Our Predictions as Conversation Starters
By Dave Bayless
When we make a prediction, our conversation tends to collapse into a debate about whether the prediction is right or wrong. It’s often better to use a prediction as a trigger for a conversation about the conditions under which the prediction might be true.
In Why Most Post-Pandemic Predictions Will Be Totally Wrong, Rob Walker notes:
Every prediction is just a point on a spectrum of possibilities to consider, and that will be influenced by developments no one has thought of yet. Predictions look like declarations that end the conversation, but it’s much more productive to think of them as exactly the opposite.
It’s easy to slip into Boolean thinking mode when confronted with a prediction. We tend to react by thinking “true or false,” “plausible or implausible,” or “relevant or irrelevant.” Likewise, “base case” forecasts have a tendency to anchor our thinking.
A more productive response to a well-considered prediction would be to ask:
- Under what set of conditions is the prediction likely to be accurate?
- What might influence the likelihood of those conditions coming to pass?
- Am I—or my business—robust in the range of circumstances I’m likely to face?
My business partner, Laura Black, observes:
The intent of running simulation experiments is not to find the narrow set of assumption combinations that can lead to the most successful business, but to identify the ranges of values assumptions can take on, individually and in combination, that still permit your business to “fly.” The larger the simulated performance envelope, the more robust your real business can be.
Finding those “edges” is key. After all, the essence of strategy is the avoidance of ruin.