The problem with predicting the future of business
July 06, 2021
I’ve spent the past year thinking about the future. It’s been my day-to-day obsession as the research lead for Business Futures, a new capability that explores future trends in how businesses will work and grow.
At times it’s felt like a daunting task. Not least because, historically, even the best minds have been pretty good at getting the future wrong.
Take The Book of Predictions, a 500-page compendium from 1980. It’s based on a simple idea: ask various experts — from Nobel Prize winners to purported psychics — to imagine the next 50 years. Some of the 4,000 predictions were on the right track. One contributor foresaw the “wrist telephone”, albeit 25 years before the iWatch. But most were wrong, some wildly. The year 2000 did not usher in an ice age, or indefinite life expectancy for humans.
Why do the smartest of us get the future wrong so consistently?
Our individual biases lead us astray. We tend to be overly optimistic that the things we want to happen will bear out. We mistakenly base our predictions on our past experiences. We interpret new information as fitting into our existing mental models and beliefs. Indeed, neuroscience research suggests facts that support a conclusion we want to reach are more readily available in our memories than other information less supportive of our preconceived notions but equally relevant.
To ask someone to predict is invariably to ask them what they hope to see.
The inclination to base our views of the future on what we already know can be seen in The Book of Predictions. The sci-fi writers, for example, foresee the discovery of alternate life forms and have us renting asteroids. To ask someone to predict is invariably to ask them what they hope to see.
So, how do you forget your fantasies and generate real foresight?
I certainly can’t claim to have the answer. But I can offer some lessons learnt in how to address our inherent biases from my experience developing Business Futures.
Those who are particularly good at foreseeing the future — such as the “superforecasters” documented by Philip Tetlock — aren’t afraid to sacrifice their ideological sacred cows. They shake up their perspective. They draw on other fields, outside experiences, and analogies for alternative viewpoints.
That’s why in developing Business Futures, we didn’t just draw on our own insights to identify and select Signals of business change. Instead, through a crowdsourcing and prioritization exercise, we drew on the collective insights of our global research team, community of Managing Directors, and network of external advisors from across government, business, and civil society. Well over 1,000 people, all told.
Taking a hive-mind approach helped us connect the dots between trends and uncover Signals that might otherwise have been missed. In the wake of the pandemic, it’s an approach that is gaining traction in governments looking to prepare for future shocks. Ministries of futures, such as the UAE’s Ministry of Possibilities, are breaking down departmental silos to develop an integrated, cross-governmental capacity for the development of predictive models, future scenarios and risk analysis.
In forecasting, a large amount of interrelated weak information tends to be more reliable than a single point of strong information. It’s easy to be thrown off by one erroneous source that leads you astray.
In substantiating our Signals, we used a range of research methods alongside our crowdsourcing exercise. These included a C-suite survey with over 2,600 respondents from 18 countries and 20 industries, economic modeling, data science techniques such as natural language processing, and case study development.
Prediction is about future certainty; forecasting looks at how currents in the present signal possible changes in direction for companies. Our goal is to identify a range of possible futures, not false certainties. Whether a specific Signal actually turns out to grow in strength is only part of the picture.
That’s why in our final report we didn’t just outline a singular narrative for how the Signals might evolve, but also “wildcards”: outcomes at the edge of plausibility that might conceivably happen but were uncomfortable to contemplate.
“Real Virtualities,” for example, is a Signal in which we present a future in which the physical and virtual worlds become increasingly blended. But whilst these real virtualities might offer enhanced customer experiences and new growth opportunities, in our wildcard we also outline how they could encourage digital deception. Imagine that fake, yet realistic, AI-generated videos of a CEO spreading disinformation about a company go viral, and the damage that could inflict on a brand’s value, trust with customers and share price. Some organizations are already working to prevent this abuse. All this points to an unfolding race, with AI-driven creation of “counterfeit realities” looking to outpace our detection capabilities.
Hidden biases are everywhere. But they need not cloud our foresight. Taking these steps have helped us peer into the future, defining a set of Signals of change — and associated wildcards — that will shape the business landscape in the years to come. Take a look at our Business Futures 2021 report to help you prepare for what might materialize, no matter how uncomfortable it might be.