus we quickly adjust the probability that we will be attacked from the left to 19% and moved to protect ourselves on the right. (For those who are more mathematically inclined, the formula and calculations of how to derive those numbers are at the back of the book.)
One key difference between you and those binary thinkers who thought that the opponent will definitely attack from the right is this: you know that there is still a non-zero 19% chance that the opponent will still attack from the left so you can prepare yourself accordingly, e.g. leave 20% of your forces to defend the left in case your opponent launch a "surprise" attack from the left.
We are not saying that we need to take out a calculator every time we make a move. The key here is to always think probabilistically for all kinds of events and adjust the probability as events unfold. Practice this every day, and your prediction ability will definitely improve.
Second-Order Thinking
Another method to out-predict your opponents is second-order thinking. In his exceptional book, The Most Important Thing, Howard Marks explains the concept of second-order thinking.
First-level thinking is simplistic and superficial, and just about everyone can do it (a bad sign for anything involving an attempt at superiority). All the first-level thinker needs is an opinion about the future, as in “The outlook for the company is favorable, meaning the stock will go up.” Second-level thinking is deep, complex and convoluted. It requires us to not only consider our actions and their immediate consequences, but the subsequent effects of those actions as well.
First-order thinking is fast and easy. It happens when we look for something that only solves the immediate problem without considering the consequences. For example, you can think of this as I’m hungry so let’s eat a chocolate bar.
Second-order thinking is more deliberate. It is thinking in terms of interactions and time, understanding that despite our intentions our interventions often cause harm. Second order thinkers ask themselves the question “And then what?” This means thinking about the consequences of repeatedly eating a chocolate bar when you are hungry and using that to inform your decision. If you do this you’re more likely to eat something healthy.
First-level thinking looks similar. Everyone reaches the same conclusions. This is where things get interesting. The road to out-thinking people can’t come from first-order thinking. It must come from second-order thinking. Extraordinary performance comes from seeing things that other people can’t see.
A lot of extraordinary things in life are the result of things that are first-order negative, second order positive. So just because things look like they have no immediate payoff, doesn’t mean that’s the case. All it means is that you’ll have less competition if the second and third order consequences are positive because everyone who thinks at the first order won’t think things through.
Second-order thinking takes a lot of work. It’s not easy to think in terms of systems, interactions, and time. However, second-order thinking is a smart way to out-think and out-predict your opponents.
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No matter what method you use, always predict what is your opponent's next move.
The threat you do not see is the one that defeats you.