We are at that time when most of us are ‘on edge’ as the new year begins, knowing intuitively we’re facing a future that feels more uncertain than before. It’s all too easy to become overwhelmed or want to crawl into a hole somewhere and just hibernate until the future arrives.
There are two ways of making predictions: Aleatory and epistemic. The former is based on probability of some sorts. For example, when asked whether it will rain tomorrow, we seldom don’t know for sure. Problems of such nature are sometimes solved by tossing a coin. You, however, cannot walk around tossing a coin for every decision, as this will result in a random life that will be unhappy. The latter focusses on well-grounded evidence of facts based on an existing body of knowledge derived from episteme (Greek for knowledge).
At this time of the year we are faced with myriad questions. Will the economy get better? Or worse? When? How will it affect you personally? How will your job change in the near future (if it even exists)? Will your company thrive or struggle? What’s going to happen to health insurance, social welfare, climate change?
How will terrorism affect free travel? What’s going to be the impact of erratic weather on agricultural production? Or will health pandemics affect you personally? And is your business going to be disrupted? Will corporate profits ever return or are we going to continue witnessing profit warnings? Will your salary be finally reviewed upwards, or continue to drop in real terms?
We’d all love to know the answers to these questions and more, but, of course, if you did you would be rich and famous. More fundamentally, how can anyone predict or plan for a future so filled with uncertainty? It has been said that the best way to predict the future is to create it. However, as much as we’d all like to create our own future, that isn’t a realistic option.
Most forecasts make explicit assumptions about future trends, estimate probabilities and include educated guesses about what’s going to happen. The IT professionals, for instance, have what we call a clairvoyance algorithm that goes to the future to look at possible outcomes and react to them. However, in today’s highly volatile and unpredictable economy, assuming any kind of predictability in the marketplace can be fatal.
Economists, for instance, share the opinion that traditional strategic planning is worse than useless when dealing with the uncertainties of today’s economy. Indeed, traditional thinking about the future, as if it were actually knowable, is downright dangerous. Most strategic planning approaches embody several fundamental assumptions that are patently false in the current business environment:
In my coaching practice, there is a technique that I use mostly to put my clients’ mind in a future frame. This technique helps them recover from a false start by avoiding being in one in the first place. Your mind powers your motivation differently when you think about the past and when you focus on the future. Often, you realise your mind will be powered positively when you think about the future, and there is a power in doing so.
I have used this technique when working with teams that are about to embark on a project. A powerful mind-bending question I always pose is “assume it’s six months from now and your project is a complete disaster, what went wrong?” The team using the power of prospective hindsight, offers some answers. Most organisations and individuals avoid thinking of failure in advance.
The state of business today shows how totally irrelevant and even misleading those assumptions are. What we need instead is an approach to planning that moves at the speed of the internet, embraces uncertainty, and prepares the organisation to move in several different possible directions, sometimes simultaneously.
More about this is covered under the topic Forecasting Techniques in my upcoming book- Big Data and Predictive Analytics: Raise your Data [email protected]
More about this is covered under the topic Forecasting Techniques in my upcoming book- Big Data and Predictive Analytics: Raise your Data Quotient.
Author and data scientist at Predictive Analytics Lab