Tuesday, May 19, 2009

Brainless Forecasting 2: Getting it Right (Occasionally)

We all recognize how difficult it is to predict the future.

We measure the economy every day, for example, but our smartest economists just happened to miss the current worldwide recession.  We invent a device like the telephone and then predict that it will never replace the telegraph (on the one hand), and that it will bring about a universal language and world peace (on the other).

In the case of the telephone, however, one person in particular got the future right, and well before anyone else.  That person happened to be its inventor, Alexander Graham Bell.  

In a remarkable 1878 letter to the organizers of the Electronic Telephone Company, Bell described a universal point-to-point service connecting everyone through a central office in each community, in turn, to be connected by long-distance lines.

What is stunning about Bell’s vision is that the available technology did not permit universal, switched, long-distance service.  He was describing something that he could not build, at least in 1878, but that would exist in all its pieces and parts a century later. 

Sociologist Ithiel de Sola Pool pondered why the only forecaster to get the future of the telephone right—and really right—was the inventor.  He offered five theories:
1. Bell was a smart guy, perhaps just brighter than the rest of the world. 
2. Bell was living with the telephone eighteen hours a day, year after year.  Better than anyone, he understood its capabilities and potential. 
3. Bell was a speech expert who approached the problems of telecommunications from the outside.  Folks like Western Union and Elisha Gray thought of the telephone as an extension of the telegraph—the “fallacy of historical analogy”—and missed the future. 
4. Bell was not a scientist but, like Morse, Edison, Ford, and Land, was both an inventor and capitalist.  These men were interested in what might be theoretically possible and what might sell; “the optimism of their speculation was controlled by a profound concern for the balance sheet.” 
Personally, I find the last item especially compelling; when Edison’s notebooks on devising the nation’s first power grid were examined, they showed on every page “calculations of the system’s market potential, the price charged for competing gas illumination, the cost of copper wiring, and other entrepreneurial concerns.”

There's something about pushing a technology ahead with a profit motive in mind that creates a sense of clarity.  Most successful entrepreneurs become good at telling the story of a rosy future.  Some have a great technology but no business plan.  Some have a great business plan but no technology.  The ones who succeed have both, or access to both, and clearly separate the real and now from the purely aspirational.

So when we think about Alexander Graham Bell running a (so-called) pre-revenue company, and being so very right about its future, we can assume that being brilliant, living 24/7 with the innovation, and avoiding historical analogy were all contributing factors.  Maybe, too, the idea of constantly iterating the possible, the impossible, the practical, and the the profitable was also decisive.

And then again, maybe when all is said and done, Bell was just plain lucky.  That's how we get most of our really good forecasts, even today.