Will there be a World War III?
Whenever an important question like this pops out, the “experts” come in and give sure predictions on what will happen.
In most cases, the vast majority of these experts are wrong. Even those who do fine at first will eventually be off, falling victim to their own biases.
And the more confident someone is about a future outcome, the more suspicious I typically grow.
Some events are more predictable than others. But more often than not, predicting the future – forecasting – can feel like an impossible mission.
Yet, if you embrace the reality of uncertainty, ask the right questions, and bring some discipline to the exercise, you can increase your chances of becoming a better forecaster.
I’m no forecasting expert. I’ve been off way too often. But, I also improved over time, and here are a few lessons learned that helped me spot the “prediction imposters” and tune my approach.
#1 Nothing is certain until it happens.
Sounds obvious? I know there are immutable laws ruling the universe that you can precisely predict – like rules of physics and gravity.
But, when it comes to future outcomes involving human behaviors, the scenarios multiply; beware of certainty. You’d better put your “critical thinking” hat on and ask yourself deep and probing questions. Stay humble and open-minded.
#2 Cluster big questions into smaller chewable ones
Even on considerations – like “What’s our revenue forecast for the next quarter?” – I’ve seen success when we distilled the main question into smaller chunks.
So, think about everything that would need to be true for an outcome to materialize. Also, ask yourself what would need to happen for this same outcome not to occur. It will ensure you’re considering more potential scenarios.
#3 Keep progressing and tune as things progress
Our world keeps changing every day, so no prediction should remain static. Good and bad events take place that will affect the results. The best forecasters I’ve worked with were the ones who would adjust their thinking as new events would happen.
I also found that starting with a range of possible outcomes and becoming more precise as we’d go provided the best results. Remember, it’s always better to be directionally correct than precisely wrong!
#4 Luck is a crucial part of the equation
Not all things happen for a reason. One way or another, we need to acknowledge that luck – or lack thereof – will influence business outcomes. A more precise definition of luck is the sum of all the events you have no control over, affecting a result.
Over time, forecast after forecast, it all regresses to the mean. One can more easily discern what role true expertise or sheer luck played in the outcome. From there, you can work your way towards influencing what used to be just luck and have more control over your destiny.
Superior forecasting is hard, but you can grow from the experience with practice and some humility, whether your predictions were right or wrong.
As Enrico Fermi, the famous atomic physicist, once said:
“There are two possible outcomes: if the result confirms the hypothesis, then you’ve made a measurement. If the result is contrary to the hypothesis, then you’ve made a discovery.”