Looking back at looking forward

Looking back at looking forward

RICHARD N. FARMER LOOKING BACK AT LOOKING FORWARD A check of some Fortune forecasts Richard N. Farmer is chairman of the Department of International...

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RICHARD N. FARMER

LOOKING BACK AT LOOKING FORWARD A check of some Fortune forecasts

Richard N. Farmer is chairman of the Department of International Business Administration, Indiana University.

We will have to wait to see how good our present forecasting methodologies are, but we can test futurologists o f earlier times. The author has checked a selection o f Fortune's forecasts as far back as 1933. Examination reveals that predictions were on target in three areas--technology, general trends, and structural change in the economy. They fell far short of the mark, however, in the areas o f legal, political, and international constraints; the personal impact o f economic factors; and the personal impact o f various innovations. But the failures were often not too far o f f and the correct ones, if heeded, could have saved us time and money. Unfortunately, the people problems that plagued the Fortune forecasts are still unsolved today.

Long-run forecasting is a growth industry these days, and futurology is a respectable scientific field. Cynics note, however, that those who look more than ten years into the future are usually safe from scrutiny and responsibility; when the decade has passed, few will remember the forecast and fewer still will bother to compare it with what actually happened.

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Serious long-run forecasts are widely debated and discussed. The Club of Rome, for example, is an informal, scholarly group of men and w o m e n from m a n y countries who have pondered the basic question of what will happen to the whole world, given current pressures and trends, during the next fifty to one-hundred years. The club has financed extensive and insightful long-term forecasting work at M.I.T., under the direction of D. H. Meadows. The methodology of forecasting is also being seriously studied. One scholar, James R. Bright, has identified five basic methodologies now used in long-run technological forecasting. A large number of futurologists are now using all of these methodologies to prepare forecasts in m a n y areas. 1 One way to determine how far futurology has come, if indeed it has moved forward at all, is to recheck forecasts made long ago and whose time has now come. How good were intelligent forecasters and futurologists of earlier times? Fortunately, there are plenty of 1. The initial work of the Club of Rome has been published. See W. Behrens, D. H. Meadows, D. L. Meadows, and J. Randers, The Limits to Growth (Washington: Potomac Associates, 1972). For the basic methodologies, see James IL Bright, A Brief Introduction to Technology Forecasting (Austin, Tex.:James R. Bright, 1972).

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good and bad historical forecasts around, and we can restudy them to determine just how good an earlier generation of futurologists were. This article is an experiment in looking backwards at those who looked forward. We have three concerns here. First, we are interested in knowing the exact content of the forecast, since it may have dealt with issues people no longer care about. The early forecasts about the long-term supply of ostrich feathers for women's hats m a y have been rather good, b u t the matter causes no anxiety to anyone today. Second, the question of how good the forecasts were, now that the events have occurred, is relevant. If many forecasts of the sort we now make turn out to be far off the mark, we might infer trouble ahead. If, on the other hand, certain types of forecasts, using selected methodologies, were better than others, we may be able to identify a useful set of guides. And third, if forecasts were poor, we would like to know what went wrong and why. It m a y be that the m e t h o d o l o g y was poor; it might mean that some minor point that could have been easily corrected was not taken into account; or it might mean that futurology efforts have historically been futile and erroneous for reasons we cannot control. In any case, it is interesting to analyze closely success and failure. Foxtunately, we have a long history of widely read forecasts b y the best men available at the time. These are contained in the various articles in F o r t u n e . Since 1930, For"tune has been a widely read and eminently respectable business magazine. It has consistently utilized some of the best minds of the time to discuss ideas and forecast in the shortand medium-term and in the long run. These forecasts have dealt with political, military, technological, and industrial matters as well as with the state of the e c o n o m y . Indeed, the subjects are similar to those tackled in modern forecasting. Presumably, the authors (sometimes well-known men, b u t often anonymous staff members) consulted with

the best thinkers available.at the time to get the clearest picture of the future. And well over 500,000 readers had a chance to ponder F o r t u n e ' s vision of the future. The accompanying table lists the articles considered here. The list is selective and representative of the subjects covered. No effort is made to c o m p u t e precise averages of good and bad forecasts, since the object is to see how well the more interesting forecasts matched the outcome. Basically, we are interested in figuring out w h y good forecasts were correct, and .how bad ones went astray.

GOOD FOR ECASTS Examination of various forecasts, b o t h good and bad, suggests that the F o r t u n e writers were on target with their predictions in three areas--technology, general trends, and structural change in the American economy.

Technology The record in this area is impressive; authors were not only able to hit the mark more often than they missed b u t to predict in considerable detail. For example, an article published in February, 1940, entitled "The U.S. Frontier" (see table, No. 6), not only discussed the new physics, with its potential for power generation (omitting, curiously, the b o m b ) , b u t also such on-target forecasts as synthetic vitamins, potential genetic breakthroughs (some of which have not happened even yet, b u t still look like good bets), the relative decline of railroads, cotton pickers that really work, television in every home, and the explosive growth of the use of house trailers. N o t one forecast in this particular article is far wide of the mark. Indeed, about the only elements not foreseen were jet aircraft engines, computers, and transistors. The rest of what has happened technologically since 1940 is right here. The 1946 article, "The Automatic Fac-

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Forecasting Articles Selected From Fortune, 1933-50 Date

Title

A u thor

Forecast Subject

1933

"Steam vs. Electricity"

Stuart Chase

Structural changes caused by use of electricity

"Who's in the Army Now" "The House that Works"

Staff Staff

Role of U.S. Army Prefab housing

"Unfit for Modern Motor Traffic"

Staff

Highway design and safety

"Tomorrow's Airplanes"

Staff

Types of commercial aircraft

"The U.S. Frontier"

Staff

Technological change during next few decades

"What Business With Russia?" "Hollywood's Magic Mountain" "The New Transport Planes" "Steam Power: Rolling Along" "The Middle East Challenge"

Staff Staff Staff Staff James M. Landis

Potential trade with the Soviet Union Problems of the movie industry Types of commercial aircraft Developments in railroad steam engines Political and economic potential in the Arab Middle East

12. Jan.

"American Productivity: I"

Charles R. Walker

13. Feb.

"Television--a Case of War Neurosis"

Staff

14, Mar. 15. Nov.

"Japan;s Road Back" "The Automatic Factory"

Staff Staff

Factors that could improve worker productivity Technical problems in television broadcasting The Japanese economy The factory of the future

"The Guaranteed Wage"

Staff

Impact on the U.S. of a guaranteed wage system

17. Jan.

"The Atom and the Businessman"

Staff

18. Aug.

"Promise of the Next 100 Years"

Harold G. Moulton

Private enterprise role in atomics under the reorganized AEC Economic and demographic data (longterm forecasts

"The World Will Save Money in the 1950's" " T V - W h o ' s Afraid?" "The Graduate Business Schools"

Colin Clark

1. 1935

2. Sept. 3. Oct. 1936

4. Aug. 1938

5. July 1940

6. Feb. 1945

7. 8. 9. 10. 11.

Jan. Feb. July Aug. Sept. 1946

1947

16. Apr. 1949

1950

19. July 20. July 21. Aug.

Staff Peter Drucker

tory," (No. 15) is similarly on target. Everything is here, including such concepts as systems analysis (but not its vocabulary), cybernetics, and feedback loops used continuously. The author correctly notes some of the potential impacts-cheaper goods produced in higher volume (we tend to forget that massproduced consumer durables not only are now more widely used,'but are actually less

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Demography, rates of change of savings and investments in various countries Those injured by the fast growth of TV Problems facing business schools in next decade

expensive than they were in 1946); rapid changes of product mixes; more flexible machine tools; and more thinking and planning work, along with the use of less skilled labor. Here the factory world of 1975 is laid out for all to see. Computers appear and are described, but the word "computer" is not used. Here is the way the electronic brain and

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nervous system of the automatic factory is described: Blueprint specifications for a single part are transposed to a punch card, perforated tape, "piano roll".., or other recording medium. This record, run over a pickup in the master record control, sends electrical impulses to a collation-and-control unit, which acts as an electronic brain, regulating power to a fabricating machine, receiving and comparing data from the master record and an information unit. [No. 15, p. 161]

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The diagrams and three color drawings that accompany the article also are accurate in principle; m o d e r n engineers born after the piece was written would have no trouble finding their way around the proposed layout, which is quite logical in conception. The brilliance of this forecast is almost lost in the mundane, yet accurate and logical exposition of what was quite obvious, even in 1946. "Television-a case of War Neurosis" is another example of good technical forecasting. The whole system and its technology is discussed, both actual and potential, and such future developments as color television and its technology are also considered. Once again, the author is able to zero in on his targets.

General Trends Fortune's authors were also able to forecast the evolution of such general American features as the trend toward suburban living, the improvement of roads, and the probability that atomic power will become economically feasible (a good technical forecast). As early as 1936, "Unfit for Modern Motor Traffic" (No. 4) not only discussed systematically and intelligently the causes of most motor accidents, but correctly predicted the construction of superhighways, complete with clover-leafs. The diagrams and drawings accompanying this article would look quite appropriate in next month's technical highway journal. The article offers a social forecast that the United States would be unable to keep dangerous drivers, such as drunks, off the road. The forecast was correct; such

people caused a high percentage of accidents then, and they still do. The article also correctly noted that if the proper road improvements were made, m a n y needless deaths could be prevented, and that the accident rate per million vehicle miles could be c u t - a s it has been. Even poor forecasts in other dimensions occasionally had keen insights into potential long-term structural change. Consider this closing statement from a generally poor forecast about Japan in 1946 ("Japan's Road Back," No. 14): "What it has no chance whatever of contributing this year or next (e.g., to world economic growth), it might do fivefold five years from n o w . " By 1971 Japan was so economically powerful that it was making every other country in the world nervous--which suggests that the writer of twenty-five years ago was a very good forecaster indeed.

Structural Change in the Economy On occasion, one finds real brilliance in the Fortune articles on this topic. Only one needs to be mentioned here, namely Stuart Chase's "Steam vs. Electricity" (No. 1). While appearing somewhat quaint and simplistic after thirty-nine years, Chase said it all about the future of both the cities and [he countryside. He correctly foresaw what such dispersive factors as electricity, telephones, and autos would do to cities, and one can find in this article the whole pattern of suburbia, singlestory factories in rural locations, exurban living, the death of inner cities, and the decline of the central city. This is a general, almost philosophical article, examining basic forces which were destined to tear apart traditional living patterns. The only problem is that it was probably twenty-five years ahead of its time. If anyone had bothered to think through what Chase said then, and apply it at once to city planning and similar affairs, we might have avoided m a n y of our present urban

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problems. But apparently no one was listening to visionaries who turned out to be more practical than the hard-nosed businessmen during the depths of the Great Depression.

POOR FORECASTING Some of Fortune's forecasters have not withstood the test of time so admirably. There have been blunders, poor forecasts, and just plain silly statements through the years. Predictions tended to go awry when involved with legal, political, and international constraints; the impact on people of sometimes accurate economic predictions; the effect on people of innovations; and the cross-impacts of technology.

problems. If Israel had somehow been aborted in its formation, what was said here would have made m u c h more sense. In all these cases, the forecaster failed to predict correctly some key political or legal changes, and, as a result, everything w e n t astray. Fortune's writers perhaps should not feel too badly about this; who would have forecast even three years ago that a conservative Republican President would visit Red China and open new options and new opportunities? It appears that if key legal/ political constraints change, then forecasting can get far off-base; it also appears that this forecasting area is one of the most difficult of all to deal with.

The Impact of Economic Events Legal, Political, I nternational Constraints It turned out to be difficult to forecast properly the legal, political, and international constraints and how they might change. "Who's in the A r m y Now," published in September, 1935 (No. 2), turned out to he a wild shot, simply because the author premised that any future U.S. military action would be on American soil as a result of an invasion. The idea that Americans would again go back to Europe, or even Asia, was not considered. I f the key political premise had been correct, this might have been an excellent forecast. "What Business with Russia?" (No. 7) presented in January, 1945, also turned out badly, since the author did not foresee just how long and complicated the Cold War would be. He forecast excellent potential t r a d e - i n the wrong things and at the wrong time. But once again, if Stalin had decided on somewhat more conciliatory policies or if the American government had decided to take trade chances with the Soviets, it would have been an excellent forecast. And finally, "The Middle East Challenge" (No. 11) fails to forecast the emergence of Israel and all its attendant opportunities and

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The economic forecasting was sometimes good, but it often seems as though the authors could not imagine what doubling or tripling some economic factors would really mean to people. The numbers are there, but the personal impact is not. Perhaps this is because Fortune is and was basically a businessman's magazine; perhaps it is also because the total impact of such geometric expansions simply cannot be imagined. Just as we cannot now visualize the average American family making perhaps $30,000 per year in 1973 dollars in 1998, the earlier Fortune writers could not imagine what it would be like when the average American family makes its present fantastic average income, which is about two and one-half times (in real dollars) what families averaged in 1940. It was too unreal, even though the numbers were there and were more or less correct.

The Effect of Innovations Related to the preceding point is the fact that many forecasters could not imagine what the various innovations would do to people. We

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find discussions of television, b u t no discussion of what would happen to people's habits as a result, although one gets a whiff of this in July, 1950, in " T V - W h o ' s Afraid!" (No. 20; note that this article came at the end of the period we are surveying). Chase, in 1933, can clearly see structural change, b u t he cannot foresee what kind of life styles will evolve when half the people in the country live in the sort of suburbs he forecasts. Articles of 1940 were discussing biochemical concepts, which eventually led to the Pill, b u t nowhere is there any consideration of how sexual mores might change. Indeed, this inability to forecast human reactions to technology shows up clearly as the biggest error in all forecasts. It is often pointed out that we can easily get a man to the moon, a matter of pure technology, b u t that we cannot figure out how to rebuild a slum in Chicago, which is pure human behavior. Human reactions are so complex that few forecasters are brave enough to consider what might happen when an innovation is introduced, let alone approach accuracy. Hence, forecasts which do not involve a human element tend to be more correct than those that do. Note that the legal/political failure discussed above also is in a sense a human element in the forecasting equation. As a footnote, this inveterate old science fiction reader has noted that the only group to tackle the "What does it mean to people?" problem are these science fiction writers. Often they are wildly wrong, b u t at least they are in there trying. And this is one reason w h y science fiction is more fascinating than scientific forecasting-at least one has some feel for the human element in the future, no matter how weird it may seem. One senses in most forecasting w o r k a studious effort to stay "sanitary," to avoid anything which touches on human behavior. As a result, the work is a lot less exciting than it might be, and perhaps no more correct. The inability to forecast the human problem is illustrated in Fortune's articles on

television. Television was demonstrated b y 1929, one year before the periodical was first published, and from time to time an author would c o m m e n t on the technology and trends. But it was not until 1950, four years after the real beginnings of mass television broadcasting, that the first indication of what might be happening to viewers as a result of TV was even considered. Such developments as the waning interest in radio and the cinema could not be forecast until we had some experience with the medium.

Cross-Impacts of Technology Fortune also had considerable difficulty with

the cross-impacts of technology. While a given technology could be forecast accurately, its effect on related industries was forecast badly if at all. In the 1945 article "Steam Power: Rolling Along" (No. 10), there is an excellent discussion of new developments in railroad steam engines and how they were being improved. But the whole exercise came to an end because the diesel was developed more rapidly. The point is discussed shortly in the article and dismissed; it is as if steam engines were the only machines on the rails. Here, incidentally, we see a repeat version of the sailing ship vs. steamship competition. Already it was clear that a new and deadly competitor had emerged. The short-term result was a final burst of creativity in the older technology, but, in the end, the new technology w o n out, and the last creative gasp failed. But Fortune's article would convince many hard-nosed thinkers that steam had a bright future. The last steam engine in America was built b y a c o m p a n y outside the industry about five years after the article appeared. In 1945, " H o l l y w o o d ' s Magic Mountain" (No. 8) appeared, a discussion of problems and trends in the movie industry. It was a good article, except that there was no mention of television. While there was no commercial television in 1945, it had already been

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widely forecast for 1946 (the year in which commercial TV did begin). As a result, not much that seemed important in 1945 turned out to be important in 1950. Once again, the failure was in cross-impact forecasting. A somewhat different kind of crossimpact problem recurred throughout the 1930's in Fortune. As early as 1932 the magazine was discussing prefabricated housing in considerable intelligent detail. It was clear even then that the technology was available to provide good inexpensive houses. The problems lay in people's attitudes and political considerations--zoning codes, suspicious unions, disorganized contractors, and so on. As a result, the industry could not get off the ground. These missing cross-links m a y suggest w h y the recent forecasts of the Club of R o m e have aroused such interest. In these, an effort is made to consider every development as related to every other development. Since such interrelationships are extremely complex, one needs a powerful computer to do even fairly simple analyses over time. Before the late 1960's, neither the computers nor their software were available for such a job. And, as a result, the forecasting efforts of an earlier time sometimes appear rather simplistic. They miss many key interrelationships that might have been foreseen. Perhaps, however, the inability of most of us to consider more than a few variables at one time still leads us astray. One encounters all sorts of forecasts that seem somewhat odd because they miss this interrelationship• feedback/correction factor. Thus, right now, we are expanding rapidly our expenditures on police w o r k to fight illegal narcotics importation. This is commendable and probably correct in forecasting terms. If we get better people, more skills, and more expertise in this field, we can cut off some (all?) supplies of narcotics. Period, as far as the forecast goes, since nothing else is considered. A massive effort is equated with success in preventing one sort of crime. But the crossover impacts might also be

FEBRUARY, 1973

considered. If the program is successful, narcotics will be in short supply, and the street price will rise. Addicts, needing to finance their now more expensive habits, will be forced to steal more frequently; hence, other kinds of crimes m a y well rise rapidly. Our success in one sector creates a failure in another. The type of one-dimensional forecasting that fails to consider the side-effects is still common. Most professional futurologists do not make such errors, b u t many of our political actions and programs are based on singularly single-minded, one-dimensional predictions. As long as this is so, we can confidently forecast that many of our solutions will not work too well, since the side-effects may well be worse than the original problem.

WISE OLD BIRDS Consideration of the Fortune successes and failures does suggest that there were lots of smart people around twenty to forty years ago. We could have done worse than to follow all of the periodical's forecasts, even the poor ones. The ones that failed were often not too far off the mark, and the ones that were right could have saved us lots of time and m o n e y , if anyone had paid attention. But we learn slowly. The errors that were c o m m o n in the Fortune forecasts keep right on reappearing in the modern ones. Despite our computers, our wealth of knowledge, and our improved methodology, we still have great difficulty in handling the people problems, along with the legal and political constraints which, in the end, are people problems too. And where Fortune was good, we still are good. Consider the introduction of a new gadget, the TV telephone, to see h o w slowly we travel. This device is nearly perfected, and is already in use in Chicago, for example, b u t its use has not spread. The technology and its costs are about where television was in the

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early 1940s, when the first commercial station went on the air briefly in New York City. What kinds of forecasting do we find discussed in the more popular, yet serious publications? It sounds like a broken record. There is, from time to time, a discussion of costs, technology, and probable developments. There are a few science fiction type scenarios, with happy housewives ordering things from TV-based warehouses. But the cross-impacts are not even considered. Once in a while one comes across a hint of what might happen to air travel when and if businessmen can use the TV telephone. Beyond that we find little. Few consider what might happen in ten years to airline pricing policies when the business traveler--the cream

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" S t u d y . . . suggests that even the most far-out forecasts were too conservative, and hence the wild men (that is, the science fiction writers) were often closer to the truth than anyone."

of the m a r k e t - n o longer has to travel, and almost all the passengers are tourists with highly price-elastic demands for air travel. No one considers whether the TV telephone will change teenage dating habits or sex mores. No one ponders what such instruments might do, for better or worse, for older people or invalids w h o can no longer travel easily, b u t w h o just might love to talk to the grandchildren or friends "face to face" on a dark and stormy night. No one forecasts how traffic congestion patterns in cities might change, if we called instead of travelled. No one is theorizing about h o w our life styles or psychological makeup might change if we had such a gadget in our homes. Mighty high-rise office buildings which will last fifty years are being built with no thought of what might happen if businessmen and professionals do not have to get together to work.

No thinkers in health care wonder what such systems might do to hospitals, if routine care patients can be monitored visually with such an instrument at h o m e instead of in a hospital bed. The probable results? Lousy forecasting for sure, since, like those earlier Fortune forecasters, we seem destined to repeat our errors instead of learn from them. And when our whole society is clobbered b y some simple thing that has been around in experimental form for at least fifty years, we will be shocked, dismayed, and astounded that we did not quite see what was going to happen. One wonders what might happen to us if some totally unexpected scientific thing came along, for instance, antigravity machines. The problem of forecasting is incredibly complex. As Fortune noted rather plaintively early in the game: A n d if one were to c a t a l o g u e every successful l a b o r a t o r y e x p e r i m e n t o f t h e c u r r e n t year, o n e w o u l d still b e u n a b l e t o express t h e f u t u r e in its o w n terms. For, r e f e r r i n g again to P r o f e s s o r E i n s t e i n , if E n v i r o n m e n t explains cuRure, it is n o t possible to t r a n s p o s e one's self spiritually f r o m one e n v i r o n m e n t to a n o t h e r . Even h a d t h e V i c t o r i a n s p r e d i c t e d w h a t we have a c c o m p l i s h e d w i t h t h e s t e a m engine, t h e y c o u l d n e v e r have c o n c e i v e d t h e c o r p o r a t e e c o n o m i c s derived f r o m it, n o r t h e m o d e r n w o m a n derived f r o m the c o r p o r a t e e c o n o m i c s . T h e A m e r i c a n p a c e is such t h a t all p i c t u r e s o f t h e f u t u r e are p r o j e c t i o n s i n t o a kind of moral vacuum. 2

Here and there are those who do try to forecast, b u t typically they work anonymously or write in obscure professional journals. Study of the Fortune forecasts suggests that even the most far-out forecasts were too conservative, and hence the wild men (that is, the science fiction writers) were often closer to the truth than anyone. One wonders if our respected mass media can ever learn to forecast in the w a y it really should be done. To date, our efforts do not look promising. 2. "The Expanding Decade," Fortune (June, 1931), p. 150.

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