How to tell when fortune-tellers might get it right

Foreseeing the future
It was George Bush who, on NBC television, quoted an Iowa farmer as saying, "The future ain't what it used to be."

Mr Bush was not a man noted for his felicitous syntax, but you can sort of see what he meant. As far as quantity is concerned, we are going to get an enormous amount of the future in the next three weeks as everybody does their projections for 1998 - you may even read a bit of it in this column. But as far as the quality of the future is concerned, it will in the main be pretty low-grade stuff. Most predictions of the future, sadly, turn out to be terribly wrong.

Some of the more spectacular mis-calls of the past are charted in a new book, The Fortune Sellers by a US business consultant, William Sherden, and anyone who wants a bit of fun at the expense of the futurists will enjoy snippets such as Herman Kahn's 1967 forecast that by 2000 we would be using nuclear explosives for excavation and mining, or Paul Erlich's prediction, a year later, that by the 1990s war, pestilence and famine could lead to 500 million deaths, that the polar ice caps would melt and the sea level rise 20 feet, and that eventually "The most intelligent creatures ultimately surviving this period are cockroaches".

Yet we go on buying these predictions. As individuals we buy the books in their millions, City firms pump out predictions for financial markets, companies run forecasting units to help them do their corporate planning, and in Japan, the government's Science and Technology Agency has 3,000 people producing a long-range forecast, the largest forecasting exercise in human history.

I'm not sure about the value of the Japanese effort, given the inability of the country to pull out of recession, but of course some predictions have been remarkably prescient. Edward Bellamy, a Boston novelist, predicted in 1887 that by the year 2000 women would have achieved equality with men and achieved prominence in professions, trades and sports, that health and safety regulations would protect workers, and that everyone would have "a credit card ... with which he procures ... whatever he desires whenever he desires it". He also predicted cars and planes, electric lighting and heating and computers and keyboards.

The trick, of course, is to sort the nuggets from the dross. Here is where William Sherden is most helpful. For example there are some things, like long-range predictions of the weather, which seem to be hopeless. Even day-old ones, such as you read in this newspaper, are apparently not an awful lot of use. (Sorry about that.) But very short-term predictions, those that look forward a few hours, are useful: "If you are in need of a reliable weather forecast, get it as current as possible from either radio or television."

If forecasting the weather sounds a dismal science, economists are much worse than weather forecasters. We get the turning points of the economy completely wrong, we fail to predict recessions, we have not improved over 30 years and none of us are consistently better than the others. Market gurus have about the same success as economists: they are about as good as a random selection. The advice for anyone with money to invest is to avoid both excessively gloomy forecasts and excessively optimistic ones, and simply draw up an orderly financial plan based on your savings, your needs, and the amount of risk that is acceptable.

Population: here are the really scary predictions - that, for example, the world's population, currently 5.9 billion, will grow beyond the carrying capacity of the planet, and that the number of human-kind will collapse. Predictions of population growth have been pretty accurate on a 20-year basis, so we know that by 2020 there will be about 8 billion people in the world. What we don't know is the ability of the world to supply their needs. Not only do we not know the ultimate carrying capacity, which in any case will change over time, but we don't know the consequences of going beyond it. All past predictions of global famine have proved wrong, as food production has grown faster than population. But they may be right at some future date. My own view, for what it is worth, is that 8 billion looks possible, but one would have to make very ambitious estimates of growth of food production for the world to be able to sustain more than about 12 billion.

Technology. Well of course we get that wrong too. At an early stage there are always lots of competing technologies and it is very difficult to see which ones will be the ultimate commercial winners: sometimes we lock- in to a less good technology that we might have done: the QWERTY keyboard, the Microsoft operating system for PCs. But there are some guides. One is that it takes 20 years, maybe more, for an invention to go from the lab to popular use, so virtually all the technologies in popular use in 2020 exist now in some form. Another guide is to ask what people really want: do we want video-phones? If we do we will get them; if not, it won't be worthwhile. I am convinced that the Internet, by the way, has now reached unstoppable mass, and it and its successors will have a profound impact over the next 20 years.

Finally, there are the corporate gurus. Much fun has been made of Tom Peter's and Bob Waterman's In Search of Excellence, where the authors looked at 43 successful companies and distilled the reasons for their success into ten rules. Trouble was that within two years one-third of the firms described as excellent were in serious trouble. My own instinct here is to accept that corporate planning will make errors, and therefore seek to make the planning as flexible as possible: plan to be nimble.

And that really is the value of this book. The key is to identify levels of certainty: what we really know, what we cannot know, and what are the possibilities in the vast area in between. But do enjoy the crop of predictions for the year to come. Just use them as a template into which to fit your own ideas ... then if you are wrong you will only have one person to blame.

Comments