australian centre for innovation & international competitiveness presented by professor ron...
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Australian Centre for Innovation & International Competitiveness
presented by presented by
Professor Ron JohnstonProfessor Ron Johnston
Australian Centre for InnovationAustralian Centre for Innovation
Sydney, AustraliaSydney, Australia
PRESTPREST
July, 2006July, 2006
‘‘So You Think You Know How So You Think You Know How To Think About the Future?To Think About the Future?
Australian Centre for Innovation & International Competitiveness
Australian Centre for InnovationAustralian Centre for Innovation Mission: ‘To assist public and Mission: ‘To assist public and
private sector to better address private sector to better address the challenges of the future the challenges of the future through innovation’through innovation’
Focus on the interplay of the Focus on the interplay of the knowledge economy, globalisation, knowledge economy, globalisation, connectivity and innovationconnectivity and innovation
Independent non-profit companyIndependent non-profit company http://www.aciic.org.auhttp://www.aciic.org.au ‘‘son of PREST’ son of PREST’
Australian Centre for Innovation & International Competitiveness
Challenges in Predicting the Challenges in Predicting the FutureFuture
The horse is here to stay, the The horse is here to stay, the automobile is a novelty automobile is a novelty (Michigan Bank manager (Michigan Bank manager to Henry Ford, 1908)to Henry Ford, 1908)
Who the hell wants to hear actors talk? Who the hell wants to hear actors talk? (Jack Warner, 1930)(Jack Warner, 1930)
There is a world market for about five There is a world market for about five computers computers (Thomas Watson, IBM, 1943)(Thomas Watson, IBM, 1943)
Guitar music is on the way out Guitar music is on the way out (Decca (Decca Records rejecting Beatles, 1962)Records rejecting Beatles, 1962)
If anything will remain unchanged, it is If anything will remain unchanged, it is the role of women the role of women (David Riesman, 1967)(David Riesman, 1967)
The Internet is full. Go away. The Internet is full. Go away. (T-shirt, 1995)(T-shirt, 1995)
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Remember the definition of Remember the definition of foresight!foresight!
Foresight is a Foresight is a process of anticipating process of anticipating and managing change. and managing change. It is a It is a systematic and participatory approach to systematic and participatory approach to developing effective strategies and developing effective strategies and policies for the medium- to longer term policies for the medium- to longer term future. future. (APEC-CTF)(APEC-CTF)
Foresight is a systematic, participatory, Foresight is a systematic, participatory, future-intelligence-gathering and future-intelligence-gathering and medium-to-long-term vision-building medium-to-long-term vision-building process aimed at present-day decisions process aimed at present-day decisions and mobilising joint actions. and mobilising joint actions. (IPTS - (IPTS - FORLEARN)FORLEARN)
Foresight is a means of systematically Foresight is a means of systematically addressing the future, and acting on it. addressing the future, and acting on it. (R. Johnston)(R. Johnston)
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What Can beKnown
Analytic Tools
Examples
1. A Clear-Enough Future
A single forecastprecise enough fordeterminingstrategy
“Traditional”strategy tool kit
School population
2. AlternateFutures
A few discreteoutcomes thatdefine the future
Decision analysis Option valuation
models Game theory
NASA
1
2
3
Tools for Different Futures
Australian Centre for Innovation & International Competitiveness
What Can beKnown
Analytic Tools
Examples
3. A Range of Futures
A range of possibleoutcomes, but nonatural scenarios
Latent-demandresearch
Technologyforecasting
Scenario planning
Fast changingemerging markets,eg. e-commerce
4. True Ambiguity
No basis to forecastthe future
Analogies andpattern recognition
Nonlinear dynamicmodels
Russia in 1992
?
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* Different types of futures guides foresight tool selection
* “The primary function of foresight is to transform Type 3 and Type 4 futures, which we have limited capability to manage, into Type 1 and Type 2 futures, where our management tools are effective and our decision-makers are confident” (Johnston, 2004)
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The ContextThe Context
Principles of Good GovernancePrinciples of Good Governance Evidence-based Policy MakingEvidence-based Policy Making Demands to invest in and manage Demands to invest in and manage
intangiblesintangibles Horizontal Governance of Horizontal Governance of
InterdependencyInterdependency
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Philip E. TetlockPhilip E. Tetlock
Expert Political Judgment: How Expert Political Judgment: How Good Is It? How Can We Know?Good Is It? How Can We Know?
Princeton University Press, 2005Princeton University Press, 2005
Australian Centre for Innovation & International Competitiveness
The MethodThe Method Select 284 experts in world politics from Select 284 experts in world politics from
government, universities, think-tanks government, universities, think-tanks “who had shown themselves to be thoughtful “who had shown themselves to be thoughtful and articulate observers of the world scene”and articulate observers of the world scene”
They each make 100 forecasts about They each make 100 forecasts about specific items of world affairs looking specific items of world affairs looking out from 1988 to 2003,on topics such as out from 1988 to 2003,on topics such as transition to democracy, economic transition to democracy, economic growth, war and nuclear proliferation growth, war and nuclear proliferation including an assessment of their own including an assessment of their own confidence in their predictions, and their confidence in their predictions, and their preferred decision-making style.preferred decision-making style.
Time passes – evaluation of the Time passes – evaluation of the forecasts statisticallyforecasts statistically
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The ResultsThe Results Average accuracy only just above a ‘dart-Average accuracy only just above a ‘dart-
throwing chimp’, and well behind crude throwing chimp’, and well behind crude extrapolation algorithmsextrapolation algorithms
Generalists are more accurate than Generalists are more accurate than undergraduates who were given a 1-page undergraduates who were given a 1-page summarysummary
Experts do little better than generalistsExperts do little better than generalists Reputation of experts is an inverse guide Reputation of experts is an inverse guide
to accuracy – the more famous the expert, to accuracy – the more famous the expert, the worse the accuracy of predictionsthe worse the accuracy of predictions
Australian Centre for Innovation & International Competitiveness
The Defences?The Defences?
DiscontinuityDiscontinuity Almost right – pretty closeAlmost right – pretty close Just off in timingJust off in timing Politics is complicatedPolitics is complicated I made the right mistakeI made the right mistake The low probability outcome just The low probability outcome just
happened to happenhappened to happen
Australian Centre for Innovation & International Competitiveness
The Correlations?The Correlations? Not with field of expertiseNot with field of expertise Not with depth of experienceNot with depth of experience Not with level of educationNot with level of education Not with access to classified Not with access to classified
informationinformation Not with ideology – eg liberal Not with ideology – eg liberal
versus conservativeversus conservative Not with worldview eg optimist Not with worldview eg optimist
versus pessimistversus pessimist Only with Only with howhow experts thought – experts thought –
their style of reasoningtheir style of reasoning
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Enter the Animals Enter the Animals (courtesy of Isaiah Berlin, 1997 and Archilocus, 600BC)(courtesy of Isaiah Berlin, 1997 and Archilocus, 600BC)
The The hedgehoghedgehog knows one big thing – true knows one big thing – true believers, single vision eg believers, single vision eg Plato, Dante, Nietzsche, Plato, Dante, Nietzsche, Proust, HitlerProust, Hitler
The The foxfox knows many things – knows many things – scepticalsceptical, , circumspect, cunning eg circumspect, cunning eg Aristotle, Shakespeare, Aristotle, Shakespeare, Goethe, Joyce, ChurchillGoethe, Joyce, Churchill
There are also There are also foxhogfoxhog and and hedgefoxhedgefox hybrids hybrids Foxes avoid the errors of the hedgehogs by being Foxes avoid the errors of the hedgehogs by being
more scepticalmore sceptical Hedgehogs dig themselves into intellectual holes, Hedgehogs dig themselves into intellectual holes,
prisoners of their preconceptionsprisoners of their preconceptions Hedgehogs make many mistakes, but when they Hedgehogs make many mistakes, but when they
are right, they are spectacularly rightare right, they are spectacularly right
Australian Centre for Innovation & International Competitiveness
““There are two sides to every There are two sides to every argument, including this one”argument, including this one”
Scenarios to the rescue? Well maybe, but: Scenarios to the rescue? Well maybe, but: There is a danger that scenarios fail to open There is a danger that scenarios fail to open
the minds of the close-minded hedgehogs, the minds of the close-minded hedgehogs, but succeed in confusing the open-minded but succeed in confusing the open-minded foxes, by raising too many possibilitiesfoxes, by raising too many possibilities
This reflects a continuing tension between This reflects a continuing tension between theory-driven and imagination-driven theory-driven and imagination-driven modes of thinking. The former provides modes of thinking. The former provides closure and parsimony, the latter allows for closure and parsimony, the latter allows for new possibilities. new possibilities.
Australian Centre for Innovation & International Competitiveness
How then to explain why How then to explain why hedgehogs are in such demand, hedgehogs are in such demand,
and so dominant? and so dominant? • Harry Truman’s request for a one-armed Harry Truman’s request for a one-armed
economisteconomist• The ‘snappy sound-bite’The ‘snappy sound-bite’• The ‘elevator pitch’The ‘elevator pitch’• The ‘executive summary’The ‘executive summary’• The limited and declining attention spanThe limited and declining attention span
When the world remains at least When the world remains at least
as complicated and uncertain as it ever wasas complicated and uncertain as it ever was
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A Current ExampleA Current Example- Expert Group on Knowledge for - Expert Group on Knowledge for
GrowthGrowth
THE MESSAGETHE MESSAGE The nature of the R&D deficit is more The nature of the R&D deficit is more
complex than assumed in policy complex than assumed in policy discussions discussions
The causes of the R&D deficit are The causes of the R&D deficit are difficult to identify difficult to identify
The impact of the R&D deficit on The impact of the R&D deficit on economic growth is difficult to identifyeconomic growth is difficult to identify
The implications for research policy are The implications for research policy are difficult to draw difficult to draw
Australian Centre for Innovation & International Competitiveness
THE RESPONSETHE RESPONSE These findings remove whatever These findings remove whatever
certainty there may have been in certainty there may have been in forming policyforming policy
These findings undermine existing These findings undermine existing policy, only recently formulatedpolicy, only recently formulated
Here come the experts, unable to agree Here come the experts, unable to agree on anythingon anything
If there is so little agreement, let’s give If there is so little agreement, let’s give the money to someone who knows what the money to someone who knows what they are doing (eg industry)they are doing (eg industry)
We may as well stop subsidising R&D – We may as well stop subsidising R&D – at least taxpayers appreciate us saving at least taxpayers appreciate us saving their moneytheir money
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ConclusionsConclusions
I return to my earlier claim:I return to my earlier claim:
“The primary function of foresight is to transform Type 3 and Type 4 futures, which we have limited capability to manage, into Type 1 and Type 2 futures, where our management tools are effective and our decision-makers are confident”