Future Savvy: Identifying Trends to Make Better Decisions, Manage Uncertainty, and Profit from Change

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INTRODUCTION

This book is about how to evaluate forecasts and extract value from them. It is written to help decision makers in commercial, policy, and nonprofit sectors, as well as ordinary people in daily life, make better judgments about predictions they read and hear, so they can appropriately plan for and profit from the future.

Predictive statements are all around us: in the newspapers, on TV, at conference presentations, in industry reports, consulting documents, think tank studies, and so on. All claim to be valid, but the record shows that few are. So while forecasts are a crucial decision-success resource, they are not in themselves valuable. they are only valuable alongside a clear way to separate the wheat from the chaff. What’s valuable is being able to critically judge this torrent of information and to be able determine which ideas are worth taking seriously—worth planning for and investing in.

This book sets out to communicate tools and approaches that the forecast consumer can use to filter and evaluate statements about the future and thus judge what the real threats and opportunities are. It summarizes and orders the problems common in forecasting, as well as best practices, so that managers and decision makers of all types may be better able to critically interact with the barrage of forecasts that compete for their attention and resources and discriminate between worthy and unworthy ones.

Teaching a Donkey to Talk: Why Forecasts Can’t Be Trusted

There’s an ancient Uzbek parable about a con man who promised a local nobleman he could teach a donkey to talk—for a large fee—but it would take twenty years. Of course, in twenty years the con man, the nobleman, or the donkey would be dead.1 Predicting is safe for the same spurious reason. By the time outcomes emerge, there is almost never anybody around to say, “Hey, that never happened!” And even where there is anyone who remembers the tarnished pearls of predictive wisdom, there is of course no penalty for being wrong. There’s no skin in the game. The predictor may feel a twinge of embarrassment perhaps, but then, who can get it right all the time?

Not only is there no recourse, but putting predictions out into the world is ridiculously easy to do. Anyone can read a few articles, gather the direction of technology and social trends, and make projective links. The forecasting field is not regulated. There is no accepted conceptual framework, accepted methods, agreed professional standards, or guidelines for application to policy or business decision making.2 There is no oversight board or council or licensing mechanism, no organization to which one must belong, no minimum qualifications, no agreed or standard curriculum in teaching forecasting. Anyone with a keyboard or a microphone, it seems, is welcome to babble on about digital media or nanotechnology or climate change or any other hobby horse, and before we know it, we are knee-deep in predictive wishful thinking, scare-mongering, or blatant self-promotion, much of which is not worth our attention.

Part of the lack of standardization means there is no agreed definition of terms. In this book, I’ve used forecasting, foresight, predictions, and future studies more or less interchangeably to refer to works that look to and try to interpret the future. Some analysts use “forecasting” to refer to technical mathematical approaches, and “foresight” to refer to more impressionistic approaches.

Why We Don’t Ignore Forecasts: Why the Future Matters

Rapid change is a constant, ubiquitous feature of our lives. We have seen eye-popping developments across society, technology, institutions, and products and services in the last generation; this will surely continue into the future. But change is not merely interesting. It is competitive. This is because success always implies congruence between decisions and the world in which those decisions play out. If we decide today to launch a product, buy a house, study for a degree, build a new light rail system, or take any similar decision of significance, the environment of tomorrow will be a key factor in the success or failure of that decision. What we do will be tested by the future conditions that emerge. Where there is a good “fit” between the initiative and the environment it plays out in—“the right product at the right time”—we can expect success. If not, we should expect to fail. Our decisions are only as good as the view of the future they rest on. All opportunities and successes and profits are realized in the future. All threats, failures, and losses are in the future.

In a fast-moving world, we know that the future environment will be different to that of today in big or small ways. New technologies, market shifts, changes in legislation, or evolving social values damage or destroy the traditional good fit we have between ourselves and the world. To achieve “future fit” we therefore use forecasts to position ourselves and our organizations, creating (or renewing) the fit between our initiatives and environment. In some cases we may be strong enough also to influence future events and outcomes for our own future benefit, and forecasts help us do this too. Either way, the earlier and clearer we see future circumstances, the better we will be able to benefit by changing our current recipes for success to keep up with the changes in the world. The better managers’ view of the future, the better their decisions will turn out to be.

All enterprises benefit from narrowing down what they must adapt to and plan for—all effort spent preparing for a future that will not emerge is a waste of personal or organizational resources. Good forecasts are a key ingredient in limiting the vagaries of uncertainty, and therein working smarter not harder, avoiding surprises, exploiting new opportunities and plugging weaknesses in fitting in with the future, and where possible influencing the future to suit the organization. This is true not only of business. People and institutions of all types position themselves for success by anticipating and adapting to events, or shaping them. Whether it is an NGO raising money for developing-world children, an urban planner advocating a light rail system, a homeowner deciding to sell a house, or a student making a career choice, identical principles apply—a higher-quality reading of the future operating environment in which these decisions will play out is what separates winners from losers. We should all be vitally concerned with forecasts as we are all effectively betting significant resources on their validity.

So, as individuals and organizations, we are all faced with the task of grappling with the changing world under competitive conditions. Little surprise, then, that we appear “hard-wired” to seek information about changing circumstances and manifest a desire to peer ahead or absorb the insight of those who do. To be competitive we must be reading and listening to forecasts and factoring them into our world view and our plans. We cannot afford to ignore the forecast chatter. This is compounded by the rapid growth of information. The days of the panoptic amateur intellect are over. There’s just too much to know in too many specialized fields. Whether we need to consider decisions concerning the future in healthcare, transport, education, or any one of a thousand areas, we find we are often required to call on specialists in those areas. Being forced to build our picture of the world on the expertise of others, we are, whether we like it or not, retail consumers of others’ forecast perceptions.