Why specific predictions about Internet business are pointless

Everyone loves making predictions, especially pundits and bloggers who need to keep cranking out ideas and content to pay the bills. Beyond this drive to publish, it’s an important part of the human condition to wonder about the future, dream of what might be, and imagine how to reap benefits from it. The beginning of each new year brings a flood of these prognostications, especially in the world of what I’ll loosely call “Internet business.” While it’s a fun exercise that makes for good reading, detailed predictions are basically pointless, in my opinion. Not only is it a waste of time, but it also gives a misleading impression of how accurate one can be about business, and that strategic decision-making might be guided by detailed predictions. It’s just not that simple.

Unintended consequences rule the Internet

The complex digital ecosystem in which businesses live is rife with emergent properties, which means lots of unintended consequences and behavior too complex to predict in any meaningful way. James Dewars’ historical comparison of the Internet and the printing press makes this argument quite clearly and powerfully, concluding that the changes wrought by the Internet (and by extension, how Internet business evolves) will be dominated by unintended consequences. If one agrees with this conclusion, then it’s pretty clear that making predictions about Internet businesses is absurd.

Consider Twitter as an example. For several years after its introduction, the service was relatively small, with a dedicated group of people tweeting their hearts out. And then something happened in 2009: it exploded. It experienced exponential growth, which continued to the point where Twitter became a household word for much of the world. While originally positioned as a way of sharing what you’re doing, Twitter has evolved into an essential communication platform, a far-reaching, real-time news medium and an instrument of political activism. The rapid spread of smartphones with powerful cameras certainly helped fuel these trends; when everyone has a camera, everyone suddenly becomes a potential reporter (even if they don’t think of themselves that way). Without the smartphone, Twitter probably would have grown, but to the same degree? Who could have predicted this synergistic intersection of technology (camera phone), social platform (Twitter), and human behavior (limitless desire and willingness to share)?

One could argue these changes took place over several years, and that most predictions about Internet business are looking a bit closer in, hence there’s not as much chance for unintended consequences to hold sway. Maybe. It still seems to me that things have gotten so complicated, so connected, and so dependent on human fancy that detailed predictions don’t make sense for most things. Broad trends (e.g., the rise of the mobile experience) are much easier to call out; detailed predictions about what’s going to happen to an individual business or technology, not so much.

Pursue great ideas, not crystal balls

In business, it’s great ideas, relentless delivery and superior execution that drive success. While broader trends can and should serve to inform ideas, nitty-gritty predictions could easily lead down the wrong path. It’s risky business to base your entire business, or even just key products, on where some technology or business in the digital world might be going. While for some businesses, this is a calculated risk, for most it just doesn’t make sense.

So sit back, relax and enjoy the predictions, but make sure you keep your eye on the real ball (not the crystal one): ideas, delivery, execution.

ADDENDUM: A note about trends vs. predictions

After a spirited discussion with someone whose opinion I value a great deal, I realized that I was possibly throwing the baby out with the bath water in saying that predictions about business are pointless. At the very least, I was being unclear. It’s a bit of a semantic slippery slope from broad trend analysis down to making very specific predictions. I don’t mean to imply that business, marketplace and technology trends are unimportant; they are, and any smart business (or strategist) knows how to understand the environment in which they live. It’s specific predictions that I think are the fun, but pointless, time-wasters. Some examples will illustrate my point more clearly:

  • Specific (Fun, but pointless)"A year from today, two out of these three entities will no longer exist: Groupon, Kodak, Newsweek." (Dan Pink): Well, Kodak has almost filed for Chapter 11, and the writing was on the wall for the most part anyway, which leaves two other businesses. There are so many factors that could contribute to the success or failure of these specific businesses, that I think it’s meaningless to make a prediction like this.
  • Trends (Useful)Six social media trends for 2012 (David Armano): One could argue that some of these trends have already come to pass, but that’s a matter for debate. In general, Armano draws broad conclusions based on industry trajectory, what’s been happening in the past year, and his experience.
  • Trends and specifics (mixed bag)Mashable’s social media predictions for 2012: Trend analysis would lead to the conclusion that social media will bring a resurgence in ecommerce, which seems like something businesses should keep in mind, and hence is a useful prediction. YouTube coming to your living room? Who knows? Too many factors could influence the degree to which this specific thing happens or doesn’t; I find this kind of prediction pointless. If one said that TV viewing from Internet-based sources would increase dramatically in the living room, that’s the kind of trend I can get my head around.

So to recap: Trends = Good, Nitty-gritty detailed predictions = Fun, but not useful in strategic decision-making.

This entry was posted in Web stuff. Bookmark the permalink.