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| 25/05/07 | | You can't predict anything |
Chris Anderson has listed his 5 top business books and I was struck by this explanation of why you must read Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets by Nassim Taleb.
Why it's a must-read: “The book says that you can't predict anything—that when things happen, you try to construct a narrative around what happened, and that narrative is almost always wrong. Why is the market up today? Because home sales did such and such. It's almost never why, but we need to have an explanation. If managers can check themselves from making those all-too-tempting efforts to construct narratives, fundamentally they will have an advantage over the rest of us.”
This thinking is flawed. The idea that we can consciously put a stopper in our habit of creating stories to explain what is happening is as impossible as the ability to predict the future in detail in a complex system. Here's an alternative, why don't we work to understand how stories create meaning and insight and then look to ways of harnessing our innate storytelling nature.
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Comments
It sounds like you're saying Chris has provided an example of what Taleb now calls the Narrative Fallacy?
Posted by: ken at May 27, 2007 6:38 AM