Wednesday, July 11, 2007

Forecasting

"Six Rules for Effective Forecasting" is an article (available online from Harvard Business Review, at least for now LINK) by Silicon Valley forecaster Paul Saffo (LINK). Very well worth reading.

Here's a quote from the article that made me smile (the reference below to "magazine" refers to HBR):
The most commonly considered outliers are wild cards. These are trends or events that have low probabilities of occurrence (under 10%) or probabilities you simply cannot quantify but that, if the events were to occur, would have a disproportionately large impact. My favorite example of a wild card, because its probability is so uncertain and its impact so great, is finding radio evidence of intelligent life somewhere else in the universe. Nobody knows if we will ever receive a message (radio astronomers have been listening since the late 1950s), but if we did, it would send a vast and unpredictable tremor through the zeitgeist. One-third of the world’s population would probably worship the remote intelligences, one-third would want to conquer them, and the final third (the readers of this magazine) would want to do some extraterrestrial market research and sell them something.
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