Predicting the Future

The best way to predict the future is to create it. You can predict what your plan will create if you can control your environment. This only works within limited areas. You cannot predict the actions of others and their use of their resources in the larger, competitive environment in the same way. This calls for a different view of the future.

Predictions of Controlled Events

In a controlled environment inside an organization, good information, especially about the plans of others, ensures good information about the future. The best way to predict the future is to create it. If you have a proven plan and access to the right ingredients, equipment, and skills, you can predict what your plan will create. For example, if you have a cake recipe, access to a kitchen, the necessary ingredients, and the time to make it, you can usually correctly predict that the future will have one more cake in it.

This is prediction is only possible because you control the process. You control the resources and the actions of those involved. This defines a controlled environment.

The Chaos of Competition

However, you cannot predict the actions of others and their use of their resources in the larger, competitive environment. In a marketplace, for example, customers are free to decide what they do. They control the key resource involved, their money. This means that while you may be able to predict that you can make a cake, you cannot predict that anyone in the marketplace will buy it.

This is why competitive markets are described as chaotic, or as Sun Tzu said it, messy. In a competitive environment, you do not have access to the information that other people are using to make their future decisions. The environment is too large and complex. You often do not even know who the relevant actors in that environment are, much less the information that they have access to. When a business opens its doors in the morning, it doesn't know who, if anyone, will walk through them. Even if we could read each other's minds, there are simply too many people and possibilities to manage the vast amount of information involved.

Information that Doesn't Help

We live in a flood of information. More information doesn't make the future more predictable. It makes the possibilities of the future even more confusing. In a controlled environment, the more information we have, the better our sense of control. However, in a dynamic, competitive environment, more information is just more noise.

The mental models taught by traditional strategy are designed to put a flood of information into a context where decisions can be made without a perfect knowledge of the future. Without these models, it is impossible to filter out what information is relevant in a given situation and what is just noise.

A New Model Based on Probabilities

Sun Tzu's system used a different model. It is based upon human tendencies and likely reactions. He wants us to start thinking in terms of what can happen because we cannot know what will happen.

Over time, even small advantages in probability add up. It is the small statistical advantage of the casinos that make success certain. This is the methodology of Sun Tzu. Avoiding the big bets on an uncertain outcome, but placing a lot of little bets on the most probable outcomes.

The secret is not knowing what will happen in any given situation. The secret is in knowing where the sum of all situations must eventually lead.  The purpose of Sun Tzu's science of strategy is to give us a way to "count the cards" so we know when the advantage is tilting in our favor. We increase our bets in favorable sitautions and decrease our bets in less favorable ones.

Then we let time take its course.