The company that doesn’t see trouble ahead is headed for real trouble.
That’s why it hires economists, consultants, and futurists
Franklin said, “It is easy to see; hard to foresee.” An old saying is
that those who live by the crystal ball will eat ground glass.
So many eminent observers have made wildly erroneous predictions.
• Thomas Edison opined that “the phonograph is of no commercial
value.”
• Irving Fisher, eminent Yale economics professor, said in September
1929, just before the Wall Street crash, “Stock prices
have reached what looks like a permanently high plateau.”
Thomas J. Watson of IBM said in 1947: “I think there is a
world market for about five computers.”
• Ken Olson, former CEO of Digital Equipment Corporation,
said in 1977, “There is no reason for any individual to have a
computer in their home.”
• Jack Welch, the retired chairman of GE, admitted to three
forecasting errors during his career. When U.S. inflation was
running at 20 percent, he forecasted that inflation would remain
in the double digits. When oil hit $35 a barrel, he predicted
that oil’s price would rise to $100. When Japan was in
its prime, he predicted that the Japanese would continue to
take over more American industries.
All of these show the weakness of using today’s situation to predict
tomorrow’s situation. The story is told about an auto company
that increased its production of green cars after noticing a spike in
their sales. The company didn’t realize that dealers were slashing
prices to get rid of green cars.
John R. Pierce of Bell Labs beautifully explained why so many
predictions fail: “The trouble with the future is that there are so
many of them.”
The inimitable Yogi Berra said that “prediction is very hard,
especially of the future.” He also despaired: “The future ain’t
what it used to be.”
The most truthful prediction is that business will be either better
or worse. The same can be said for the economy.
Woody Allen commented on how to handle bad times: “More
than anytime in history, mankind faces a crossroads. One path
leads to despair and utter hopelessness, the other to total extinction.
Let us pray that we have the wisdom to choose correctly.”
Businesses have relied on economists to predict the future.
There are two types of economists: those who can’t predict the future
and know it, and those who can’t predict the future and don’t