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Archive for August, 2009

In praise of forecasting: a series

Monday, 31 August 2009 11:24 Written by Eric Garland 0 Comments
  • “It’s impossible to tell the future.”
  • “Nobody could have seen this coming.”
  • “ These days, things are so unpredictable, we just focus on the short-term.”
  • “We have entered into a period of history of high instability – forecasting is practically impossible.”

iStock_000005408268SmallThe above are classic canards used by the media and some authority figures to argue against the intellectual exercise of thinking critically about the future. They have been used with alarming frequency since the bank meltdown of last year. The collective shrugging of the shoulders of our banks and Treasury officials was often accompanied by sighs of “How could we have know what was coming? It was all TOTALLY random. That’s just the way of the world now.” Ergo, we needn’t think hard about the possibilities of converging trends, we should just check in to be told what’s going on.

This is wrong, and it is counter to how smart leaders act. None of that has changed, bank catastrophe or not.  Think about the future and you will improve it. Ignore it, and other people will create your future for you.

This week marks my tenth anniversary as a forecasting professional. I can now look back on forecasts we made a decade ago with today as the target date. Thinking about a decade of predictions, scenarios, visions and forecasts, I can say I am more excited than ever about this intellectual discipline. In short, it works, it helps, and I still recommend it to every executive on Earth.

This week, I’ll be sharing some of my favorite stories of forecasts we made in the heady days of the Dot Com Boom. If ever there was a period of irrational exuberance, that was it. And we still saw into 2010 with some clarity – enough so that I’m proud to discuss our successes and amusing failures.

15,000 visitors to the Competitive Futures Blog in August

Sunday, 30 August 2009 12:43 Written by Eric Garland 4 Comments

Just checked the stats and it’s our biggest month ever on this blog – 15,000 visitors this month alone.

We’re glad you’re listening, and hope to hear from even more of you in our Disqus comments section, which can automatically link to your Twitter account.

Lots more discussion about the future to come. Enjoy the last weekend of summer!

The Do-It-Yourself Future

Thursday, 27 August 2009 09:21 Written by Eric Garland 4 Comments

The vast majority of the media reported economic activity only in terms of gigantic institutions and abstract numbers. We hear about the Federal Reserve, the Treasury, and the rates they charge mega-banks to borrow imaginary money. We hear about unemployment rates, though those statistics rarely include those underemployed, running their own business, or those who don’t participate in society enough to work at a company. Then we hear about the stock market indexes, which is a tabulation of what a tiny group of gamblers in New York, Tokyo, and London were willing to hypothetically pay to own a chunk of some companies’ future earnings. (Actually, it’s not even gamblers, but computers programmed to think like gamblers.)

You may notice, that at no point have you heard about people. Your friends and neighbors and not covered by this analysis. When you provide each other child care, it doesn’t hit the books. Build a barn yourself out of lumber you purchased directly from a mill? GDP will go down. Start a foreign language club? Sorry, it’s not educational sales, and we don’t count that. Grow your own food and eat it? Sure, you may be eating delicious food and cutting your risk of heart disease and diabetes, but all you’re doing officially is taking potential revenue away from companies we measure (and tax.)

When we don’t measure this activity, it’s hard to tell when a trend is happening. When I need help getting reliable trend data, I do what every good analyst should: I go and ask my Dad.

garden2003 compMy father still lives in our hometown of Rutland, Vermont. Yes, yes, I know you’ve been skiing nearby, and it’s quite lovely. Well, the state nearby is lovely; the town is generally on hard times. Due to a completely nihilistic policy of zero economic development, Rutland, and indeed most of Vermont has shed jobs at a terrifying rate. (One of the local heads of economic development once confided to me that what the place needed was more gift shops, “So the tourists really know we’re ‘open for business.’”) Average age of the county is around 53. The kids are gone to Boston and New York and Washington in search of work, except for those who make up our growing heroin problem. Those kids are hanging out near the collapsing downtown of boarded-up former retail space. Pretty bleak, really.

Except my Dad has never had it so good. He’s running the local farm and garden store, and after surviving an onslaught from Home Depot, Tractor Supply, and Wal-Mart (retail stores designed for MUCH larger markets) he’s having his best years ever. The reason: GARDENS. As soon as that economic disaster hit and fuel oil went through the roof, Vermonters wasted no time in getting back to their birthright of bringing up their own food in our frigid, rocky soil. Speaking as a native Vermonter, when you tell us we’re headed back to the agriculture age, threatening some scary pre-industrial nightmare, it just wasn’t that long ago for us. The last town in America to receive rural electrification was Victory, Vermont in 1967, about five miles east of where I grew up.  The idea of a 19th century lifestyle is simply not that terrifying for Vermonters.

Today, despite the meeting in Jackson Hole, Wyoming declaring the whole financial crisis “over,” people in Rutland are still planting gardens, chopping logs for firewood and going back to more self-reliance. This is good news, the sign of a civilization that may not crumble over some fruity derivatives sold by financial companies that didn’t understand them either. In the end, the word economy comes from the Greek for “how you run your house.” Our major institutions sure help run the larger picture, gluing together discrete economic activity into a global picture that could ostensibly be managed. In the end, gardens are necessary and they aren’t. With all the scandal and backroom dealing and intrigue, it’s comforting to know that when push comes to shove, people can and do plant their own gardens, look after each others’ kids, build each others’ houses. The fate of central banks are not the fate of people in general. This should give cause for optimism.

You are not crazy, and forecasting works

Wednesday, 26 August 2009 09:10 Written by Eric Garland 4 Comments

jugeotteIf you watch the TeeVee Box, the world and its institutions seem inherently irrational. It’s a world of crazy risk, cataclysmic downfalls, nonsensical solutions from people who ought to know better.

One of America’s high priests, Ben Bernanke, has just been taken on for a second term at the head of the powerful and enigmatic Federal Reserve bank. See my post from yesterday to understand why this surprised me. For a moment I had the all-too-common though:

In a world this nuts, why even forecast? I mean, why study housing prices, water tables, healthcare expenditures, and all the rest if the world comes down to the actions of a select, semi-rational few.

Then I thought it over. The last year has unfolded in a strictly rational way. The trick to understanding the future (and the method I teach) is to analyze a combination of three things:

  • structural trends
  • actor decisions
  • wildcards

Understand what’s happening, the options available to actors in a system, and the crazy stuff that can happen when you’re not looking.

Look at the economics of 2008 – 2009 through that lens and it all makes sense.

This is the subject of today’s podcast, so KEEP THINKING.

Forecasting and rational thinking Play Now | Play in Popup | Download

And they mock FUTURISTS for bad forecasts…

Tuesday, 25 August 2009 09:29 Written by Eric Garland 4 Comments

This morning I awoke to the news that Obama will be nominating Ben Bernanke for another turn at the helm of the Federal Reserve.

My only commentary would be that if you are a self-described futurist and misread the most basic economic trends for your clients, you won’t be called up for more fame and success. At some point, your bad forecasts need to call into question your methodology, and indeed, your competence.

I would say that the reason we don’t replace Bernanke despite his malpractice is that our current crop of leaders are defending our current institutions at all cost, and Bernanke plays well at that game.

Leaders need to ask themselves, do they want institutions that thrive in future realities, or ones that exist DESPITE those realities? Only our most senior leaders can make such a choice, and right now they are choosing the latter.

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This is the official trend blog of Competitive Futures, a management consultancy that provides trend research and analysis for business and government around the world. Here, we update you on interesting trends we see as part of our work for our clients.


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