Six Rules for Effective Forecasting by Paul Saffo

Rule 1: Define a Cone of Uncertainty
A cone of uncertainty delineates the possibilities that extend out from a particular moment or event. The most important factor in mapping a cone is defining its breadth, which is a measure of overall uncertainty. In other words, the forecaster determines what range of events or products the cone should encompass. Drawing the cone is a dynamic process, and what we see here is just one iteration.

Rule 2: Look for the S Curve
Change rarely unfolds in a straight line. The most important developments typically follow the S-curve shape of a power law: Change starts slowly and incrementally, putters along quietly, and then suddenly explodes, eventually tapering off and even dropping back down.

Rule 3: Embrace the Things That Don’t Fit
The novelist William Gibson once observed: “The future’s already arrived. It’s just not evenly distributed yet.” The leading-edge line of an emerging S curve is like a string hanging down from the future, and the odd event you can’t get out of your mind could be a weak signal of a distant industry-disrupting S curve just starting to gain momentum.

Rule 4: Hold Strong Opinions Weakly
One of the biggest mistakes a forecaster—or a decision maker—can make is to over rely on one piece of seemingly strong information because it happens to reinforce the conclusion he or she has already reached. This lesson was tragically underscored when nine U.S. destroyers ran aground on the shores of central California on the fog-shrouded evening of September 8, 1923.

Rule 5: Look Back Twice as Far as You Look Forward
Marshall McLuhan once observed that too often people steer their way into the future while staring into the rearview mirror because the past is so much more comforting than the present. McLuhan was right, but used properly, our historical rearview mirror is an extraordinarily powerful forecasting tool. The texture of past events can be used to connect the dots of present indicators and thus reliably map the future’s trajectory—provided one looks back far enough.

Rule 6: Know When Not to Make a Forecast
It is a peculiar human quality that we are at once fearful of—and fascinated by—change. It is embedded in our social vocabulary, as we often greet a friend with the simple salutation, “What’s new?” Yet it is a liability for forecasters to have too strong a proclivity to see change, for the simple fact is that even in periods of dramatic, rapid transformation, there are vastly more elements that do not change than new things that emerge.

Even in periods of dramatic, rapid transformation, there are vastly more elements that do not change than new things that emerge.

Read Full Article @ Harvard Business Review

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