Overconfidence, Bad Models and Delusion
Growth Science founder and CEO, Thomas Thurston, writes about the future of predictive business simulation. “It’s time for innovators – be they VCs, corporate managers, entrepreneurs, or even finance and economic wonks – to take a sober look in the mirror. For the most part, our predictions suck.”
In this severe and serious critique of the current state of evaluating innovative opportunities and companies, Thurston makes the point that people clutch onto models that are dead wrong 70%, 80% and even 99% of the time. This failure rate rarely shakes their confidence in the criteria, methods and processes they use to choose investments. At what point is this delusional?
Companies have a process. The process mostly doesn’t work. Yet they keep using the process as if it works. It’s hard to unseat established orthodoxy, even if the orthodoxy is dead wrong. There’s also the problem that, despite the models’ failures, people don’t know what to replace them with. They can’t think of anything better.
Growth Science is a company that is dedicated to improving the accuracy of prediction for investors and innovators and the companies they work for. They have created a better way to predict innovation success or failure and change the current state of our predictive failures.