Posted by Adam Gordon on Jul 21, 2009 in 2025, all, failed predictions, forecast filtering, Future Savvy, history, Perils of Prediction, politics of the future, strategic foresight, trend tracking
The copy of USA Today, slipped under my Chicago hotel room door on Friday—failing which I would have missed the event entirely—marks the 40th anniversary of Apollo 11 putting man on the moon (July 20, 1969). It says: “40 years after Apollo 11: What’s our Next Step?” The strap goes on: “The moon again? Mars? An asteroid? Four decades after the moon landing, NASA seeks a new—and affordable—frontier in space.”
The failed “our-future-in-space prediction” cluster is useful because it is the poster child for bad predicting, nothing less than foresight idiocy in its purest form, worth mentioning only because it helps us to see smaller and more subtle future-thinking mistakes we make routinely.
This is what I said in Future Savvy (Chapter 5):
“The forecasts that surrounded the future of space travel and exploration are perhaps the most high-profile and comprehensively poor set of forecasts ever made, and therefore provide a good vantage point to consider what can go wrong in forecasting. From the 1950s, space was a huge topic of interest. All significant earthbound exploration challenges had been overcome, technology was moving rapidly, and what lay ahead, unconquered, was space. The need to explore it was deeply in the zeitgeist.
“At the same time, the Cold War created the specific situation where beating the Soviets in prestige projects was an important priority, important enough to divert massive resources to it. J.F. Kennedy’s rousing (future-influencing) 1961 prediction of putting a man on the moon by the end of the decade motivated and galvanized the United States, and the resulting Gemini and Apollo programs made this not only a human achievement but a successful prediction. As a result, analysts of all stripes were quick to project the trend and predict a moon base, lunar communities by 2000, followed soon by trips to Mars and beyond, and on to the limits of space. . . .
“The last man to set foot on the moon was in 1973. The Space Shuttle tried to maintain forward momentum under the guise of scientific research, not without disaster, and an almost inconsequential international space station has been built. To this day there are many who cry into their soup over the lack of space exploration and conquest. So what happened? The groundswell of prediction was wrong because it failed to see that putting a few U.S. men into orbit did not add enough value to enough peoples’ lives to justify the expense—particularly in the economically uncertain 1970s. In the end, the majority of consumers voted with their wallets to postpone, if not entirely eviscerate, human space exploration.”
One could go into great detail, but simply put, the intertwined elements resulting in this poor view of the future were:
1. Failure to recognize user utility and the choice consumers make in determining the future. That is, for most people the cost of any space venturing is not worth the benefit (i.e. what benefit?) The fact that we “can do it” is hardly relevant. The real futures question is always: do most people want it? In the 1960s space was “worth it” (particularly in that the goal was clear and bounded) because spending billions on a prestige project made sense at a time of (a) absolute US economic prosperity and (b) ideological dispute with the USSR.
2. Projecting trends without considering the strength of underlying drivers. Space exploration was, apparently, on-the-up in the 1950s and 60s. But trends are only as good as the drivers that support them. When the drivers go away (lack of public support due to cost/benefit issues) the trend stops. In fact, there is no real, dependable, trend to space exploration. There was a blip in the 1960s when conditions temporarily favored a national prestige extravaganza. There wasn’t a trend before, and there hasn’t been any since.
3. Forecasting mired in the conditions or spirit of the present, the zeitgeist. Space was important in the golden-era 50s and 60s; and particularly in that it was arena of competition with the Soviets. But it’s always a mistake to assume the framing conditions of the present will exist in the future, and in this case 40 years later, they most certainly don’t.
Don’t hold your breath
What of 40 years time? It is quite likely that “space flip” flights into orbit will be safe and cheap enough to commercialized in the next decade. Unmanned probes (again safe and relatively cheap) will continue, and popular access to their images and experiences will be greatly enhanced. But that’s all that will happen until such time as costs and other conditions of possibility change fundamentally, which implies a completely new form of space travel, of energy, of materials, and of human resilience and longevity. Not in this century.
Wired Science ran a July 20 article “40 Years After Apollo 11, NASA Maps Out the Future,” which puts the best possible spin on this unmanned-probe future. It is careful to end without crushing the feelings of space junkies, saying: “Any American landing on Mars through the Constellation program would come some time after 2030.” It won’t happen, and here’s another secret: if anyone is going to land anywhere it will be a Chinese person. China still has prestige projects ahead of it, and human space exploration could be one of them.
read morePosted by Adam Gordon on Mar 30, 2009 in 2015, all, economy & finance, leadership, lifestyles & values, management, managing uncertainty, social change, strategic foresight, trend tracking
The International Herald Tribune (New York Times Global Edition / Reuters Business) last week ran an interesting foresight story headlined ‘Crisis complicates forecasting by luxury brands,’ reporting from the International Herald Tribune’s eighth conference on luxury in New Delhi. The gist was that although most of the famous brands continue to do well despite the recession, luxury sector executives are very uncertain about the future.
Christian Blanckaert, Executive Vice President at Hermès International was quoted as saying: “We have absolutely no visibility into 2009!”
On the one hand, fair enough. This economic downturn is steeper than previous down cycles, and the basic viability of the financial sector has been tested. Access to credit is normally easier in a recession, but in this one it is not. All of which makes luxury spending harder to predict.
No doubt the most unlikely prediction of all would have been that Hermès, Burberry, LVMH, Moët Hennessy, Louis Vuitton, and PPR (Gucci , Yves Saint Laurent) have all recently reported better-than-expected results.
Nevertheless luxury industry leaders have declined to provide investors and analysts with any official outlook. What’s curious, from an industry foresight point of view, is how executives such as Blanckaert thought they really had more “visibility” into any previous year, or that they will somehow gain it again when the financial crisis is over. They will not. The world will continue to surprise them and us. What they will gain, certainly, is a greater likelihood that the standard business-as-usual future assumptions they make will not be upset by reality.
Meanwhile, judging by the conference, the luxury goods industry has a very decent grip on current social and moral trends, and clear insight into the bigger picture of change in its industry over the next five to ten years. As they know from before, what happens in a recession is that luxury goes out of fashion. Conspicuous consumption wanes, or retreats further behind secluded walls. This is a basic pendulum swing that tracks the economy (witness how the early 1990s recession stimulated a return to “values” era after the “me, me, me” 1980s.)
Sustainable luxury
So we are again in a swing to modesty. But we also know that each swing of the pendulum also carries with it the specific issues of its time. Current key issues for consumers in this segment are sustainability, global warming, business ethics, and globalization (or fear thereof).
Therefore the luxury brands will be looking for ways of making, transporting, and displaying goods in an energy-efficient and socially conscious way, including a renewed emphasis on local artisans and traditional craftsmanship that speaks sustainability in both natural and human resources. This will be the basis of the “sustainable luxury,” positioning that the famous houses will define and compete in. Fabulous and renewable – now there’s something you can charge top dollar for.
read morePosted by Adam Gordon on Mar 16, 2009 in 2025, all, economy & finance, emerging technologies, forecast filtering, lifestyles & values, Perils of Prediction, policy, social change, technology change, trend tracking
It’s all in a day’s irony when Guinness releases its 250-year view of the future on the day that the UK Chief Medical Officer pleads for a minimum price for alcohol (and Gordon Brown, for now, says no, but don’t bet on that holding for long.)
Guinness' view of the pub of 2259. Image credit: Chris Bainbridge
The Guinness Pub-of-the-Future is a St. Patrick’s day (March 17) promotion. Nothing wrong with a little bit of fantasy foresight. But what they come up is so “20th-century-futurism” it’s hilarious. Among various reports on the project – for example in the Telegraph – the following features are foreseen:
- robotic doorman, greets you by name
- cash obsolete; orders via RFID; payments deducted automatically
- your product tailored to you on the spot
- touch-sensitive tables, send your order straight to the bar
- socializing via virtual / hologram technology
- a running tally of the number of units consumed.
Yawn. Even on it’s own terms (minimal constraints of realism) this is a totally derivative piece of foresight. These “innovations” are the staples of an infotech view of the future, and they have all been thought and spoken of countless times. Also many of the elements and services cited are already here, or not more than a decade away. What we have is the current pub assumptions + digital steriods, while the year 2259 will be, truly, another world.
The limits to growth
But all this leads us to more interesting industry foresight problem. Will there be pubs in even a generation, never mind 250 years? What the Telegraph dryly observes at the bottom of its report is that 39 pubs are closing every week Why? A number of driving forces are coming together:
First is strict drink-driving limits, which makes “the local” literally local or nothing. Second, pubs in the UK have traditionally been a refuge from housing that was poor and/or underheated. Unprecedented waves of affluence (credit-crunch notwithstanding) have led to widespread housing “do-ups.” It’s now a valid option for most people to spend their leisure time at home and entertain at home.
Then there’s the where’s-my-friend trend. You’re likely to go down the pub if your friends are there, but not if they are where most people’s friends are: on Facebook.
The social-legislative clock
Fourth, no matter how you dress it up, pubs are retail outlets. So, like all retail they are under the cosh in a Wal-mart / Tesco world. The price gap between store and pub has become too great for most consumers to cross with good conscience.
Which brings us to the current price-floor legislation bid. Alcohol is a huge social cost in terms of health care and violence. Drink costs the NHS £3bn a year, and the total price of alcohol to the taxpayer is estimated at five times that. Eventually these costs will become unjustifiable so, like smoking before it, the social-legislative clock is ticking for booze. As the 2-martini lunch has become the 2-seltzer lunch, the trend to social stigmatization is clear, and legislators will follow (not with Prohibition, but with a much more subtle community-endorsed squeeze).
Like the good politician he is, Gordon Brown won’t let his party get ahead of the trend. But the trend is clear and it bodes ill for pubs.
read morePosted by Adam Gordon on Mar 5, 2009 in 2015, all, decision-making, economy & finance, foresight tools & methods, management, managing uncertainty, prediction markets, trend tracking
Prediction markets have been in the news a lot for their forecasting potential. These markets – where participants buy and sell bets as to whether future events happen or not – mimic “real” securities markets, so it stands to reason that real markets are predictive too, and they are.
My question, as the Dow Jones Industrial Average (DJIA), and the FTSE100, the DAX, the Hang Seng and so on have hit a decade lows is, what is this predicting, if anything? What is the long-term value of this prediction, and could it be used to make better decisions in the real world?
We know that the value of a common stock – a share in a company – is based ultimately on the returns (dividends) it will bring. Buyers and sellers therefore derive a daily market price based on their views of the share’s expected, that is, predicted future payback. The greater the expectation, the greater the price. A high price vis a vis earnings (P/E ratio) suggests confidence in future earnings, and vice versa.
Therefore the current steep fall in share prices is an expectation of (crowd prediction of) lower future payouts. Of course the complexity in human-prediction situations is that this basic level is also overlayed with a meta-level: people are not only trying to figure out what will happen, they are trying to figure out what others think will happen. So falling PE ratios are an expectation of what others will do (predicting they will continue to sell.)
Madness or not?
One of the perplexing things about the markets is they very often seem to react opposite to what is expected; to what would be common sense. They often fall on good news, rise on bad news, close unchanged on big news, and so on. Although there is – famously much irrational behavior and herd instinct in the market – you don’t get hundreds of thousands of decision-makers wagering significant money not using common sense.
What is going on, of course, is that the market has often already risen or fallen in prediction of the news. When a new condition – an interest rate move, for example – is imminent, the market will move to “price in” the expectation. If market participants as a whole have called the future correctly the market will not move much on announcement.
Pricing-in the future
Because of this predictive component to group decision-making in market situations, the stock market as a whole is a classic leading indicator of the real economy. When prices move they may be taken as the crowd “pricing-in” a future prediction. So markets will fall ahead of real economic problems (they may continue to fall, as now, during steep economic declines.) But they will also turn up well before any real, measurable upturn.
By the way, there is little doubt it will overshoot in this time, as it always does. This is because, as in prediction markets, the wisdom of crowds can predict the trend but not the turn. Trend extrapolation will never show you the key shifts, and this is why predicting the bottom or top of a market is so hard.
The point, for market speculators, is that long before the real gloom is over the markets will be zooming upwards. The point for the rest of us is that recession times will be with us even after the markets move up. In the long term the market will go up. Like death and taxes, it’s the surest thing there is.
read morePosted by Adam Gordon on Jan 6, 2009 in 2015, 2025, all, decision-making, failed predictions, forecast filtering, managing uncertainty, Perils of Prediction, technology change, trend tracking
Happy New Year! Well, this time of year traditionally brings out the “January 1 quarterbacks,” poking fun at the wrong predictions for the year just past, awarding dunce caps, particularly (deliciously) to famous people.
This punditry is widely read, and sometimes published in respectable places. Some of it is just year-end fun, and nothing wrong with that. But there is also a failed-forecast “nyah-nyah” that is corrosive to the foresight field in general, which demands answers. So at the risk of giving the 20/20 hindsight artists undue oxygen of attention, here are a few thoughts:
Consider Foreign Policy’s “10 Worst Predictions for 2008.” (Dec, 2008). Highlights include:
“If [Hillary Clinton] gets a race against John Edwards and Barack Obama, she’s going to be the nominee. Gore is the only threat to her, then. … Barack Obama is not going to beat Hillary Clinton in a single Democratic primary. I’ll predict that right now.” —William Kristol, Fox News Sunday, Dec. 17, 2006
“Should I be worried about Bear Stearns in terms of liquidity and get my money out of there?’ No! No! No! Bear Stearns is fine! Do not take your money out … —Jim Cramer, responding to a viewer’s e-mail on CNBC’s Mad Money, March 11, 2008 [Bear Stearns was sold to J.P. Morgan Chase at about a 90% discount to it market capitalization at the time of the forecast]
“The possibility of $150-$200 per barrel seems increasingly likely over the next six-24 months.” —Arjun Murti, Goldman Sachs oil analyst, in a May 5, 2008, report [Oil was then around $130 a barrel. By late December it was below $40.]
Or this one from Business Week’s list of 10 (December 24, 2008)
“Existing-Home Sales to Trend Up in 2008″ —Headline of a National Association of Realtors press release, Dec. 9, 2007 [On Dec. 23, 2008, the group said November sales were running at an annual rate of 4.5 million—down 11% from a year earlier—in the worst housing slump since the Depression.]
The Future Savvy question is: how should we think about predictions like this? And how should we think about failed-forecast spotting?
1. Failed-forecast spotting is not remotely “scientific”
This should be obvious, but somehow never is. Purposefully extracting the failed forecasts from the total set of forecasts says nothing about the quality of the set in general. Many did predict Obama; did predict the downturn, etc.
2. Failed-forecast spotting raises a healthy skepticism, but runs to nihilism
Despite not passing any credible test of knowledge, at least failed-forecast spotting stokes apprehension about forecasts and the wisdom of experts. At base this is healthy. Prediction is hard, and it is mostly done poorly. And experts often transgress the boundaries of their expertise. (Typically, in this instance, they know a lot about their field, but often don’t know more than the next Joe about the future of their field, often because their expertise is wedded to existing practices and assumptions.)
Prediction skepticism is fine. What happens, however, is that tempts a “nobody can predict anything” nihilism. This is its own failing because many predictions are in fact excellent, producing good foresight, which is a key strategic and competitive advantage.
3. Often the short term future is harder to see.
This is the trickiest insight of the lot. As everyone knows, it’s impossible to accurately predict the future (which is not the same as usefully predict the future, see arguments in other posts). The world is just too complex, too chaotic. But there’s a wrinkle. It should be that the further we look into the future the harder it is to see. The world will change more – there is more time for unpredictable things to happen. The short-term future (one year, say) is closer to us, it should be more like today and we should be able to anticipate it better.
In fact, short-term foresight is the most impossible task: a casino game. In the longer term (10-20 years, say) strong trends can be relied on to have had their impact. For example, the move away from fossil fuels, or effective nanotechnology engineering, or simple domestic robotics, can be reliably forecast. But while the sweep of these and other similar evolutions are reliable over time, the short-term picture will suffer lags or reversals that follow no pattern at all. (It’s no accident that is this is just like the stock market. In the long term the market will go up, in the short term it can go anywhere.) Also short-term predictive failure is compounded by the fact that the standard to which it is held is higher – we expect specifics: dates, places, numbers, players, winners – that are not demanded of a long-term view. In other words, near-term predictions are all about “point forecasts,” and there’s nothing more impossible than a point forecast unless you believe in tea leaves and crystal balls.
The take away: short-term point forecasts really are a mugs game and the skeptics are right. Medium-long forecasts, when well done, are worthy of our strategic and competitive attention.
read morePosted by Adam Gordon on Dec 3, 2008 in 2015, all, emerging technologies, failed predictions, forecast filtering, innovation, technology change, trend tracking
I finally got to look at Kevin Kelly’s TED presentation on “the next 5,000 days of the Web,” and bring it up here because it’s really worthy of comment from a foresight quality – Future Savvy – point of view.
Kelly needs no introduction. He’s the executive editor of Wired and a core who’s-who in the new media technology world. The first lesson he has to share is a key one: the Web is only about 5,000 days old – that’s about 13 years (the Internet, DARPA, etc., is older) – and all the stuff we have and now take for granted, from online investing to social networking to Wikipedia has happened in this short time.
The video is available here:
As Kelly says, and he’s undoubtedly right: “if I had predicted all this would be there (and free) nobody would have believed it. It’s impossible. The lesson is that very big changes do occur in fast-moving industries when considered over a decent-length (e.g. 10-15 year) timeframe. So let’s not kid ourselves: mere extrapolation of current trends doesn’t take us to the future. A leap – a paradigm shift – a willingness to anticipate fundamental shifts in technologies, institutions, and business models, is required.
So, against this, it is interesting that much of what Kelly predicts for the next 5,000 days of the Web is fairly conservative… but he does build in the idea of a new, fundamental shift.
The Web in 2020
What does he see coming in the next 5,000 days?
1. First thing is what Kelly calls “Embodiment” of the Web, by which he means that every device, every screen (laptop, phone, iPod, sat-nav, etc) becomes a “window into the machine” rather than a stand-alone device. There will be one Web, one machine, and everything will go through it. Part of this is that the Web will be embedded into the physical world – inanimate objects from cars to shoes to will have connectivity. Whether through RFID or other technologies, “there will be an Internet of things.”
Hello? We’ve heard this all before. Many times. In fact we were hearing it in the 90s. This doesn’t mean it’s wrong. In fact if we’ve been hearing it for so long, and the trend is still clearly in this direction, the forecast is probably right. What’s interesting is how non-radical it is.
2. Next he talks about “Restructuring” which is his term for the “Semantic Web” or what some call “Web 3.0” The idea is: first we linked computers (the Net), then we linked pages (the Web), and next we will link all the data or information or ideas anywhere on the Web to all relevant data /information/ ideas elsewhere on the Web. (This made possible by technologies such as XML, RSS, OWL, API, RDF)
One of the payoffs of this, says Kelly in an illuminating example, is that we won’t have to “re-friend” in each social networking platform. The technology will know we’re “friends” with Warren Buffet and Tom Peters and Malcolm Gladwell (…lol) as we move from Linked-In to Facebook to Technorati, and so on.
3. Kelly’s final point is that humans will be co-dependent with the Web. It will be always on, always there, ubiquitous, and the single fundamental tool we depend on to do everything.
Again, there’s nothing new in these points. It’s all been said before. In fact, as is often the case in good futures thinking, the value in Kelly’s forecast is that it is a carefully considered “cut” from what is usually forecast, leaving behind the wilder things that are said. Kelly on Web 2020 doesn’t say “expect digital human implants; ‘conscious’ devices; retina-as-screen,” and so on – the beam-me-up-Scotty kind of foresight that unfortunately often gets the headlines.
The next stage
Nevertheless, he is equally not saying the next 5,000 days will be “like the Web, only better.” The capabilities, the embodiment, the dependency, imply a new stage, he says. What that new stage will look like at the business and institutional level – what products/services/delivery will be possible via Web 3.0 – what the Yahoo or Google or Facebook or similar iconic institutions will there be, Kelly does not get into.
Fully thinking through the next 5,000 days of the Web involves going from the capabilities to what is built on them. But all in all this is a classy, integrated piece of future thinking (that easily fulfills the Questions to Ask of any Forecast checklist in Chapter 11 of “Future Savvy”) and is a solid foundation on which to consider future business and organizational implications.
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