Futurology: More Reliable than Reading Goats’ Entrails?
A 2nd-3rd century BC Etruscan inscribed bronze model of a sheep’s liver used by priests in practicing haruspicy
Whatever business you are involved in, trying to read the forces that shape the future for your sector is essential preparation for developing a winning business strategy.
While the Etruscans and Romans relied on reading goats’ entrails and sheep’s livers for their prognostications, we are led to believe that modern futurology is a very sophisticated science. Not content with simply following the direction of current technological, economic and social trends to predict where we are heading, today’s virtual entrail analysers are “examining social systems and uncertainties to build scenarios, questioning the worldviews behind such scenarios, creating preferred visions of the future, and using backcasting to derive alternative implementation strategies”. Which all sounds terribly impressive but is futurology really any good at forecasting the future, and to what degree should we base our business strategies on their output?
One obvious way of testing the quality of forecasts is to look back at what futurologists were saying a few years ago. For example in 2010 Ernst & Young (recently rebranded as EY) published Business Redefined, their own vision for the world heading towards 2020. For a while it was looking pretty on track. After all, no-one in 2010 would have disputed the starting premise that “globalization, digital connectivity, accelerated consumption and disparate prosperity have combined with ecological decline, a lack of global sustainability governance and resource scarcity to transform the playing field for businesses.” For most of us this broad premise continues to inform our global outlook three years on.
Where Business Redefined begins to sound iffy is with predictions like, “it would not be an exaggeration to say that the 21st century will be marked by the dominance of emerging markets.” Putting all your chips on the BRIC economies was an easy punt in 2010 because back then we all believed in their scope for continuous expansion. Some people continue to believe that the emerging markets will come to dominate, but in the second half of 2013 there are reasons to question their faith.
Just consider the facts. The Brazilian economy is in its third year of slower than forecast growth. India’s economy is growing but its economic revival is proving elusive. China’s economy is built on selling goods to foreigners who are no longer buying as before. Its banking system is crippled by a credit crisis which is forcing many of its industrial giants to seek government bailouts. Just as familiar to the West is China’s demographic time bomb of its one-child policy with an ever decreasing number of workers supporting an ever increasing number of pensioners. All things considered, China’s boom is suddenly looking increasingly like a myth. As Jeremy Warner recently commented, “the dynamic state capitalism we thought was a world beater turns out to be a monstrous anomaly.”
So does all the technology and scientific rigour of modern futurology really yield more reliable predictions than the intestinal deliberations of the Roman haruspices? If modern futurologists have overestimated the growing dominance of emerging markets what else have they got wrong? It is tempting to conclude that using more technology, more data and more calculations might actually decrease the accuracy of predictions simply because futurologists lose sight of the underlying assumptions. Consider the UK Met Office’s hopeless weather predictions which, as Rupert Darwall recently noted in the Spectator, are the result of using technology to harness climate scientists’ assumptions about global warming; the Met Office needs updated assumptions not a new computer.
One can only assume that the practice of entrail reading survived for over a thousand years until the 6th century AD because it was perceived as being more right than wrong in its predictions. By defining the future using assumptions they fully understood, perhaps the Roman priests helped to build the future in a process of self-fulfilment. That at least places the responsibility for the future in our own hands which is a somewhat more positive outlook than believing that we are powerless to shape a set of all-powerful trends bent on imposing a new world order of their own making.
Come 2020 we can pass final judgment on future visions like Business Redefined and on the business strategies founded on their technological, economic and social assumptions. For now, it begins to look like the 21st century might be just another American century after all, and who on earth could have predicted that?