Elevate your enterprise data technology and strategy at Transform 2021.


“Radio has no future. Heavier-than-air flying machines are impossible. X-rays will prove to be a hoax.” – Lord Kelvin, 1899

January is boom time for soothsayers, sages, and snake oil salespeople everywhere. As we self-flagellate after the Christmas excesses, diets, detoxes, and dryathlons abound, in most cases without a shred of medical support.

And in the popular press, forecasts and predictions for the year ahead add to the nonsense.

It was my original intention to write about the history of the predictions business and have a good old laugh at the stupidity of some otherwise pretty clever people. Inevitably, BuzzFeed is already there, so I’ll leave you to check out for yourself their 26 shockingly bad predictions.

Instead, I thought I might try to understand why exactly we persist in this, frankly, monumental folly.

Predictions sell

Making predictions is a tempting business. It supports self-esteem, for who can make predictions but an expert, and we envisage the adoration of our fellow humans that will follow when our wisdom is demonstrated — or even just by dint of showing our expertise.

They sell well, too. It is an uncertain world, and that puritanism is gnawing at our self-worth at this time of year. Forecasts are something to cling to, and they make the future seem more navigable. Expertise and control by proxy, if you will.

They are, of course, as flawed as the idea of detox itself (don’t you think you’d be pretty close to dead if you were really full of toxins?)

The plight of overconfidence

In the investment world we have learned in the last decade — or at least been taught — of a host of behavioral biases that we labor under. Among these, overconfidence is a major one. Studies have shown humans tend to rate their predictions more highly when they have more information (expertise), even though this often does nothing to improve the accuracy of the predictions.

So the question becomes, given the poor record of forecasting is widely understood, do they serve some ancillary purpose instead, aside from supporting our self-esteem?

There are perhaps two types of forecasts. There is the quantitative, market-type forecasting, the type that says 330m PCs will be sold in 2015. As a point estimate, they are doomed to failure, but they do help with planning and navigating in an unpredictable world. The numbers can be modified over time, but they offer a stake in the ground, a framework around which a company or an entire industry can plan the near-term future, adjusting when necessary.

Vanity predictions

It’s also possible that the vanity-type of prediction helps us, too. Amara’s Law tells us that we tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run. Down the line, things will change, and the bold, futuristic forecasts, while almost certainly wrong except by pure luck, might encourage creative thinking about the future. This can be used in business strategy both as a defensive and offensive tool.

Because there is one thing that is certain today, especially in technology, and that is that we are in an unprecedented period of disruption. Look at digital downloads of music, which had only just conquered CD sales before shrinking in the face of streaming services; or Hailo, a disruptive technology platform in its pomp for all of a couple of years before Uber came along, causing them, I would guess, untold challenges.

The most accurate prediction about predictions is that they will turn out wrong. But pointless? Not by a long way.

Chris Woodcock is an independent technology analyst and founder of Cedilla Research. He was a professional footballer with Newcastle United in a former life, and tweets at @chrisjwoodcock.

This story originally appeared on Tech City News. Copyright 2015

VentureBeat

VentureBeat's mission is to be a digital town square for technical decision-makers to gain knowledge about transformative technology and transact. Our site delivers essential information on data technologies and strategies to guide you as you lead your organizations. We invite you to become a member of our community, to access:
  • up-to-date information on the subjects of interest to you
  • our newsletters
  • gated thought-leader content and discounted access to our prized events, such as Transform 2021: Learn More
  • networking features, and more
Become a member