Good decisions require reliable information about the future.
November 1, 1998
by Herman Kahn
a. relatively stable or only slowly changing phenomena
b. exponential, logistic, or other theoretical growth curves
c. envelope curves
d. other smooth extrapolations from past trajectories
a. rigorous and quantitative
b. phenomenological and quantitative
c. relatively nonquantitative but logical
d. reasonable and plausible argumentation
e. intuitive and literary
Predicting the Rate of Innovation
When dealing with relatively predictable variables, it is important to know how far we can project them into the future. Almost any trend will eventually tend to level out, top out, or elicit countervailing forces and trends. Depending on the area and the individual involved, an analyst will almost always exhibit a very strong bias toward either estimating a too-early topping out or creation of countervailing forces and trends, or an almost total ignorance of these possibilities and an assumption that current tendencies will continue almost indefinitely.
Those who exhibit the first bias are fond of the analogy of the growing boy; they argue that the second group would extrapolate from the growth rate of a teenage youth more or less indefinitely, not realizing that processes are underway that will soon limit his growth. The latter group, by contrast, often accuses the former of insufficient imagination and creativity: the former group, they say, does not understand that, even though countervailing forces and trends will arise, the forces behind the growth are strong enough or the people behind the forces ingenious and creative enough to surmount these countervailing factors and trends at least temporarily.
Thus, for a long time many professional analysts overestimated the staying power of West German and Soviet economic growth rates. But even more common was the underestimation in the 1960s and 1970s of the sustainability of Japanese economic growth. To take another example, in Things to Come (Kahn and Bruce-Briggs, 1972), I pointed out that a relatively unknown individual regularly made better predictions, for a period of almost ten years, concerning the future capabilities of United States weapon systems, particularly nuclear weapons, than did the most prestigious scientists in the country. He did so mainly by assuming that the recent rate of innovation would continue, whereas the most knowledgeable people tended to assume that the current momentum could not be maintained, that the genius they and their colleagues had exhibited in the past would not be matched or exceeded in the future.
This is an important point. Experts speculating about the long-term future will often extrapolate from the most dynamic current technology or economic activity and then assert that this driving force or technique has only limited possibilities for further growth in the medium- or long-term future. But in most dynamic situations, the crucial factor is the rate and character of innovation that will be generated by new technologies, fresh policies, and other new forces and innovations. In many situations the best, easiest, and perhaps only way to account for this factor is simply to extrapolate from the past rate of innovation.
An expert who has specialized in a particular subject may have great difficulty in accepting this idea when regarding his own area of expertise. He may be unwilling to give serious consideration to likely corrective and blocking actions, or, more probably, he may not consider innovations that would negate such efforts.
A less specialized outsider with a better feel for the techniques of extrapolation and for what has happened in other areas can often develop better predictions. The specialist may not understand his own tendency to discount innovation and may feel that the outsider has given insufficient attention to obvious bottlenecks, countervailing forces, or other problems. The expert may also consider "mindless" extrapolations of the rate of innovation to be foolish, irresponsible, or otherwise unjustifiable. The outsider, however, often has a better perspective because of his willingness to believe in the consistency of human ingenuity.
Herman Kahn (1922-1983), was the founder of Hudson Institute. View his bio here.
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