I was given this fantastic article by dad today – It’s a Harvard Business Review piece written by Paul Saffo about how to make effective forecasts. The article reads fantastically well (you know how much I appreciate good writing) and is easy to remember and learn from due to the nature of Saffo’s explanations. Very made to stick.
The article is broken down into 6 very relevant ‘Rules’ for effective forecasting. It’s golden stuff for anyone dealing in the opportunity evaluation space and is a great tool for any innovator. But, the point I’d like to highlight here is his first rule – Define a Cone of Uncertainty.
Saffo talks about how defining his ‘Cone of Uncertainty’ prior to forecasting something is the most crucial of all tools he uses. The reason being, that by defining what factors are most at play in a given situation he can better judge the outcome of events yet to take place. It’s very similar to a PEST analysis, but much more rooted in historic indicators backing up those factors highlighted as important currently.
“The art of defining the cone’s edge lies in carefully distinguishing between the highly improbable and the wildly impossible. Outliers – variously, wild cards or surprises, are what defines this edge”
This has a lot of similarities to the mindfulness techniques that I am studying now. Whilst I’m not Buddhist, the idea of being much more ‘in the moment’ is becoming a very valuable tool for me in remaining sane in this fast paced world. It helps focus on what is important at any one time, rather than let the internal commentary of my mind (and often others!) get in the way.
The idea of the cone of silence is similar, in that it focuses the forecasters (or entrepreneurs!) thinking on the parameters of what is possible, rather than what is improbable. It takes these events into account, measures them, and then either places them within the cone or at its edge, allowing the forecaster freedom to focus their thinking. Those events firmly within the cone, or towards its centre, are much more likely to occur and thus much more likely to impact any resulting strategy.
There are also many synergies between this method, and the De Bono Lateral Thinking methods, mainly to do with the use of a Thinking Purpose to lead the mind purposefully in its action. It’s an interesting topic of discussion, and one I think only helps improve our thinking abilities. The ability to remain creative in problem solving and yet critical in idea evaluation is a key ingredient to good innovation. At least I think so 🙂