1. Fortune Sellers Concepts, Ideas, and Lessons Learned

2. Outline Future is unpredictable –Forecast Definition –Examples –Chaos –Complexity

3. Outline How to reduce risk of unpredictability –Horizon –Adaptability –Leadership –Emulation Thought slides –Insurance –Humility –Creativity –Action

4. Forecasting and Prediction Forecast –To calculate or predict (some future event or condition) usually as a result of study and analysis of available pertinent data Prediction –To declare or indicate in advance; Especially : foretell on the basis of observation, experience, or scientific reason Forecast Prediction

5. Beliefs vs. Forecast Manifest destiny Domino theory Mr. Sherden’s education forecast Beliefs –Guide to action –Connections Forecasts –Specific –Inform beliefs

6. Future Is Unpredictable How do we know? –Book gives many examples –Forecasting accuracy is not converging (pg68) –The future does not exist –Compare against naïve prediction Same as yesterday Now The Future

7. Forecast Vs. Naïve Prediction

8. Chaos Sensitivity to initial conditions –Constant natural laws –Butterfly effect –Smoke

9. Complexity No constant natural laws Adaptive: the rules change Models become obsolete cannot be dissected into their component parts Counterintuitive cause-and-effect results Periods of order and predictability and moments of turmoil No fixed cycles –Economy, technology innovation, stock markets, and social sciences

10. “Past performance is no indication of future results” Stock market technicians –Analyze data tendencies Long-Term Capital Management –Based predictions on past events –Had to be bailed out in 1998

11. Reducing the Risk of Unpredictability

12. Use Short-term vs. Long-term Forecast Dismal economists: Forecast accuracy drops with lead time. –Research was conducted based on 5,000 forecasts made between 1976 and 1988 by fifty leading economic forecasters. –Forecasts on GNP growth and inflation rate. Weather –predictions are accurate over 12-24 hour period –become less accurate over time

13. Be Willing to Change Forecasts should be updated often Prepare contingency plans Build “highly responsive organizations that will adapt” Examples –IBM in the 1980s –EWR Inc. and data comm. technology

14. Recognize Difference Between Leading and Controlling Organizations are not directly controllable Businesses must strike a balance between achieving efficiencies and remaining flexible to adapt Tom Peters wrote about abandoning hierarchical organizations for flexible groups in Liberation Management: Necessary Disorganization for the Nanosecond Nineties, 1994 Businesses must manage in the short term, while they lead in the long term

15. Recognize Difference Between Leading and Controlling Controlling: –Set minimum level of sales revenue through use of forward contracts on future production output. Managing: –Technology innovation, integration & development in strategic mine planning. Mining Industry Military Controlling: –Use of Boot camp to generate a team thought process. Managing: –Use of Reserve training to generate expertise in billet assignment.

16. Follow Example of Most Successful Organizations Self-organization (d-day) Organizational intelligence(Toyota) Natural reflexes(royal Dutch/shell) Mutation(joint venture of CICC) Symbiosis(VCR standard) Competitive challenges(Fedex express)

17. Use Insurance Farmers know weather is unpredictable –Options –Crop Insurance Investors know market is unpredictable –Dollar-cost averaging Redundancy in IT systems

18. Be Humble The saying of Ancient Chinese “To live a long life, make your mind disinfect first; to govern a country, be humble first.” 夫欲致精者，必 虚静其形；欲致 贤者，必卑谦其 身

19. Be Humble Business & playing chess

20. Be Creative Capacity to have new thoughts and to create expressions unlike any other.(Encarta) Basic element in many human endeavors, such as art, music, literature, and performance Video games –Atari was craze in 1970s but it popularity decreased in 1980s –Nintendo made video games a craze again

21. Act Act or not act in the face of uncertainty? –New Deal, Great Society –What is the cost of not acting? Prediction interact with the phenomena they predict Often the best research could not have been predicted before the work began We are often surprised by the research topics that we “back into” (bottom-up) Business plans are successful not because of their concept, but because of successful implementation

22. Application

23. “Innovation is essentially a process of coupling” Don’t try to reinvent the wheel Find place in research field –review literature Research may end in an unintended area

24. Reduce Uncertainty in Social Research Critical thinking Sound theory base Avoid predicting on cycles Check credentials of sources Discount track record Avoid personal bias

25. The future is unpredictable Be willing to change Recognize difference between leading and controlling Use insurance Be humble Be creative Act Conclusion Change Lead Be Creative Insure Be humble Act Chaos & Complexity