Managers who claim to know the future are more often dangerous fools than great visionaries

As complex systems go, the interaction between the ball in flight and the moving fieldsman is still relatively simple. In principle, most of the knowledge needed to compute trajectories and devise an optimal strategy is available: we just don’t have the instruments or the time for analysis and computation. More often, the relevant information is not even potentially knowable. The skill of the sports player is not the result of superior knowledge of the future, but of an ability to employ and execute good strategies for making decisions in a complex and changing world. The same qualities are characteristic of the successful executive. Managers who know the future are more often dangerous fools than great visionaries.

(…) Good predictions may be available in structured, well-ordered, situations – but, even then, forecasts are properly conditional or probabilistic. There are few certainties about the future: but one is that hedgehogs who make confident statements on the basis of some universal theory will be as persistently misleading counselors in the future as in the past. And that the foxes (…) who scramble everywhere for scraps of information will provide better, if more nuanced, advice.

via John Kay.

the “R” word

Daniel Gross on predicting recessions:

The problem with recession forecasting is that you never know when a recession has started until long after it begins. The National Bureau of Economic Research is the official dater of recessions, and it doesn’t make forecasts. We could be in a recession now, for all we know. Lakshman Achuthan and the team at the Economic Cycle Research Institute have an excellent track record on predicting recessions (they were among the only forecasters to accurately predict the last recession). And they still believe the expansion is intact.

(…) So, be careful however you bet. Relying on professional economic forecasters to tell us when a recession will start—and how long it will last—will be like relying on weather forecasters to tell us today whether it will rain on Labor Day weekend.