Predicting the Future - Understanding Risk and Uncertainty

In his book 'Leaders make the Future', Bob Johansen talks about a VUCA world. A world that is Volatile, Uncertain, Complex and Ambiguous. I thought so much of this book that I made it the 'Summit 2102 Leaders Library' selection. The Summit provided a copy to every delegate. Upon reflection, it seems to me that we need to understand the difference between risk and uncertainty to develop a good strategy for the future.

Nate Silver

Nate Silver in his book The Signal and the Noise: Why So Many Predictions Fail - but Some Don't (Penguin, 2012), shows that for the most part, the agencies we trust are either “unable or uninterested in appreciating the distinction between risk and uncertainty.” Silver suggests risk is something that can be calculated. You can put a price on risk. For instance, we often 'price in the risk' we face on a purchase or investment. Some even calculate the 'risk' of winning or losing while they gamble. 

By contrast, Silver shows that uncertainty has become a risk "that is hard" if not impossible to measure with  strict attention to mathematical models and predictive equations. According to Silver, “Risk greases the wheels of a free-market economy; uncertainty grinds them to a halt." In a day and age when marketers are asking us to trust their 'predictive models' and explore 'Big Data' can we be sure this is the path to a sustainable future? 

I think not. Perhaps we've arrived at a time and place where intuition, experience, common sense and the intellectual gifts humans possess may be the tools that prevail. If you have $20 to invest in your future, I suggest reading Silver's book. 

I'm a farm boy and uncertainty has always been part of agriculture. We till the ground and plant the seed but rely on a higher power for the sun and rain. Dealing with uncertainty involves understanding, expectation and faith. It seems to me these elements are states of mind or mindfulness which allow you to separate signals from noise and that is useful as you consider the future.

Thunder Ridge Farming

Future - PwC Report Shows Consumers Reign Supreme

The PwC report on Global Entertainment and Media Outlook 2012-2016 provides an interesting perspective for those in the world of brand.  Here are three highlights and a quote:

• By 2014 Internet ads will beat out TV ads and by 2016 spending on Internet ads will be 23% larger than on TV ads
• In 2012 video games will overtake spending on consumer and educational books, and by 2016 spending on games will be 20% larger than spending on books
• Over the five year period ended 2016 it is expected that total US and Canadian spending on advertising overall will grow from US$184 billion to US$245 billion but it will be directed more and more at internet advertising

Michael Paterson, Partner, Price Waterhouse Cooper's Canadian Entertainment & Media practice has a challenge for those of us in brand management:

"The challenge for entertainment & media companies rests not only in monetizing great content, but the growing fact that consumers are now "king" and their desire for customised experiences and getting content on their terms will require transformation on the part of companies to keep up,” says Paterson. “Location-based-marketing, mobile technology and social media are and will continue to be the driving forces behind revenue growth"

View the PwC Release and InfoGraphic

Meet Peter Thiel - He Just Doubled his Net Worth

In 2004, Peter Thiel did something quite extraordinary.  

Just three years after the dot.com crash, before Wikinomics said change was coming, before Google's IPO and while industry was still undecided on Social Media, Peter decided to invest half a million dollars in a small unproven play called Facebook.  Furthermore, through all the ups and downs and failed experiments at Facebook he continued to believe in the idea and the founders. 


Peter manages Founders Fund, and according to published reports he stands alone as the first outsider to invest in the Facebook venture. Yesterday, he also became famous for another reason.  According to published reports, Peter's net worth doubled to $2.7 billion US dollars.


Perhaps you're invested in an internet play that is moving more slowly than you wish. High value internet plays seem to have different profiles and timing than many of us expect.  Read the Founders article on the Future by Peter's partner, Harvard Business Review writer Bruce Gibney for a better perspective on VCs, good investments and the strategies they use at Founders Fund.  


I'm sure Peter probably had some angst along the way and he may not have arrived where he expected, but you can bet yesterday was memorable.


Meet other Facebook Billionaires