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How Clear Is Your Crystal Ball?
Forecasting future events - and particularly their timing - is notoriously difficult. However, a degree of prediction is increasingly becoming a necessity for Insight managers.
In the July/August 2007 edition of the Harvard Business Review, there is an excellent article called ‘Six Rules For Effective Forecasting’ by Paul Saffo. In future, we may cover more of these rules, but for now we want to focus on just one. This is the need to look for ‘weak signals’. Saffo makes the point that quantity is often better than quality when it comes to forecasting future events: it’s better to rely on numerous ‘weak signals’ rather than one or two strong ones. To find these weak signals, you may have to delve into the past…
Look back to look forwards…
There is a commonly held view that people tend to overestimate the initial impact of new technology (such as the Internet), but underestimate its longer term effects. In fact, almost every new technology or social trend tends to have a very long lead-in, consisting of ideas, variants and failures, before becoming an ‘overnight success’.
So the key to understanding the initial success of a new idea is to look back through the years to see the trail of trials, mini-successes, failures, high cost developments etc. If this shows that an idea has been around for a long time, but hasn’t gone away despite setbacks, it shows that there is a basis for a take-off. But even then you’ll need multiple streams of activity, all reaching a level of maturity, before it can happen.
Take the idea of 3D interfaces and virtual worlds. You may have heard of a 3D world called Second Life. It allows ‘residents’ to interact, to determine their own appearance, to build houses, shops, or virtually anything. It currently has five million residents worldwide! This fact on its own might tempt you to believe that 3D technology was ready to take off. But if it was a recent development without a long history, such a prediction would almost certainly be wrong.
However, in this case, this one ‘strong signal’ is backed up by numerous ‘weak signals’ over the past 20 years. These suggest that this kind of virtual technology really is on the verge of take-off. Here are just a few of those weak signals:
- Flight simulators – Airline pilots have trained on these for over 20 years. They are very expensive but also very effective, and an early example of virtual environments.
- Early PC games – These were very basic 2D versions, but flight simulators were some of the first 3D applications.
- Recent PC games – The current generations of computer games (such as the X-Box and the Playstation) have millions of users, all familiar with 3D environments.
- Kitchen design – This started as 2D but quickly became 3D, and is now a standard offering from any kitchen company.
- Manufacturing - Design has moved from the drawing board to PCs, and then to 3D versions. Almost all industrial design now uses 3D computer aided design (CAD).
If you put all of these weak signals together, along with the news that Microsoft and others are now working on the 3D equivalent of the Internet browser, it seems as if 3D is finally coming of age. We still don’t think it will have a major commercial impact for a year or two, but in the longer term it’s likely to become pervasive.
The general lesson from all of this is: don’t draw conclusions about the future from just one or two pieces of evidence, no matter how convincing. Only if you can see lots of weak signals from many different areas that all lead to the same conclusions should you be bold enough to predict that something may actually happen.
