Nelson's Column

How to Survive the Future

Charlie Nelson

March 2000

 Is it possible to predict the future with any degree of reliability? Not according to William Sherden, Author of "The Fortune Sellers", who reviewed 16 types of forecasters and concluded that the future is fundamentally unpredictable - that chaos reigns. Sherden certainly provided many examples of poor forecasting. One section of this website - Sceptics Corner - also documents forecasts gone wrong, with the aim of learning from past errors. However, Nelson's Column will also document forecasts that have been accurate. My experience is that to develop accurate forecasts, it is important both to understand market behaviour and use modelling techniques that can reflect that behaviour.

Peter Drucker ("Peter Drucker on the Profession of Management") also thinks it is pointless to make long-term predictions but that it is possible to identify changes that have already happened and will impact the future. A common example is demographic change. In the mid-1990's, clothing retailers were experiencing little, if any, growth and blamed an upsurge in gambling. But their biggest spending market, 18 to 24 year olds, was shrinking by 1.7% per year due to a plunge in births in the 1970's. Increased female participation in the workforce and a change in the interpretation of abortion laws precipitated this sharp drop in births. So clothing retailers could have predicted the consequences 20 years earlier but most did not recognise this discontinuity when it hit them.

 

 In relation to things we cannot predict, Peter Schwartz in "The Art of the Long View" shows the importance of making strategic decisions that will be sound for all plausible outcomes. This is where scenario building is important - to scope the range of alternative futures. For example, a policy conference organised by the Australian Chamber of Commerce and Industry developed four in-depth scenarios for the year 2015:

First Global Nation - Australia shows leadership in a "Silicon Valley World"; 

Sound the Retreat - globalisation falls apart, trade barriers are rebuilt, nationalism resurges;

Brave Old World - Over-reliant on tourism and over-promised biotech, we miss the global tide;

Green is Gold - an eco-catastrophe puts the nation into a war-style emergency to restore the balance of nature. 

This website is dedicated to helping us all survive the future - by improving knowledge of market behaviour, discussing forecasting models, identifying discontinuities, and developing scenarios. Contributions are most welcome.