Business projections: beware the crystal ball

The chances are that your company has a graph of projected profits over the coming years.

It is dangerous. It is dangerous because profit cannot be predicted. Profit can be wiped out by an nimble competitor or shift in consumer trends. Profit can skyrocket due to unforeseen success.

Past performance is not a good indicator of the future.

The world is becoming more interconnected and more complex. “Winner takes all” and power laws are more common than linear growth.

Be wary of anyone with a crystal ball.

The best defence is innovation. The bible is The Black Swan.

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