The gold rush is a defining part of Silicon Valley. The gold of today is data, and many solutions are rushed to the world market from a small radius around Princeton University. On the other side of the Bay lies the University of California, Berkeley, a place of the Liberal Arts in contrast to the technology-driven Princeton. Philip Tetlock taught at the former and provides a profound empirical and people-driven view on forecasting. His book “Superforecasting, the Art and Science of Prediction” is of paramount utility to every FP&A department and to every decision maker.

The Executive Summary

The empirical work done by “The Good Judgement Project” is financed by the IARPA, the Intelligence Advanced Research Projects Activity. It showed that

1. sixty ordinary citizens were repeatedly able to significantly out-forecast analysts with access to classified information; and that
2. supreme forecasting is a skill that is attainable to any open, interested and collaborative mind if forecast quality is measured and lessons are learned from it.

The Future is Unpredictable

It is impossible to run a correct cause and effect analysis for an event that has happened in the past. It is therefore also impossible to map a distinct route to a favourable outcome in the future. Despite today’s knowledge and processing power, academic hypotheses about the future have become ever less secure. The focus must be on people, and their abilities to establish emergent strategies with small adjustments in short time frames. This leads to supreme results and makes a strong argument for going beyond budgeting with rolling forecasts.

The Mediocracy of the Expert Opinion

Analysis of how experts forecast in their field revealed mediocracy at its best. Simple to understand messages and consistent views get more air time than differentiated interpretations loaded with doubt and restraints. Therefore, Philip devoted a complete section of his book on the role of the CEO, and how forecasting skills help him nonetheless. The findings go well with “Built to Last”, Jim Collins’ empirical analysis of what makes and keeps corporations superior in performance. This chapter is a strong argument for the strategic-minded  CFO that works as a team with his CEO.

The 11 Commandments of Supreme Forecasting

The Superforecasters were assessed according to Brier scores. As stated above, a certain mindset combined with a resolute feedback environment led to extraordinary results. Philip came up with 11 methodical commandments that can be followed to attain supreme forecasting skills:

1. Choose questions that can be dealt with. Concentrate on questions which lie in the Goldilocks Zone between Clocklike predictable and Cloudlike impossible.
2. Divide and Conquer your prediction into manageable parts to get a complete overview of the possibilities.
3. Always start with the external view and seek outside information and then balance it with your inner view.
4. Move in small and continuous steps; this is preferable to big swings in any direction and ensures all new information is met with a balanced reaction.
5. Explore both sides of any issue with thesis, antithesis and synthesis, in what the author calls the Dragonfly look.
6. Allow doubt, but balance with judgement, and focus your doubts on the obvious.
7. Balance caution and decisiveness and look out for false alarms and misses in a creative way.
8.  Look for errors in your models without a distorted view in the rear mirror.
9. Communication, discussion and support make everyone predict more accurately.
10. Use your experience to balance out the opposing errors.
11. “Don’t treat commandments as commandments.” Philip Tetlock.

Finally, a Forecast

The Good Judgement Project is trademarked and it offers good services to businesses. Although Berkeley and Princeton may have different academic focuses, they are both part of the Valley and its rush for Cash. So let me forecast with 90% confidence that you buy that book within the next 3 days.