Morgan Housel says, “History is the study of surprising events. Prediction is using historical data to forecast what events will happen next. Do you see the irony?” And that’s the problem. Even if we can predict what will happen next, it won’t be from the historical record if it really matters. So what’s the good of predicting anyway?
Prediction requires both analysis and imagination. If we only use what happened before we’ll set ourselves up to be shocked. If we only guess what completely new events could happen next we’ll be disappointed. Our best bet it is a mix between the two.
The most important rule of forecasting is to remember that the world is surprising. Whatever is going to happen, we should expect to be surprised. In order to be surprised, there has to be something we just don’t know.
When clients ask us to help shepherd in the future, we have to remind them of the “we just don’t know” element. Likewise, as we try to figure out what will happen for our own business, there’s a healthy dose of “we just don’t know.”
The more we see “we just don’t know” as a feature and not a bug the better off we’ll be. The best part of “we just don’t know” is the collective “we.” There’s a lot of “us” in “we.” If we are the ones who are ready to be surprised and ready to adapt, “we” have an advantage. Take it.