The Fallacy of Forecasting>
THE FALLACY OF FORECASTING
Russell L. Ackoff
(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.