Bad Forecasts: Tales from the Unexpected Future

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Slides from my presentation on why we make bad forecasts, why the future is a social activity, and what we can do close the gap between what we think we know and what we actually know.

For more check out https://www.competitivefutures.com/data-lab and http://www.ericgarland.co/keynote-speaker-executive-educator/

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Bad Forecasts: Tales from the Unexpected Future

  1. 1. TALES FROM THE UNEXPECTED FUTUREeric garland
  2. 2. “The future will be better tomorrow.”- Dan QuayleFormerVice President of the United States
  3. 3. The world isn’t a mess from what we don’t know,but from what we know for certain that just ain’t so.-Mark Twain
  4. 4. There are things we know that we know...these are known knowns.There are the things we know that we don’t know...these are known unknowns.But then there are the things we don’t know that we don’t know...these are unknown unknowns.- Donald RumsfeldFormer U.S. Secretary of Defense
  5. 5. We know where the weapons of mass destruction are.They are in the area around Tikrit and Baghdad, east, west, south, and north somewhat.- Donald RumsfeldFormer U.S. Secretary of Defense
  6. 6. STOCHASM:The difference between what youthink you know, and what youactually know.
  7. 7. I think about the future a lotDo you seewhat I see?Housing bubble?What?
  8. 8. Three big questions• What is our understanding of future riskand reward?• When and why do we fail?• What can we do today to improve ourperception?
  9. 9. for today• A children’s treasury of bad forecasts• Epic fails: Market research• Epic fail: Risk estimation• How to improve our foresight(despite the risk)
  10. 10. BAD FORECASTS
  11. 11. “What, sir? You would make a ship sail against the wind andcurrents by lighting a bonfire under her decks?I pray you excuse me. I have no time to listen to such nonsense.”- Napoleon Bonaparte to Robert Fulton, upon hearing of the latters plans fora steam-powered engine.
  12. 12. "It has too many shortcomings to be seriously considered as a means ofcommunication. The device is inherently of no value to us."-- Western Union internal memo, 1876.
  13. 13. “Remote shopping will flop.”-- Time Magazine, 1966
  14. 14. "We dont like their sound, and guitar music is on the way out." --Decca Recording Co. rejecting the Beatles, 1962
  15. 15. “By the end of the century, we will live in a paperless society”Roger Smith, CEO of General Motors, 1986
  16. 16. “This technology will lead to ubiquitous education and world peace!A whole bunch of people
  17. 17. things we do to mess up forecasts• Overestimate technological advance• Underestimate technological advance• Right forecast, wrong timescale• Failure to comprehend social impact• Miss secondary and tertiary effects• Ignore intransigent human nature• Discount wildcard events• Missed assumptions about actorbehavior• Emotional attachment to the outcome
  18. 18. WE reject the NEW, the important, the disruptiveand place it in the category of“ridiculous”
  19. 19. Short list of ridiculous things• Women comfortable in the working world• A computer that fits in a single room• People being able to use computers at workwithout “training.”• The Japanese as serious industrial competitors• The Koreans as serious industrial competitors• The Chinese as serious industrial competitors
  20. 20. ALMOST EVERYTHING IMPORTANTSTARTS OUT AS A FUTURE SO RIDICULOUSYou look dumb talking about it.
  21. 21. GREAT MOMENTS in EPIC FAIL:MARKET RESEARCH division
  22. 22. BETTY CROCKER
  23. 23. DUNCAN HINES
  24. 24. GUINNESS STOUT IN AFRICA
  25. 25. GREAT MOMENTS in EPIC FAIL:risk analysis division
  26. 26. The mortgage market
  27. 27. The mortgage market
  28. 28. Fukushima Nuclear power plant
  29. 29. WE usemechanistic forecastingfor a complex world
  30. 30. improving our perception offuture risk and reward
  31. 31. the future is actually a group activity
  32. 32. We rely on authority to tell us whichfutures are safe to discuss
  33. 33. What does an authority look like?
  34. 34. can you rely on this man’s forecasts?• 2005:We’re not in a housing bubble• 2007: Growth with limited risk• 2008: Unemployment will go down• 2009: It’s all good, dude!
  35. 35. take a systems approachACTORDECISIONSTHE HUMOROF THE GODSSTRUCTURALFACTORS
  36. 36. take a systems approachCustomersCommunitystakeholdersDisruptivetechnologiesToday’sCompetitorsThe environmentEconomictrendsPoliticsRegulators andgov’t agencies
  37. 37. Rigor VISION
  38. 38. What you can do starting today• Start tracking economic, technological and social trendsoutside of your industry• Hold active discussions with stakeholders about what it allmeans• Ask how customer needs will evolve from macro-trends• Tell your customers that you have their future in mind
  39. 39. @ericgarlandEricGarlandFuturewww.ericgarland.coThank you so much!Merci Beaucoup!

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