Forecasting the Future: Helping a Gorilla to Imagine a Black Swan

Black Swans and Gorillas

When exploring future possibilities, there will always be predictions and assumptions. But the future is complex, and how can forecasts be made in an uncertain world?

In the 17th century prior to the discovery of Australia, Europeans believed that all swans were white. It was only after a species of black swan was discovered in Australia that people's ideas about swans were upturned.

In recent years, the term "black swan" has become popular after Nassim Taleb used it in two books on uncertainty and probability. The term "black swan" is now used to describe events that are entirely unpredictable but which generate enormous impact. Taleb believes that historical development has occurred in the form of sudden leaps, and that the important events that cause major changes in human history are generally unpredictable.

There is a joke about gorillas that suggests that the average accuracy of expert predictions is roughly equivalent to a gorilla playing darts. The first time the author saw this joke was in a book on predictions. The author studied the methodologies used in the predictions made by experts in scientific literature from 1984 to 2004, and found that the expert predictions were equivalent to random guesses.

To have a gorilla imagine up a black swan might make people imagine that the future really is impossible to forecast. There are differing views on this in the industry.

One academician named Philip Tetlock participated in an intelligence research project of the Intelligence Advanced Research Projects Activity (IARPA). In forecasting competitions, his precision forecasting project team would regularly beat the competition by a wide margin. Competitors included academic teams as well as government analysts with access to confidential data. In the second year of participation in IARPA, his team achieved a forecasting accuracy of 80% and became the sole partner of the IARPA.

Tetlock came to two conclusions in his research. First, accurate forecasting is possible. Second, the method of forecasting is more important than the authoritativeness of the forecaster.

In Tetlock's view, in the majority of cases, statistical algorithms can outperform subjective judgment. However, there are no effective algorithms when forecasting many things. Using computers to help people overcome the limitations and prejudices of their understanding can markedly improve the accuracy of predictions.

Tetlock also found that the accuracy of results from group forecasting was higher. Of course, the people involved must be very familiar with the field that they are dealing with. This result is probably owing to the combination of multiple "other perspectives".

Group forecasts must ensure the independence of every individual, and avoid extreme "groupthink". Otherwise, group discussions will smother the ability of individual members to make independent judgments. This will lead to an accumulation of erroneous viewpoints and result in what has been termed "collective stupidity".

Former Intel CEO Andrew Grove once proposed the idea of fostering "constructive confrontation", which entails encouraging skepticism within the team founded on a respectful attitude, and to boldly seek out help.

In addition, staff from external organizations can be introduced. This will help restrict the viewpoints of internal leaders and break down hierarchies.

To return to the coiner of the concept of black swan events, Nassim Taleb, he believes that the attempts made by Tetlock to improve forecasting ability are impressive. However, Taleb holds that events that can be predicted are unimportant, and the truly important events are not predictable.

One thing that Taleb and Tetlock agree on is that there is no evidence that forecasters of geopolitics and economics can accurately forecast events beyond ten years into the future. The restrictions to which forecasting is subject are the result of unpredictable, non-linear, and systemic changes. Minor variances in forecasts become magnified over time.

An Incorrect Map Can Still Provide Correct Directions

In this enormous, incredibly complex world, our ability to forecast the future is very limited. However, there are things that can be learned from the major trends in history.

There are many examples showing that sometimes predictions can be self-fulfilling. Forecasts about major trends, once accepted within an enterprise or an industry, have the potential to be self-fulfilling prophecies.

During the First World War, a contingent of hundreds of German soldiers got lost in the Swiss Alps and had nearly exhausted their supplies. The group had differing opinions about which way they should travel, and the commander was at a loss for what to do. In an abandoned cottage in the mountains, they found a yellowed old hand-drawn map. But no one could understand the writing. Nonetheless, the soldiers were convinced that the map was of the local region. Based on the route indicated on the map, despite encountering many dead ends, forks in the road, and loops, they persisted and eventually miraculously found their way out of the mountains.

Later on, the commander found someone who could make out the writing on the map, and discovered that the map was of a region in southern Austria. It was entirely unrelated to the Swiss Alps.

By relying on this incorrect map, they nonetheless were able to find the right way forward. Why was that? The map was incorrect, but it helped the group smooth over their differences of opinion and reach a consensus. Combined with persistence and constant correction, they eventually succeeded.

In many cases, whether or not a forecast is correct, a spirit of brave exploration, consistent action, dedication, and flexibility in the face of change will generate a positive result.

If a large enterprise doesn't have any forecasts about the future, how can it make large investments into R&D? Doing one's best to establish correct assumptions and targets for the future, whether or not they are correct, is critical to an enterprise. This is why Huawei founder Mr. Ren Zhengfei has said: "Making the right assumptions will point us in the right direction. With the right direction, we can think the right thoughts. With the right thoughts, we can establish the right theories. With the right theories, we can launch the right strategies".

Can we predict the future? It isn't always certain. But a consensus in society, industries, and large enterprises can help forecasts and assumptions to be self-fulfilling.

The future doesn't exist yet, which means we can shape it through joint effort.

500 letters to input.