SEPTEMBER 2014 / NO. 2
TAGS: POSTDICTORS, PREDICTORS, NASSIM TALEB, BLACK SWANS, GREY SWANS, KPN TELECOM, E-PLUS, TELEFONICA, VODAFONE, DEUTSCHE TELEKOM, AMERICA MOVIL, VATTENFALL, NUON, AIR FRANCE-KLM, LAKER AIRWAYS, VIRGIN AIRWAYS, RYANAIR, EASYJET, SOUTHWEST AIRLINES, NORWEGIAN, STELIOS HAJI-LOANNOU, EASYFOODSTORE, ALDI, LIDL, ASDA, EASYFED, JEFF BEZOS, AMAZON, THE WASHINGTON POST

There are more postdictors than predictors

“Postdictors who explain things after the fact, because they are in the business of talking, always look smarter than predictors”, Nassim Nicholas Taleb
As a result of hindsight, people who did not see an event coming, (think for example of Black or Grey Swans), will manage to convince themselves that they predicted it, before proceeding to convince others. According to Taleb, after every event there will be many more postdictors than true predictors. Think about this statement: “Never ask anyone for their opinion, forecast or recommendation. Just ask them what they have or don’t have in their portfolio”. Here are some related business case examples.
KPN Telecom: the Dutch national telecom company invested many billions of euros to expand into Europe to become a strong European player. But after 14 years, the company is back to square one in the Benelux, selling German E-Plus to Telefonica. It has itself now become an acquisition target for leading players such as Vodafone, Deutsche Telekom or America Movil. The Mexicans have already offered € 2.40/share. This is the best solution for KPN, where the board of directors failed completely during the last 14 years, with a drop in market value from € 70 billion to € 7.5 billion.
Vattenfall: the Swedish energy giant acquired the Dutch energy company Nuon for over € 10 billion in 2009. Just four years later Vattenfall had already written-off € 4.3 billion.
Air France-KLM: on 23rd July 2013, the Vice-Chairman of the Board stated in the National Dutch Financial Newspaper: “The problem in air traffic for short distances is Europe. Something must be done”. Air France-KLM is losing money and more restructuring rounds of cost-cutting will follow. This reminds me of the airline business sector in the 1990s which was arrogant and complacent, neglecting the pioneer Laker Airways, and later the entrepreneurs behind Virgin Airways, Ryanair, easyJet, Southwest Airlines, Norwegian and others.
Stelios Haji-loannou: do you remember the entrepreneur and founder of easyJet, who started out with an easyFoodstore in the UK, challenging Aldi, Lidl and Asda? The name of the new store was to be easyFed, a “supermarket for the poor”. Did you know that he also founded FastJet, a new airline for popular destinations in Africa? Jeff Bezos, the CEO and founder of Amazon, has personally acquired The Washington Post. It will be interesting to see what this great entrepreneur with his ‘web genes’ is planning to do with this ‘paper’!
Can you see the differences between KPN, Vattenfall, Air France-KLM and the founders of Virgin, Ryanair, easyJet, Southwest Airlines and guys such as Stelios Haji-loannou and Jeff Bezos? Nassim Nicholas Taleb calls this crucial difference “soul in the game”. Taleb has also put this phenomenon in another context:
“There is no other way to produce a forecast without being a turkey somewhere, particularly in the complex environment in which we live today”, Nassim Nicholas Taleb
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