Forecasting & Prediictions - From a Business or Innovation Context

 

Image Source: BINUS Business School

              The terms forecasting and predictions in business resonate with me personally and professionally. Analytics has been around as long as data has been around. With the rapid technological evolution, the predictive and forecasting capability has added tremendous value to organizations with evidence-based facts to make better decisions. Forecasting is not art, but it all about leveraging the right domain expertise in combination with the right statistical and advanced analytical tools to provide an insightful solution for actionable decision-making by the business stakeholders. Many forecasters rely on a “point” forecast for the best estimate of the prediction without considering uncertainties in the recent past (Gilliland, 2015). Highlighting uncertainties with appropriate prediction intervals is critical for reliable estimates. History has some great lessons to offer when forecasts have gone amiss, and the one worth mentioning is about the founder of IBM, who in 1947 predicted that there was a world market only for about five computers. So technically, basing the prediction on just past data can lead to misleading conclusions. An insightful predictive modeler is aware that the future may never mimic the past, and the more prolonged the forecasting timeline more significant the ambiguity.

           There has been an explosion of forecasting methods from structural modeling or state-space models to Bayesian forecasting to Exponential smooth to Neural Nets to multivariate models to dynamic artificial neural networks. The forecasters have a healthy debate about the best method, and the universal fact is the choice of the method would always depend on the type of problem encountered, period of prediction, quality of data, availability of subject matter expertise in the domain area of interest and other causal factors.

           Nikola Tesla happens to be one of my favorite inventors not because he was touted as a rival to the great scientist Thomas Edison but has made remarkable predictions in his lifetime. He is also known as the tech superstar from Serbia who had close to 300 patents. His famous predictions included the smartphone and wireless technology, which he believed would take the world by storm. And my favorite prediction of Tesla is autopilot and self-driving cars, and in just 118 years, the 21st-century innovator Elon Musk made it a reality, and Tesla has been immortalized (Ratner, 2019). 

 Image Source: Forbes

          The forces that influenced Tesla to be one of the radical predictors is his ability to think outside the box and happened to be a nonconformist. He had the background to pursue scientific opportunities because of his education and experience working with someone like Thomas Edison, who was equally inspiring and accomplished. When you have the freedom to tinker, innovators can predict a future that is achievable and inspire future innovators to make their predictions a reality.

 

References

Gilliland, M. (2015). Business forecasting (1st ed.). Wiley.

Ratner, P. (2019). 10 of Nikola Tesla’s most amazing predictions. Big Think. https://bigthink.com/paul-ratner/10-nikola-teslas-most-amazing-predictions