The Fallacy of Forecasting>


(From Management in Small Doses, Russell Ackoff, John Wiley, NY, 1986)

   A great deal of the present is being wasted with efforts to forecast

the future. In an environment that is rapidly changing and becoming more

complex, our ability to predict the future necessarily decreases. Preparing

for an inaccurately forecasted future is often worse than doing nothing.

This is reflected in the old saying: "He who lives by the crystal ball ends 

up eating glass."

   Nevertheless, those who conceive of planning as preparing for a

predicted future argue correctly that we benefit from forecasting the

weather and preparing for it, although both are done imperfectly. True, 

but there is a significant difference between our relationship with the

weather and a corporation's with what it forecasts in its planning.

   Some believe that carrying an umbrella prevents rain and washing a car 

causes it. Nevertheless, our preparations for the weather have absolutely 

no effect on it. On the other hand, corporate planners forecast such things 

as the behavior of consumers, supplies, competitors, and governments; and 

these things are affected by what corporations do. In fact, the principal 

purpose of planning is to affect them. Therefore, once a corporate plan 

that is based on a forecast has been prepared, the effects of that plan 

on what has been forecast should be taken into account by revising the 

initial forecast. But revising that forecast requires revision of the 

forecast, which in turn requires another revision of the forecast, and so 

on ad infinitum. If all this were done, planning would take a course like 

that of the gilly-galoo-bird, which flies in ever decreasing concentric 

circles until it disappears up its own anatomy.

   Now, of course, this is not done. Predict-and-prepare planners treat

the environment like the weather; they act as though it will be unaffected

by their plans. Therefore, they try to control the effects of the 

environment on the organization planned for. 

   The assumption that the environment is unaffected by what corporations

do is sufficient to invalidate the forecasts used by planners and to make

their preparations less effective than they desire.

   Most forecasting is based on projections of the past into the future.

Such extrapolations assume that the future is completely determined by the 

past. The assumption is sometimes approximately true for the very near 

future; but the more distant the future forecast, the more it depends on

what will happen between now and then. This is even true for the weather.

Put another way: the more distant the future, the more it depends on 

decisions still to be made; therefore, the more subject it is to control. 

For this reason corporate planning should be directed toward trying to 

control the future, not the effects on a corporation of a future assumed

to be out of its control. This is exactly what we have done with the weather.

Buildings are built to bring the weather under control. They eliminate the 

need to forecast the weather where we work and live. Even if we had perfect 

forecasts we would be better off working and living indoors than out.

Corporate planning should not consist of predicting and preparing for an 

uncontrolled future but of designing a desirable future and finding or 

inventing ways of approximating it as closely as possible.