Foxes and hedgehogs: why it’s not a good idea to try and predict the future

There are three companies that sell the most smartphones in the world. The first is Apple with 23% marketshare, the second one is Samsung with 17% market share and the third is Xiaomi, with 11.6% marketshare. Apple the American company was founded in the 70s. Samsung, a Korean company was founded in the 1930s. And Xiaomi, the Chinese company was founded in 2010, just a decade ago.

In my latest book Xiaomi: How a startup disrupted the market and created a cult following,  I have talked about how Xiaomi company became the world’s third-largest smartphone maker in such a small period of time. The book unpacks key trends and strategies that worked for Xiaomi. It also looks at the people who made the company what it is today.

In the last chapter, I look at some trends that may affect the company adversely. What could pose challenges for this company? I argued that China’s trade relations with the US and India, competition from other Chinese brands, a weak patent portfolio, and finally the fact that people want to be increasingly private online are some factors that pose a threat to Xiaomi.

At times, I was tempted to predict doomsday situations for the company. It struck me when a journalist asked me if I couldn’t find one negative thing to write about the company. As hard as it was, I stayed away from predictions of doom and gloom. The reason for that is simple. I consider myself a fox, and not a hedgehog. The leap from the world of business to the animal kingdom merits an explanation. So here it goes.

I first came across the foxes and hedgehogs in Nate Silver’s book The Signal and the Noise: Why So Many Predictions Fail-but Some Don't. The concept dates all the way back to the Greek poet Archilochus, who says that the fox knows several things but the hedgehog knows one big thing and believes in it.

So when confronted with the need to predict, the fox comes with an open mind and is ready to change its view in light of new facts. The hedgehog, on the other hand, tries to fit the future into the world view he holds to be true. As Silver notes in his book, Foxes are more often right and Hedgehogs are often wrong. So ideologically, I like to be seen as a fox and not a hedgehog.

Remember amazon.bomb? It was a famous report by an analyst at Barrons’ in 1999. Based on some projections and several factors, the analyst predicted that Amazon would go bankrupt. We know now that bankruptcy never happened and Amazon is now the world’s third-largest company by market capitalization. In 1995, the internet was called a fad by Newsweek. Cars, horses. You get the drift.

If history is any good at teaching, when it comes to predicting the future of companies and technologies, it is even more important for us to be fox-like.