The end of forecasting?

Or could we simply be at the end of forecasting’s beginning – with unforeseen potential ahead? Thornton May, Executive Director and Dean at the IT Leadership Academy, discusses the idea that forecasting, as we know it, is coming to an end.

Researchers at the IT Leadership Academy have studied many soon-to-be-great enterprises. Their analysis shows that those exceptionally performing organizations are in the final stages of early experiments that have profoundly transformed the relationships they have with their customers. In other words, many businesses are undergoing a paradigm shift when it comes to how they think about customers.

Business models appear to be migrating from the make-and-sell mode of the industrialized past, through the sense-and-respond methods of the "Webified" present, and are now shifting toward the anticipate-and-lead ecosystems of the not-so-distant future.

In an environment where the ability to anticipate and lead is a critical determinant of success, it stands to reason that forecasting and forecasters will rise in prominence and importance. However, while forecasting is increasingly viewed as a key ingredient of strategic success, forecasting techniques and practitioners have never been so much under the magnifying glass as they are today. The powers that be are seriously rethinking forecasting.

In the face of ever-improving, massively powerful and omni-connected computers, who could blame many for believing that someday real-world systems like the economy, the weather and human health would become truly and totally predictable?

The first decade of the 21st century has been a humbling one for forecasters. A new subcategory of management literature has emerged addressing and questioning the extent to which what comes next might be knowable.

Following the fall of the Berlin Wall in 1989, Francis Fukuyama, Professor of International Political Economy at the School of Advanced International Studies of the prestigious Johns Hopkins University, published The End of History and the Last Man (New York: Avon Books, 1998). In that work, he boldly prophesied that liberal democracy may constitute the "end point of mankind's ideological evolution." He essentially stated that we were at the end of history. Subsequent events in the Middle East, Asia and Russia demonstrated that Fukuyama's forecast was materially off the mark.

However, Fukuyama's response to having his forecast proved wrong provides a role model for all of those who would forecast. Rather than retreat from the public realm or move into denial or excuse-mongering, this stellar academic redoubled his efforts to understand uncertainty. His most recent book Blindside: How to Anticipate Forcing Events and Wild Cards in Global Politics (Washington, DC: Brookings Institution Press, 2007) is my favorite treatment of the question of what "knowability" is.

Blindside courageously stares in the face of forecast error and asks why. Fukuyama explains that "the past decade and a half has demonstrated that nothing is as certain as uncertainty … As the famous scatological bumper sticker suggests, bad things happen."

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