Friends,
I hope that all is well with you and yours.
Things on my end have been, shall we say, adventurous since last we spoke. I have realized that there was an item that I forgot to add to my list of infant top tips: do not get ill, if you can in any way avoid it, at the same time as they do. I was reminded in the most painful of ways; the entirety of the Castlin household has now been floored with Covid for a week and a half.
Having the virus by yourself, with all that follows, sucks. Having it while also needing to take care of a toddler with a seemingly endless supply of ungodly fluids is worse.
As a result, finding time and energy to write has been challenging, but I will always do my best to ensure that you have a fresh batch of insights and commentary in your inbox every Friday. Should this one appear unusually incoherent, I can only apologize. I tried. I really did.
Predictions, forecasts, and anticipation
As alluded to in previous newsletters, we are today going to begin our next big theme: how, if at all possible, to figure out what may lie ahead.
It is, of course, a topic fraught with bullshit.
Since the dawn of time, knowledge of the future has been highly sought-after. Leaders of the past would make offers to oracles, prophets, shamans, and seers; leaders of today invest billions into predictive modeling. And then, just like now, charlatans have followed in their wake; where there is money to be had, there are cons to be found, particularly when the time between the cheque and the promised return is significant.
But beyond the obvious value of insight into what is to come – it is, after all, much easier to place bets if the outcome is certain – our desire to look to the future also tells us something about how we view the present. We think of our todays as insufficient, messy, desperately flawed, and far from what we had once hoped it would be. As a result, we make up stories about our tomorrows and more often than not, they have a happy ending: the issues that nagged us for so long will finally be no more.
It is a display of what Steve and I call the Garden of Eden fallacy., i.e., a wishful evasion of a reality we do not desire in favor of an idealized future state that forever will escape us. As much as the space of what is possible is indefinitely larger than the space of what will ever become actual, these alternate universes never come to be. Problems, if solved, are replaced by new problems. Challenges, if overcome, are replaced by new challenges. Despite the point of the original exercise, the consequences of our actions remain unforeseen, not least because we stubbornly ignore any scenario-to-be that forces us to face uncomfortable truths about ourselves.
We know this because the future has a history. Time and again, we have attempted to define what lies beyond the adjacent possible, an undertaking doomed a priori. Time and again, we have therefore failed. Yet we do not learn from our mistakes.
Instead, we continue to make predictions, typically in one of two ways: through innate power or through technological prowess.
The former is where one might find so-called futurists, futurologists, TED speakers, and similar folk of deservedly ill repute. If there was anything in their claims, anything at all, these people would have had such an evolutionary advantage over the rest of us that they would effectively rule the planet. But there is not, so they are not, and I will leave it there (lest I develop Tourette’s).
The latter group is often taken with a larger degree of sobriety. Predictive modelling has increased dramatically of late under the Laplacian assumption (or consultancy argument) that the more scientifically advanced the approach, the more accurate the forecast. This, as we know from previous newsletters, is untrue; the most advanced supercomputers on the planet, running the most sophisticated models, have proven no better at predicting GDP trends than the entirely naïve model which says that the upcoming quarter is likely to resemble the preceding one. Economists, like generals (to reuse a point originally made by James Mackintosh), excel at fighting the last war. They build models that incorporate previous problems, and are constantly blindsided by new issues.
But they are hardly alone in doing so.
Accuracy, it turns out, is elusive; the more we seek it, the more we lose it – until we are, to paraphrase Rory Sutherland, no longer vaguely right but precisely wrong.
A critical question follows. If information (or at least data) provides diminishing return, and resources are finite, where and how does one draw the line? Indeed, I would consider the conundrum (which I have yet to name; suggestions would be welcomed) one of the most difficult in all of business analysis and strategic management.
And so, over the next few years, we shall look into it. Along the way, we will dig into works such as Tetlock’s notion of superforecasting and the van Dorsser integrated three-layered foresight framework, not to attempt to predict world events, but to understand the limits of our capabilities, become more efficient, better our diagnostics skills, and improve our future histories.
I anticipate that it will be an interesting journey.
Until it begins, have the loveliest of weekends.
Onwards and upwards,
JP
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