What we don’t need: ‘Expert’ 2021 forecasts
Any prediction for the year ahead needs to be treated with more than just a grain of salt
Judging by the recent stream of emails and social media posts offering predictions and trends on what to expect in 2021, you’d think 2020was just a standard “nothing to see here” kind of year.
It takes a particularly acute case of audacity to swirl the tea leaves after the past 12 months and pretend to see patterns revealing what comes next.
Anyoneventuring such predictions might bear inmind economist Irving Fisher’s infamous claim, just before the Great Crash of 1929, that stock prices had reached “a permanently high plateau”. And even in less extreme times, numerous studies haveshown thathumansare notoriously bad at predicting futures that don’t benefit them.
For example, in a 2017 essay for the Atlantic, writer Caroline Beaton notes that in November2007 just 20 per cent of economists in the Philadelphia Federal Reserve’s survey of professional forecasters predicted a chance of decline in the
Useconomyany time in 2008.
Something similar plays out at a personal level. While all the available data shows most first-time entrepreneurs fail miserably, it’s never difficult to find someonewho says “but that’s not me”. The reality is that there’s a 90per cent chance that really is you.
The corollary here is that any insight you’re going to get from an organisation will likely be selfserving.
There’s a reason social media firms are so eager to talk about the death of television orwhyresearch organisations love to talk about the growing trend of data segmentation. They both stand to benefit from these things coming true.
Another problem with predictions is that it’s never difficult to find an insight or nugget that reinforces somethingwealready believe.
The masters of trend sorcery increasingly harness the power of Linkedin and Youtubeto distribute their reckons to peoplewhowork in certain niches. These so-called Linkedin influencers rarely offer anything new, but the packaging of the information makes it moreish to those hungry for an edge over their competitors.
There’s nothing like a sexyvenn diagram or insufferable catchphrase to bring all the suits to the yard. To quote Will Ferrell’s delightfully overconfident Chazz Michael Michaels in the movie Blades of Glory: “No one knowswhat it means, but it’s provocative. It gets the people going.”
Most of the arbitrary predictions filtered through to executives are harmless because they’re simply added to the ever-growing pile of ignored emails. But they can also result in somespectacularly bad business decisions.
Take the example of adidas, whose global media director Simon Peel last year admitted that thecompanyhad over-invested in targeted digital advertising for years, to the detriment of its brand. This not only hurt adidas, but also numerous traditional media partners.
Toyota’s strange foray into mass customisation of its cars offers another glaring example ofwhy trends don’t always provide the answers. Responding to the insight that customers wantedmorechoice,
Toyota in the 1980s shifted its skilled workforce to making customised products that met the exact desires of its customer base. While it all seemed to be going well at first, a Harvard Business Review report reveals that by the 1990s Toyota realised that only 20 per cent of its product varieties accounted for80 per cent of sales. It turns out people didn’t want choice asmuchas they said they did, and Toyota dealers endedup with lots of inventory that no one ever bought.
Perhaps, rather than listening to the trend gurus of the time, Toyota would’ve been better served by following Henry Ford’s legendary advice that customers could have any colour car they wanted as long as itwas black.