Both Fortune-tellers and Angel-investors thrive by predicting future

posted by Ravi Arora December 13, 2015


Fortune-tellers are quite popular in India, China, Africa and Europe. Most of us in India would have shown our palms (mostly the right one) to a well-known palmist in our neighborhood or the city. They are often visible in Malls, parks, temples, street side and other public places. Many Indian families have a family palmist also. In every city or town, there are a few famous palmists who have a reputation of being more accurate than others. People come from far and near to meet such palmists and wait for hours in the queue. Some of us may have seen a fortune-teller during bad times in our professional or personal life.

Most Indians who travel in trains for long distance, don’t hesitate to show their palms to a fellow traveler or even to a friend who claim to have some knowledge of palmistry.

How often do we remember what the palmist had predicted for us? Do we even remember the predictions for more than a few days, week or months even though the predictions would have been for a longer time horizon? How often do we compare the predictions made with the actual reality that happens to us in future? Do we celebrate the accuracy of the palmist or curse him for the wrong prophecy? Do we go back to the palmist and tell that he or she was incorrect? Do we penalize or reward the fortune-teller for being accurate or inaccurate? In most cases we do not even remember the person who predicted the future for us?

A very few people remember those predictions that came out to be true, but I have never seen anyone talking about the misses. What could be the reason? This is because the misses are attributed to the lack of effort from the person who missed it – who would like to be blamed?

Let’s now focus on the fortune-teller. There is no upside for the palmist if his predictions come out true and no downside if he is proved incorrect. There is no warranty about the prophecy. There is a wide range of methods that fortune-tellers use like tarot cards, astrology, palmistry etc. Each one of them claim to be more accurate than others.

The focus of this post is to reflect on our actions and behavior after we have heard the fortune-teller and consciously try to ensure that it does not become our habit in our professional life.

Who are Angel-investors? They too predict the future and put some stake in the startup if they feel that the startup founders would be able to achieve the future. Unlike fortune-teller, they have skin in the game but are not involved in shaping the future. Do you think the fortune teller, instead of charging a fee, put some of his stake in the future success of select individuals who he feels would do extremely well in their life?

In the corporate world too, we have several experts (individuals and companies) who analyze and predict future-trends, also known as mega-trends. Managers love hearing them because it is exciting and take us to the imaginary world. Many companies invite these experts during annual leadership/strategy meetings to get their insights while preparing the Long-term plan. Have you noticed the reaction of managers after the session on mega-trends? Most managers assume that the trends predicted would be true and imagine as if they have already arrived at the future state and discuss strategies to make best use of the future state. Has someone ever challenged a management guru for wrongly predicting a trend or a mega-trend? I think our behavior is the same as it is towards the fortune-teller.

Mega-trends are very broad in their description of the future state. It is the responsibility of managers to use these as inputs to paint a picture of products and services that are likely to emerge. They should then identify the ones they would focus and include them in their strategic plan.

When the future arrives, the managers exhibit a behavior that is similar to our behavior toward fortune-tellers. Business leaders and managers should inculcate the following two habits to enhance the innovation capability.

  1. Introspection of the opportunities that we failed to identify but others could (false-negatives) and those that we identified but didn’t turn out to be winners (false-positives): We should also analyze the reasons for these misses. Discussing these errors openly will help in improving our capability think about our future products and services more accurately and granularly. Introspecting errors will encourage us to be more flexible in including something that we might have missed earlier and be less obstinate which doesn’t look promising.
  2. Sincerely pursue the choices that were made: Most companies fail to invest resources on innovations as they need to be nurtured for longer-term. Managers need to make detailed investment plan of all their innovation projects and introspect if there have been deviations.