When planning your future – predictions are inevitable. Certainly in the world of finances it’s hard to turn around without running into a prediction on where interest rates will head, which investments will perform well, or the exchange rate with US dollars.
The thing with predictions though, is they’re often wrong. This is why I’m often suggesting to clients that we consider what the consequences are if a prediction turns out to be exactly the opposite in reality. If the consequences of getting it the wrong way around are serious, this needs to balance any potential rewards for getting it right.
I’m reading a great book on this topic at the moment called Risk Savvy: How to Make Good Decisions and it has a great example of coming to the completely wrong prediction (about telephones) from two entirely opposite directions:
In 1876 Western Union, the largest American telegraph company, refused to buy Graham Bell’s patent for one hundred thousand dollars, arguing that people are not savvy enough to handle a phone: “Bell expects that the public will use his instrument without the aid of trained operators. Any telegraph engineer will at once see the fallacy of this plan. The public simply cannot be trusted to handle technical communications equipment.”
A group of British experts thought somewhat differently: “The telephone may be appropriate for our American cousins, but not here, because we have an adequate supply of messenger boys.”
…therein lies the problem with many predictions. One way to get it right, ninety-nine ways to get it wrong!