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Dr Graeme Codrington

A South African in London with an eye on the future

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How to forecast the future: pitfalls to avoid 2

As I elaborated on in my last post, individuals with a good grasp of the world and a strong sense of adventure might be able to predict some major world trends; however, if we want to predict the future effectively, we need to steer clear of attempting specific predictions.

I'm going to continue to point out some of the other major pitfalls that many forecasters seem to jump towards and then, suggest how circumvent these errors.

Disproving examples

This issue has different names, but really comes down to the basic foundations of scientific proofs. You need to know how you would disprove a hypothesis before you can submit it as a truly scientific theory. So, when you think you've spotted a trend, then look for disproving examples.

In other words, look for the exceptions.

Contrary to the much-stated, "The exception proves the rule" (what does that mean anyway?), the exception typically destroys the rule. Or, at least, changes the rule you think you found.

My favourite example of this issue is the fabulous disproving example of manager-less teams. Thousands of litres of ink are spilled every year on management textbooks, fuelling everything from the MBA industry to self-help leadership development. Yet, recent research is showing that maybe the whole lot of them are barking up the wrong tree - maybe our entire approach to management is wrong.

As Peter Drucker was fond of saying: "There is nothing as futile as trying to do better that which should not be done at all". Maybe the whole tribe of management experts have it wrong - maybe the very concept of modern management is fatally flawed, and no-one has noticed.

The disproving example here is recent research that shows that teams that have had lost their managers for a period of time (through extended illness, personnel policies that have left positions unfilled, or a variety of other reasons) have actually functioned better than when they had managers.

This is obviously not true in every instance - and the research is still trying to work out which situations get value from manager-less teams and which do not. But enough data is in to say that we can seriously consider removing managers in a vast number of our organisations and teams.

To say that "good management is essential for good organisations" might therefore be missing a very important issue. Maybe "good management is essential for good organisations, but no management is better in great organisations. More work is needed on this, but the disproving examples should make us pause to consider whether we have truly understood trends or not.

Defining the limits/challenging the "rules"

Lastly, a more conceptual issue. Key to working out what might happen in the future is to understand limits.

There are natural limits to certain trends and behaviours. There are also limitations to our conceptual frameworks. These frameworks are the mental models we have about the world around us. We limit our own thinking because we come to think that the world "as it is" is the world "as it must be". In order to think about the future, we must challenge our assumptions, and the unwritten "rules" we take for granted.

For example, I did some work with the motor retail industry a few years ago. The mental model most people in this industry have is that men buy cars. The reality is that women buy - or have the greatest influence over the purchase - of most cars.

Natural limits are also important to think about. For example, companies are looking for competitive advantage. The question is: where is this advantage to be found? For most of the 1980s, it was found in increased efficiencies, which improved the speed and price of getting the product or service to the market. Those efficiencies have now largely been found (although CEOs who were managers back then have not yet worked this out, and continue to demand more and more from less and less).

There are natural limits to efficiency gains. Better technology can change this, but simply asking for more effort from people cannot. I think the most demoralising thing to hear your boss say at a press event is "we will improve profit next year by finding more efficiencies and getting our people to work smarter, not harder". Since you're working as smart as you know how, you just know what your boss really meant is that you'd be working harder and longer hours. And then they increase profits by firing 10% of your colleagues, and asking you to pick up the slack. Not only demoralising, but insulting, too!

Another example of natural limits can be found in the war for talent. Around the world, salaries for people considered critical in various industries have been skyrocketing (from software programmers in Silicon Valley to traders on Wall Street and from football stars in the Premier League to call centre operators in Bangalore). It might not seem like it in some industries, but there is most certainly a limit to how effective this behaviour will remain.

It's not only the absolute limit that's important, but also the relative limit, too. If everyone in your industry pays exorbitant salaries, then although you have to do so to be in the game, this has become a necessary but not sufficient criteria for competitive advantage. In other words, you have to do it just to be in the game, but it won't help you win. And that means that salary increases on their own will not help you attract and retain talented staff (again, many companies have not yet understood this, and continue to be surprised that talented people want more than just a good salary).

Avoiding the pitfalls

So, how do you avoid these (and other) pitfalls? It's not always that easy, but here a few ways to make sure you're doing all you can:

Be aware of the pitfalls, and constantly check yourself against them.
Have someone on your team who has formally studied logic, fallacy and statistical analysis (yes, a nerdy philosopher) - and listen to them!
Listen to the outlier voices. De Bono referred to this as the "black hat". Belbin team analysis refers to this person as the monitor evaluator. In the Enneagram personality profile, this is often the 8 (the need to confront) or the 4 (the need to be unique). Most people just call them irritating! Make sure you have them on your team, and give them both permission and encouragement to test your assumptions.
Don't drink the Kool-aid (this strange phrase entered American cultural usage after a well- known cult committed mass suicide by poisoning the Kool-aid cooldrinks of all the adults and children in their compound). This means: don't allow your team to convince itself that you're definitely doing the right things. Be careful when everyone in your team is saying the same thing.
Don't believe your own PR. Don't think you've found the ultimate solution or that you are really as good as you say you are. Keep looking for ways to test what you do, to break what you've built and to change the rules you think constrain you.