“A fox knows many things, but a hedgehog one important thing”
(Ancient Greek poet Archilochus)
Looking into the future is one of the most important aspects of business. We all want to know the business is sustainable and so we do budgets and strategic plans to maximise the organisation’s future performance.
Just how accurate are we when forecasting? This is particularly important as upsets occur more and more frequently – last year the world was stunned by Brexit and by Donald Trump’s victory.
One researcher – Philip Tetlock – has done an enormous amount of research into why most forecasters get it wrong. He has come up with some good suggestions as to how we can improve forecasting.
Hedgehogs versus foxes
The philosopher Isaiah Berlin said people’s thinking falls into two categories – those who have one overriding idea and see everything through this idea (hedgehogs) and those who are flexible and will interpret events using a variety of ideas (foxes). Tetlock’s research shows foxes are much better forecasters than hedgehogs. It is better to look at predicting future events dispassionately and not try to distil it into one overall outlook.
Beware: Hedgehogs make better sound bites
Usually, the forecasters you see on TV or at seminars about 2017 are hedgehogs. Learn to recognise them so they don’t clutter your own thinking. They often say “on the one hand the Rand will improve next year” but “on the other hand if there is a ratings downgrade, the Rand will not improve”.
Tetlock’s ten commandments for good forecasters
As we move further into an age of uncertainty, understanding Tetlock’s philosophy can help your business navigate into the future.