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What to Do When You Can’t Predict the Future

You may have wondered why so many things seem to be harder and take longer to accomplish than you would like—and why both those things seem to be increasing.

We don’t have the answer in every case, but here is an explanation that probably covers the majority of situations: the way we have been taught to solve problems was designed for a different world. To deal with uncertainty today, we need a different approach.

YOU’RE SMART, creative, and terrific at approaching challenges. So why does it seem that the number of things you can’t figure out is increasing? The problem may not be you. It could be the way you were taught to think. From kindergarten on, we’ve all learned prediction reasoning—a way of thinking based on the assumption that the future is going to be pretty much like the past.

Demographics are one simple example of how prediction reasoning (what we refer to as Prediction) works. You can calculate, with a some confidence, the world population in 2050 because you know a lot of things. Here are just four:

  1. You know how many people are alive today: about 7 billion.
  2. You know how those people are distributed by age, that is, you know how many teenagers there are, how many people over age sixty-five, and so on.
  3. That means you know how many people are in their twenties and thirties, when most people decide to have children.
  4. And you know recent trends in population growth, which is slowing as people worldwide are, on the whole, deciding to have fewer kids.

Studying all this data and much, much more, you can, as the United Nations did recently, say with reasonable certainty that in the year 2050, there will be 8.9 billion people on the planet. Armed with that data, you can also make a number of fairly accurate estimates, such as how many diapers will have to be produced, how many gallons of water those 8.9 billion people will drink each day, and how much the United States will need to pay out in Social Security benefits at the midpoint of this century.

We have gotten really good at Prediction. To support this kind of thinking, we have developed great analytic tools (statistics, probability theory, computer simulations, and the like). These tools are logically sound and complete. That’s a scientist’s way of saying they yield the correct solutions, and the same solutions, every time. Math like this is great. It has right and wrong answers, and is consistent. It allows us to do wondrous things. You want to send a rocket to the moon and land at a specific spot (even though the orbiting moon will be moving while the rocket is underway)? No problem. Prediction allows you to do that. Need to come up with a fairly precise estimate of how many sports cars will be sold during a recession? Prediction can help with that as well.

Because it works so well in these kinds of situations—and countless others—we (like you) became accustomed to using Prediction all the time. And like anything, if you do something over and over, it becomes a habit. Your view of the world becomes conditioned.

And yet... Not everything can be foreseen (and therefore predicted). Want to know if the cute guy across the hall is going to ask you out? Sorry, Prediction can’t help. Desperately need to know if the town council is going to accept your idea of turning Main Street into a pedestrian mall, before you spend your nights and weekends working on the project? Prediction is of little use. Is the world ready for your brand-new, never-before-seen product or service? That’s another place where Prediction really does you no good.

Here’s the central point of this book: when the future is unknowable (Is quitting your job and starting something new a good idea? Will the prototype we are developing at work find a market?) how we traditionally reason is extremely limited in predicting what will happen.

You need a different approach.

We are going to give you a proven method for navigating in an uncertain world, an approach that will complement the kind of reasoning we have all been taught. It will help you deal with high levels of uncertainty, no matter what kind of situation you face. We know it works because entrepreneurs—the people who have to deal with uncertainty every day—use it successfully all the time.

If it works for them . . .

When people write about entrepreneurs, they invariably focus on their behavior: what Howard Schultz or Michael Dell did in building their companies. If you take that approach, you probably would conclude that every single entrepreneur is unique, so there is little to be learned from studying them; you would have to be Howard Schultz to start Starbucks and Michael Dell to start Dell.

Enter our friend Saras D. Sarasvathy, professor at the University of Virginia’s Darden School of Business. (We are huge fans of Sarasvathy’s work. To connect with what she has written, see the Further Reading section at the end of the book.) Early in her work, she made a fascinating discovery, one that ran counter to the conventional wisdom. Sarasvathy studied serial entrepreneurs, people who have started two or more companies successfully.

But instead of looking at the behavior of entrepreneurs—which is indeed unique—Sarasvathy focused on how they think. There she found amazing similarities in how they reasoned, approached obstacles, and took advantage of opportunities. Yes, of course, there were variations. But the basic approach, as she understood it, was always the same.

In the face of an unknown future, entrepreneurs act. More specifically, they:

  1. Take a small, smart step (see “What’s a Smart Step?”) forward;
  2. Pause to see what they learned by doing so; and
  3. Build that learning into what they do next.

What’s a Smart Step?

In our description of how Creaction works, we said that you take “smart steps” toward what you want, toward what you desire. So, what’s a smart step?

It is the action you take based on the resources you have at hand and never involves more than you can afford to lose, that is, your acceptable loss. It can involve bringing other people along, although initially it does not have to.

Having taken the step, you pause to reflect on what you have learned. From there, you take another smart step or quit if your desire has waned (or you have discovered something else that you want more) or if you have exceeded your acceptable loss.

You repeat this process until:

  1. You succeed. Or
  2. You no longer want to continue. (You changed your mind; something else is more appealing.) Or
  3. You exceed your acceptable loss. Or
  4. You prove to yourself it can’t be done.

This process of act, learn, build, as we came to think about it, repeats until entrepreneurs are happy with the result, or they decide that they don’t want to (or can’t afford to) continue. At about this same time Sarasvathy was pursuing her research, the faculty at Babson started going down the same path and came to many of the same conclusions.

Inspired by all the research, we began to extend it in a variety of ways. We tested our ideas with colleagues and held more than two dozen seminars at which we invited smart, skeptical people to challenge our framework’s conclusions. They helped us refine and clarify our thinking, but our central findings only grew stronger as they told us about their experiences, which reinforced what we had learned.

So, we began to wonder if the way entrepreneurs think would work for the rest of us. Before moving on, we want to note a couple of things about that statement.

First, while we will use many business examples throughout the book, we will also be providing some that come from everyday life. This is not a business book in the traditional sense. (See “What You Won’t See in This Book.”)

What You Won’t See in This Book

  1. Only business examples. Of course, there will be some business examples. We are business executives who have run and consulted with companies and taught this stuff as well. But you are also going to find examples from everyday life, since what we are advocating will work everywhere, not just in the office.
  2. An all-out attack on the way you were taught to think. Invariably, when presenting a new approach to solving problems, authors go to great lengths to show why everything written before their work has been a waste of time. That’s just silly. We are not going to say that the way you were taught to think was wrong. But we are going to say that there is another (and better) approach to use when confronting an unknown future.

    However, that does not mean you should use this new approach, which we have dubbed Creaction, exclusively. We will show how Creaction can work extremely well in conjunction with the way you already approach solving problems.

  3. Randomness. When asked to summarize the central message of the book, we respond, “Action trumps everything.” Some people hear that and think we are advocating “ready, fire, aim” or “leap before you look.” We’re not. In fact, we have applied, if you will, the business version of the scientific method, the process by which scientists, collectively and over time, try to create an accurate picture of the world. The steps they use are similar to those we are advocating: they ask a question or encounter a surprise (“I wonder . . . ?” “How come . . . ?”); do some research (we advocate doing just enough, but we do argue for doing it); construct a hypothesis; test the hypothesis (which in our case occurs by acting); and draw a conclusion based on what happens.

    In business today, you are often told to “experiment” in order to help shape an uncertain future. Creaction gives you the formula to do just that, a formula grounded in one of the best ways of conducting those experiments: the scientific method.

  4. Footnotes and other bits of professor-itis. Although our approach is steeped in the scientific method, this is not going to be a textbook. We have great respect for academics. One of us is a university president who taught for more than two decades at the Harvard Business School. And as you will see (in “Further Reading”), our arguments are deeply grounded in academic research by dozens of people, including a Nobel Prize winner. But footnotes are distracting at best. We believe what we have to say is important and can literally change your life, and we know it can be said simply and directly.

Second, when we set out to see if the way serial entrepreneurs think would work for everyone, we weren’t looking to replace Prediction. There were two reasons we weren’t.

  • As we have seen, Prediction works really well when the future can realistically be expected to be similar to the past, and since we are advocating smart steps (see sidebar), it certainly isn’t smart to discard something that works well in a specific situation.
  • Sarasvathy’s research—which we will refer to throughout—shows that entrepreneurs continue to use Prediction effectively in the situations where it works well, that is, in the places where it is logical to assume that the future will be a lot like what has come before.

So, we were not looking to replace Prediction. Rather, we wanted to know whether the logic entrepreneurs employ when they face the unknown—we came to think of it as Creaction—would work for everyone else when the future is essentially unknowable. In other words, we wanted to know if Creaction could be used to complement Prediction in everyday situations that we frequently find ourselves in (“Can I convince the town to add a bicycle lane downtown?” “Will anyone buy what I have to sell, if I start a company?” “Would I be happy chucking it all to join the Peace Corps?”)

We found that the entrepreneurial logic works in business and potentially elsewhere. You can use this way of thinking to complement the kind of reasoning you have already been taught—an additional way of thinking that can help you deal with high levels of uncertainty no matter what kind of situation you face.

What are we are talking about?

What exactly is Creaction? Well, to start, it is based on acting and creating evidence, as contrasted with thinking and analysis.

Here’s one way to think about that pivotal difference. A dancer dances. Substituting thinking for dancing doesn’t work. If all you do is think, you end up just thinking about dancing. There is nothing to show for that thought.

Thinking is often a part of creating, but without action, nothing is created. This is true for even very intellectual, cerebral fields. For a task to be considered creating, you must publish, teach, or whatever. Daydreaming by itself is not creating.

How does Creaction play out in practice? How does it help us deal with uncertainty? The process has three parts, which repeat until you have reached your goal or decide you no longer want to. (See figure 1-1.)

FIGURE 1-1

Creaction: How to act in uncertainty

image

  1. Desire.Find or think of something you want. As we will discuss in chapter 2, you don’t need a lot of passion; you only need sufficient desire to get started. (“I really want to start a restaurant, but I haven’t a clue if I will ever be able to open one.”)
  2. Take a smart step as quickly as you can. As you will see, a smart step has its own three-part logic as well.
    • • Act quickly with the means at hand—i.e. what you know, who you know, and anything else that’s available. (“I know a great chef, and if I beg all my family and friends to back me, I might have enough money to open a place.”)
    • • Stay within your acceptable loss. Make sure the cost of that smart step (in terms of time, money, reputation, and so on) is never more than you are willing to lose should things not work out.
    • • Bring others along to acquire more resources; spread the risk, and confirm the quality of your idea.
  3. Build on what you have learned from taking that step. Every time you act, reality changes. If you pay attention, you learn something from taking a smart step. More often than not, it gets you close to what you want. (“I should be able to afford something just outside of downtown.”) Sometimes what you want changes. (“It looks like there are an awful lot of Italian restaurants nearby. We are going to have to rethink our menu.”) After you act, ask did those actions get me closer to my goal? (“Yes. It looks like I will be able to open a restaurant.”) Do you need additional resources to draw even closer? (“Yes. I’ll need to find another chef. The one I know can only do Italian.”) Do you still want to obtain your objective? (“Yes.”) Then act again and again until, building on what you learned, you have what you want (or you have decided you don’t want it or you want something else instead).

Researchers found that successful entrepreneurs used a common logic that allows them to deal with situations in which the future is unpredictable. What works for them will work for you.

In other words, when facing the unknown, act your way into the future that you desire; don’t think your way into it. Thinking does not change reality, nor does it necessarily lead to any learning. You can think all day about starting that restaurant, but thinking alone is not going to get you any closer to having one.

Thirteen Reasons Why Action Trumps Everything When the Future Is Unpredictable

Action, the cornerstone of Creaction, does indeed trump everything when the future can’t be known with much certainty. That simple statement makes sense, of course. If you are heading into an unknown frontier—and starting a new journey of any sort usually qualifies—the only way to really discover what is out there is to go and find out. “Are there potential customers?” “Is the market big enough?” “Will the community like the civic venture I helped create?” Take a small, smart step and find out. Thinking and creating endless “what if” scenarios doesn’t help you. You can “what if” yourself to death. The only way to know for sure is to act, reflect on what you have learned, and act some more to gain more learning.

But before you do, double-check to see that the future is as uncertain as you think; that there is, indeed, no way to predict what will happen. If there is a more than reasonable chance that the future is knowable, you are often better off letting Prediction dominate, and that is a good thing.

Remember what we said at the beginning. Prediction and Creaction frequently work in tandem and each works better in certain situations. You could take an egg out of the refrigerator, hold it out at arm’s length, and, to find out what will happen if you drop it, take action by letting go. But there is little reason for doing so (other than to entertain a three-year-old). The laws of gravity are well known. You can predict the fact that the egg will break with near certainty.

Similarly, you could go out and start a transportation company tomorrow and learn as you go how many cars, trucks, motorcycles, and bicycles you can sell in a given year, then sort those numbers by categories—coupes, convertibles, SUVs, and so on—and chart sales during good economic times and bad. But there is no reason to go through all that effort and risk. Those numbers are readily available, and you can estimate future transportation sales with reasonable confidence.

Our point is simple: when the results of thinking would lead to actions that are predictable (“I wonder how many high-end sports cars I could sell in a year during an economic slump”), let predictive thinking dominate, supplementing it with Creaction as necessary. You can expect Prediction to give you a solid result, that is, you know the uncooked egg will crack when it hits the floor, and you can come up with numbers that will project fairly accurately how many specific types of cars you are likely to sell in a given period.

But in the face of unknowability—what is the market for motorized skateboards with training wheels or for a four-wheel Segway, things that don’t yet exist—you can’t do a lot of learning in advance. In this case, the fastest, easiest, most effective (and often only) way to get that learning is by acting.

Here are thirteen reasons why:

  1. If you act, you will find out what works . . .
  2. . . . and what doesn’t.
  3. If you never act, you will never know what is possible and what is not. You may think you know, but you won’t be able to point to anything concrete to prove you are right. The problem with that, as Mark Twain famously pointed out, is clear: “It ain’t so much the things we don’t know that get us into trouble. It’s the things we know that just ain’t so.”
  4. If you act, you will find out if you like it . . . with “it” being whatever the new action is . . .
  5. . . . or you don’t.
  6. Acting leads to a market reaction, which could point you in another direction. You thought you were going to open the world’s best Italian restaurant. Taking a small step toward that goal, you began hosting large dinner parties and cooking for the monthly meeting of the Elks club to try out your recipes and discover firsthand what the food service business is like. People raved about your food, but were surprised when you didn’t want to talk to them. You, in turn, were left cold by the experience. You hated interacting with people; the idea of doing all the logistics necessary (finding a place, dealing with the constant turnover of waitstaff, etc.) made you break out in a cold sweat, and you really didn’t want to prepare more than three kinds of entrées at a time. It turns out you learned that you liked the cooking part of running a restaurant but weren’t crazy about all the rest. Your action, the decision to take steps toward starting a restaurant caused a market reaction. People loved the food but found you to be a cold fish; you loved the cooking but could do without everything else. Your action has convinced you to go into high-end catering and hire someone to deal with the clients.
  7. As you act, you can find people to come along with you. For example, in talking to your suppliers, you ended up meeting the world’s most organized person. She now runs the day-to-day operations of your catering business and is a 10 percent owner.
  8. As you act, you can find ways to do things faster, cheaper, better. You discover, after making your world-famous chicken parmesan fifty times, that you can prepare the dish in eight steps instead of eleven.
  9. If you act, you won’t spend the rest of your life going, “I wonder what would have happened if . . .”
  10. If all you do is think, you may end up being less interesting as a person. Who would you rather sit next to on a plane, someone who started a successful rock-climbing store (or even an unsuccessful one), or someone who only thought about it?
  11. If all you ever do is think about stuff, you can gain tons of theoretical knowledge, but none from the real world. You become like that woman in the fable who knows the price of everything but the value of nothing. In other words, if all you ever do is think . . . all you do is think.
  12. Action always leads to evidence. You act, therefore something changes, and in observing that reaction, you gain knowledge. (“Hmm, if I drop an egg from shoulder height, it shatters.”) Thinking doesn’t lead to proof—or messy floors. As Scott Cook, the founder of Intuit, said when interviewed for a Harvard Business Review article: “Evidence is better than anyone’s intuition.”
  13. If you act, you know what is real. You always want to know what’s real.

For all these reasons and dozens more that you can come up with on your own, action trumps everything when the future is highly uncertain.

Déjà vu all over again?

Sometimes, when we explain the concept of Creaction, people say it sounds familiar. It should; it was the way we all learned—at first.

When you were a child, everything was unknown or uncertain, so you started learning through action. You’d make a sound and something happened; your mother responded. You pulled the cat’s tail and got scratched. So, what we advocate amounts to the recovery of a skill we all had a long time ago: the ability to act your way into better thinking.

Remember, Creaction complements Prediction. When Prediction makes sense, predict. When it doesn’t, think about using Creaction.

As you deal with a new situation, you will invariably bounce back and forth between the two. That is exactly what you should do. In fact, we have a term for the process of using both forms of reasoning: Entrepreneurial Thought and Action. That’s our phrase for using both Prediction and Creaction together to solve a problem or create something new.

Creaction: One Person’s Story

No one’s journey is typical. But how Jodi Rosenbaum brought More Than Words (MTW) into being represents how Creaction works.

MTW, as its Web site explains, “is a nonprofit social enterprise that empowers youth who are in the foster care system, court involved, homeless, or out of school to take charge of their lives by taking charge of a business. By working as a team to manage their own retail and online book business, café and community space, they develop the employment skills, leadership, and self-confidence they need to successfully transition to adulthood.”

The MTW approach is clearly working: some 35 percent of the youth have some sort of court involvement—an open charge or restrictions put on them by the Massachusetts Division of Youth and Family Services—when they start work at MTW. That number drops to 9 percent when they stop working there and is at 4 percent after twenty-four months. Some 85 percent go on to earn their GED or high school diploma.

Let’s look at how the four parts of Creaction played out, in Rosenbaum’s words:

Desire. “My background is in child welfare and the juvenile justice system as a child advocate. I have over 15 years of experience with how young people often don’t have the opportunities, accountability and support to really move their lives forward and fulfill their potential.

“Seven years ago I was working with youth development programs through Harvard [where she earned her master’s] and I wanted to get back involved with the foster care system and I was also interested in business and the concept of social enterprise using business to help deliver on a mission. But I didn’t quite know how it all meshed together.”

Starting with the means at hand. “There was no grand vision. One day my best friend found a pile of books set out for garbage. She brought them home and looked them up online and saw they were actually worth some money. We looked at each other and said wow this could work!” Specifically, Rosenbaum thought she could have young, at-risk people figure out how to price the books and sell and deliver them. “We could use the revenue that comes in to help pay for this hands-on, real-world learning and training experience. This would be a really good vehicle for teens. It would help them gain skills and be empowered, productive and engaged in a job and their lives.”

Taking a smart step within the bounds of your acceptable loss. Rosenbaum kept her day job while researching the online used-book market, and eventually opened MTW in a 150-square-foot space with an inventory of donated books.

Reflecting and building on what she found (part I). There was a market and the young people who worked at MTW realized that the more effort they put in, the more they got out of the experience in terms of business knowledge, technology and financial skills, and, as Rosenbaum points out, “they learned the critical life skills of showing up on time and of working as a team, and communicating, and making eye contact.”

Reflecting and building on what she found (part II). “I did a lot of cold calling to get additional financial support for some of the operating expenses because the revenue from the books didn’t cover the entire budget. Our first corporate supporter was Boston Scientific. I got the right person at the right time on the phone and she ‘got’ what we were trying to do. She said they just weren’t sure they could be the first on board but to keep them posted on how I was doing. Then we got a small grant from the Executive Office of Public Safety. Somebody there had read a concept paper I had written and liked it and reached out to us. We wound up getting funded for an intervention for reducing crime and supporting some of our most at-risk young people. I took that back to Boston Scientific and they immediately pulled the trigger and wrote a check. Once I had them, I had leverage to go to others since I was able to say we have government sponsorship and we have a corporate source.”

Building (part III). “The young people experienced success and it bred success. The more they sold a great book for $40, the more they wanted to find good books to sell to make money. Within a year’s time we were signing the lease on a retail storefront, and we added a café.”

About the journey ahead

As you have already seen, we are big believers in practicing what we preach. We continued that approach in how we constructed this book. We will:

  1. Help you take small, smart steps.
  2. Pause to review what you’ve learned, and then
  3. Move ahead, building on that knowledge.

You have just started part I, “What to Do When Facing the Unknown,” which deals with the two foundations of Creaction: uncertainty, in chapter 1, and desire, in chapter 2.

In part II, we will cover the four individual elements that make up the logic of Creaction, and in part III, we will show in detail how to apply Creaction in certain situations (in large organizations or with family and friends). We will conclude by coming full circle and explain how entrepreneurs have proven this method works—not only for them, but for all of us. You will find that discussion in chapter 10 and the epilogue.

That’s all there is

There you have it. That’s our book in a nutshell. We set out to answer one simple question: what do you do when the way you think doesn’t allow you to thrive in today’s brave new world? We think we have developed an answer that will allow you to succeed in the face of uncertainty.

If you have insufficient data, make your own.

If you find the idea appealing, in the pages ahead, you will find a detailed description of how to use Creaction in all kinds of situations you may encounter at work and in your personal life.

If you don’t, well, you found out how the approach works. You took a small step into the unknown (learning about Creaction) and decided it’s not for you. That learning was worthwhile, too.

Incidentally, although there is tons of research that support the ideas and arguments we will present (see the Further Reading section at the end of the book), if you get some value out of this book, it will not be because we convinced you with these arguments. It will be because what we have to say resonates with what you already know. It will strike you as common sense. To find out if it does, turn the page. The journey is about to begin for real.

Takeaways

  1. When the future is unknowable, how we traditionally reason is extremely limited in predicting what will happen. You need to complement the way you were taught to reason with a new kind of thinking: Creaction.
  2. Creaction does not replace prediction reasoning; it works with it. One is not necessarily better than the other (it depends on the circumstance), but using them together is a very effective prescription.
  3. If Creaction feels familiar, and it should, that is because it is the way we reason naturally. All we are advocating is rediscovering a skill you already have.
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