The past isn't the best predictor of the future

Rick Mihelic
Updated Oct 21, 2021

Measuring progress for technology adoption in freight may seem like an easy thing.

All you need do is look at the amount of dollars spent, projected stock valuations of companies, market projections by expert investment firms, projections by researchers at non-profit groups, media coverage, government projections, other trusted estimates and many more supposedly easily measured metrics.

In our collective experience, every single one of these has always been spot on, accurate, correct and unbiased, right? We have grown so confident in the veracity of these projections that seldom do we actually go back and audit them to see if they actually were accurate. It’s almost as if we trust them as much as we trust daily weather reports or hurricane tracks for storms starting out somewhere in the mid-south Atlantic where old cartographers used to draw dragons at the edge of maps.

Sarcasm aside, a fundamental core principle of the stock market, of weather forecasting, of market forecasting – in fact anything to which the word “prediction” can be implied – is statistical modeling, or more exactly, educated guessing. The science of estimation is around trying to model what has happened in the past and creatively use it to predict the future. This works extremely well for flipping coins. It works relatively well for rolling dice at a casino. It works less well for political polling. It gets really hard for technologies.

The complexity of the modeling increases with the number of variables having to be modeled. A variable is something that is not controlled, hence the name variable. The real world has a lot of variables.

The underlying belief that the future is an accurate predictor based on the past is contracted in the fine print of every statement put out by companies governed by U.S. SEC rules, the infamous “safe harbor” rules about “forward looking statements.”

I found this example explanation on an SEC website:

CAUTIONARY STATEMENTS RELATING TO FORWARD-LOOKING INFORMATION and RISK FACTORS.

The Company and its representatives may, from time to time, make written or verbal forward-looking statements. Those statements relate to developments, results, conditions or other events the Company expects or anticipates will occur in the future. The Company intends words such as “believes,” “anticipates,”  plans,” “expects” and similar expressions to identify forward-looking statements. Without limiting the foregoing, those statements may relate to future revenues, earnings, store openings, market conditions, new strategies and the competitive environment. Forward-looking statements are based on management’s then current views and assumptions and, as a result, are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected. Any such forward-looking statements are qualified by the following important risk factors that could cause actual results to differ materially from those predicted by the forward-looking statements.

·      General Economic Conditions

·       Competitive Pressures

·       Consumer Demand

·       Weather conditions

·       Seasonality

·       Merchandise Sourcing

·       Labor Conditions

·       New Store Growth

·       New Markets

·       Regulatory and Litigation Developments

·       Other Factors

Everyone seems to have an opinion about the future. Some are emotional, some are factual, some are prophetic and some are wrong. The future is hard to predict as exemplified these last two years in many, many harsh realities personally experienced by many of us — the pandemic waves, fires, droughts, arctic storms, hurricanes, floods, wars, divisions across regional and international levels, driver shortages, chip shortages and unfortunately more.

On the technology side, decades of examples are out there on innovative products and companies that just didn’t work out. There are also many examples of opportunists that were heralded as major successes before the market proved them lacking. There are also outright cons. There are no sure things, as much as we wish there were.

The challenge is separating the fact from the fiction, the hype from the realities, the dreamer from the innovator, the revolutions from the deceptions. A common statement is that nine out 10 innovations fail. The actual data is not so convincing, but conservatively I believe it is safe to say that at least one out of two fails. Edison, a true machine of innovation in history, reportedly stated, “I have not failed. I’ve just found 10,000 ways that don’t work.” Anyone from backyard inventor to head of research and development companies probably can appreciate that comment more than most.

Innovation is by definition doing something new and unproven. So we have to also be careful to not let those that say it can’t be done get in the way of those who can do it. Freight is going through massive technological disruption with many alternative approaches to reducing emissions, reducing operating expenses, improving safety, reducing maintenance, improving efficiency, and more. In a rare moment of clarity on stage at ACT EXPO 2021, a keynote speaker candidly stated that in transportation we just don’t know what the future will be. Many of the speakers clearly understood that whatever that future is, we have to be acting now to get us there successfully.

We often represent competing technologies as a horse race, each horse struggling to win – to beat the others – like there is going to be only one winner and only one race.

I propose we change the discussion to thinking of technologies as a horse team and we are the wagon. We will need many successful technologies to reach our zero-emission future. As well-said in Apollo 13, “Failure is not an option.”

Rick Mihelic is NACFE’s Director of Emerging Technologies. He has authored for NACFE four Guidance Reports on electric and alternative fuel medium- and heavy-duty trucks and several Confidence Reports on Determining Efficiency, Tractor and Trailer Aerodynamics, Two Truck Platooning, and authored special studies on Regional Haul, Defining Production and Intentional Pairing of tractor trailers.