Tag Archives: forecasting

Paul Saffo: Forecasting must embrace uncertainty

Futurist Paul Saffo recently gave a talk “Embracing Uncertainty – the secret to effective forecasting” at the Long Now foundation. The talk (mp3) and Stewart Brand’s summary are online on the Long Now Foundation website. The talk is similar to his article in Harvard Business Review Six Rules for Effective Forecasting (see also Podcast interview). His six rules are:

  1. Define a Cone of Uncertainty
  2. Look for the S Curve
  3. Embrace the Things That Don’t Fit
  4. Hold Strong Opinions Weakly
  5. Look Back Twice as Far as You Look Forward
  6. Know When Not to Make a Forecast

Saffo writes about forecasting:

The role of the forecaster in the real world is quite different from that of the mythical seer. Prediction is concerned with future certainty; forecasting looks at how hidden currents in the present signal possible changes in direction for companies, societies, or the world at large. Thus, the primary goal of forecasting is to identify the full range of possibilities, not a limited set of illusory certainties. Whether a specific forecast actually turns out to be accurate is only part of the picture—even a broken clock is right twice a day. Above all, the forecaster’s task is to map uncertainty, for in a world where our actions in the present influence the future, uncertainty is opportunity.

Unlike a prediction, a forecast must have a logic to it. That’s what lifts forecasting out of the dark realm of superstition. The forecaster must be able to articulate and defend that logic. Moreover, the consumer of the forecast must understand enough of the forecast process and logic to make an independent assessment of its quality—and to properly account for the opportunities and risks it presents. The wise consumer of a forecast is not a trusting bystander but a participant and, above all, a critic.