Social Forecasting; Tool for Business Planning for

Business Process Outsourcing Industry

Presentation by
Prof.K.Prabhakar,
Director, KSR College of Technology,
Tiruchengode-637209
prabhakar.krishnamurthy@gmail.
com

10/05/2007 STOREP 2007 1

European Summer School, Italy
Premise for Social forecasting
 In business forecasting, we used technological and
economic forecasting to depict the future scenario or
picture of future to design strategies to meet future
opportunities and challenges. However, many
organizations are experiencing residual error in
forecasting which is too large to explain or caused by
factors other than economic and technological.

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Argument
 Crime Forecasting
 1995 James Allen Research on Crime rate in USA
indicated based on past trends that there will be at least
fifteen percent increase in crime rate in optimistic
scenario and thirty percent in pessimistic scenario.
 Everyone started planning for the catastrophe.
Journal Reference: The Fall and fall of Crime: Steven D.Levitt,
“Understanding Why Crime Rate in the
1990’s: Four Factors that Explain the Decline and
Six That Do Not”. Journal of Economic Perspectives 18,
no.1 (2004). Pp.163-90

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What happened and the
research explanation;
 The teen age murder rate has decreased by fifty
percent.
 The research explanation was,
1)Growing economy providing better job opportunities
2)Gun control initiatives and innovative policing
strategies.

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Reality
 However, the reason for the fall of crime is
attributed to an important event that has
happened twenty years back. Norma Mc Corvey
who was poor, uneducated and unskilled, drug
using twenty one year old woman. She has given
up two children for adoption and found herself to
be pregnant again. In Texas in United States of
America, abortion was illegal. She filed a class
action lawsuit to seek legalization of abortion.
United States Supreme Court on January, 22, 1973,
ruled in her favor. Our question is how this is
related to crime rate after two decades. It has
been established by large number of research
reports that children born in adverse family and
economic environment is more likely to turn to
crime. The reduction in crime rate is attributed to
the unborn children to the millions of poor mothers
who adopted abortion mode. More than the gun
control, innovative policing techniques or growing5
economy has really produced the expected result
Prediction VS Forecasting
 Events are the “intersect” of social vectors (interests,
forces, pressures and the like), while one can to some
extent assess the strength of these vectors individually
one would need a social physics to predict exact cross
points where decisions and forces combine not only to
make up the “event” but more importantly its
“outcome”. Prediction therefore is a function largely of
the detailed inside knowledge and judgment that come
from long involvement with the situation.
 Forecasting is possible where there is “regularities” and
“recurrences of phenomena" though rare or where there
are persisting trends whose direction if not exact
trajectory can be plotted with statistical data.

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Events and Trends
 “Event” is used to describe something which either does
or does not happen. The great depression in 1929 in
United States of America is an event. We may foresee
their occurrence with some probability rather than
forecast the dates at which that would happen.
 The use of the word ‘trend’ implies “social
phenomena evolving over a period of time”. If we
identify a trend than we can identify the pattern of its
evolution and we can take a view regarding future.
Therefore, the probability of occurring of any event at
any point of time may be less but a cumulative
probability is likely to increase. On the other hand, the
trend evolves over a time.

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Social Trends
 The centrality of theoretical knowledge
 The creation of new intellectual technology
 The spread of a knowledge class
 The change from goods to services
 A change in occupational characteristics
 The changing role of women
 Science as imago
 Demographic changes
 Role of organization

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Technological Forecasting
 Technological forecasting “deals with rates of
change or permutation and combinations of
factors within classes of “events”.
 Just as one cannot predict events, one cannot predict
specific inventions, however, one can forecast necessary
next steps of succession of changes with in a closed
system. Let us examine vacuum tubes-Transistors-
Integrated circuits micro processors evolution.

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The metaphor from Electronics
 Theoretically one can
specify the kinds of
materials, New tensile
strengths or lightness or
the processes
Vacuum Tubes Transistors

(miniaturization)
necessary to achieve
next level of speed,
capacity, then one looks
for these materials and
processes. However, is Integrated
matter of economics Circuits
forecasting-the cost of
search, the assessment
of possible gains, the 10
amounts invested in
Three kinds of Economic forecasting
 Simple Market survey based on income data, age
distribution, household information and anticipated
needs, which firms use for anticipating consumer
demand, the amount of inventory to carry and the
acceptance of new products.
 Creation of time series of macro variables such as
indexes such as agricultural productivity, rate of
unemployment and different parameters and serve us as
indicators of business activity and are combined to make
forecast about the state of the economy.
 Econometric models define the actual interaction of
crucial variables in the system, seeks to simulate the
reality of economic system as a whole.

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Technological and Economic Forecasting
limitations
 In business forecasting, we used technological and
economic forecasting to depict the future scenario or
picture of future to design strategies to meet future
opportunities and challenges. However, many
organizations are experiencing residual error in
forecasting which is too large to explain or caused by
factors other than economic and technological.
 The social forecasting may not guarantee that correct
decisions will be taken. Nor will it ensure that forecasts
will be obtained from the emerging trends. It provides a
better understanding of the forces shaping the
environment. It should provide confidence to manager
that his decisions reflect assessment of issues. In social
forecasting we include all those environmental factors
that are not currently embraced by economic or
technological forecasting. Primarily it involves individual
as customer, supplier, manager or employee. It
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concerns people in-groups both inside as well as outside

Shifts in the conditions of Human Society
 If we examine history we find a series of significant shifts
in the conditions of human society. The Renaissance,
the Agricultural Revolution, Industrial Revolution
culminating to present knowledge revolution. The age of
communications and knowledge has already begun with
the advent of internet and convergence of various
technologies. However, web 2.0 tools and semantic web
brought reverse convergence which can be called as
“unconvergence”, in the sense anyone who is interested
in giving expression to his or her thoughts with minimum
training could be a part of knowledge revolution. The
phenomenon of www.youtube.com and models such as
Wikipedia are most successful where non-profit motive
and volitional trait of humans enabled by technology to
produce “content", that is shared by all.

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Where we are moving and relevance of
discussion to managers and strategic
planning?
 We are moving from “age of reason” to “age of
possibility”. The five hundred years of age of reason
has disappeared and we are moving into age of
possibility. The age of possibility or post industrial
society require different kind of approach to forecasting.

 The forecasting techniques are developed by

economists more specifically econometricians and
technologists. However, the output has to be used by
managers who are working in the real time environment
who has information on different trends that cannot be
incorporated in to the economic and technological
forecasting.
 Active involvement of sociologists and business
organizations are needed to further the objectives of
forecasting supplementing the economic and
technological forecasts with social forecasts.
 Disadvantage of social forecasting is for many 14
phenomenon of interest, these are no clearly defined
measures. Though objectivity is stressed, subjectively
Elements of Social Forecasting

 What to forecast? . Our views of the society in which

we are living, the way it has developed and it is likely
path in future is affected by personal experience and
individual values.
 Which phenomenon has to be selected for study
or what factors to be considered? scanning of the
Psycho-socio-political environment generally leads to
large number of trends and possible future events which
might be considered within the forecasting exercise.
 Measurement . Let us consider the example of
‘attitude towards leisure for work force’. These
particular phenomena can be understood but how it is
measured? We may consider some surrogate measures
such as number of days spent by families for vacation
or increased number of people at different pilgrimage
centres. The precision may not be available in social
forecasting, however, the impact of event or trend can
be incorporated into the forecasting process.
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Elements of Social Forecasting
 A time-scale The association of an event or attainment
of a quantified level for a trend, (which we generally) is
called call it as tipping point or point of inflexion with a
time scale, is an essential feature of forecast. A time
scale is necessary for taking decisions based on
informed view of future
 A probabilistic Assessment Decision making under
uncertainty is one of the major limitations of social
forecaster. The probability will vary with the forecaster
confidence in selection of indicators.

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Types of Forecasts

 Information forecasts; are those whose purpose is to

forewarn and to help us to mould attitudes about future.
They have wider margins and errors compared to other
forecasts and they are not specified. For example, the
discussion on nanotechnology is information on
forecast.
 Decision forecasts; are designed for a particular purpose
and for a particular decision and the error of assumption
has to be clearly stated.Social forecasting as we have
used tends to be concerned more with information
rather than decision forecasting. There are four general
rules evolved to help to curtail the residual error in
social forecasting and we will discuss them.

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How to organize Social Indicators
Database-Glimpse
 Growth or Decline - Is the total population growing or
declining? How is the age structure of the population
likely to develop? What factors (e.g. changes in fertility,
the birth rate, mortality) do we need to examine in
order to predict change?
 Economic Activity - What is the size of the employed
population? What is the unemployment rate,
distinguishing between long and short – term
unemployment? How is the employed population
distributed by age and marital status? How is it
distributed by manufacturing industry, services, the
professions, agriculture etc.?
 Housing - What are the level of home ownership and
the various forms of home tenancy? What is the
balance between demand and supply of property and of
finance for buying and renting?
 Ownership of ‘key’ Durables - Ownership of durables
which may fundamentally change the pattern of life, 18
such as a car and a telephone.

Models
 Economic Model
 Demographic Model
 Technological Model
 Psychological Model
 Sociological Model
 Political Model

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Syntropic Model

Economic Technological
Model Model

Demographic Psychological
Model Model

Political Sociological
Model Model

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Criteria for an effective forecast
 The forecasting should not be technique oriented.
 Good social forecasting should have a fine
understanding of particular situation for which
forecasting has been done.
 Forecast should work from simplicity to sophistication.
Sophistication by way of mathematics is introduced only
as and when it is necessary to reduce the margin of
error.
 The forecast should have a funnel approach from
general to specific and from macro to micro
 Forecast if they are worked from long term to short
term, they are likely to be more effective.

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Conclusion
 we can conclude that social forecasting provides a
framework of analysis for business planners especially
relating to strategic planning.
 It has different methodology of approach compared to
that of economic and technological forecasting.
 It captures dynamic nature of business.
 Thus social forecasting reflects present and future likely
events and can be used for supplementing economic and
technological forecasting.

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Conclusion…
 Though, we observe that blind spots are pervasive in
social forecasting they can be bridged with the help of
information revolution. Social forecasting combines
various disciplines and provides explanation for different
types of phenomenon that is happening around us. We
could clearly see the move from individual to societal
dependence and in turn from societal dependence to
individualism. Therefore, we can conclude the social
forecasting is a must for business planners to plan their
resource allocation and achieve mission and vision of
their organizations

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References
 1. The Fall and fall of Crime: Steven D.Levitt, “Understanding Why Crime Rate in the
1990’s: Four Factors that Explain the Decline and Six That Do Not”. Journal of Economic
Perspectives 18, no.1 (2004). Pp.163-90
 2. Twiss Brian.C (ed.) ‘Social Forecasting for Company Planning’ by MacMillan Press Ltd.
(1982).
 3. There is a very little ‘hard data’ on how many do, in fact, do so. A useful survey of
current practice is contained in D.J.Romano and J.C.Higgins, The Role of Social
Forecasting in Business Planning (Management Centre, University of Bradford, 1978).
 4.Social Trends, No.6 (1975), ‘Subjective social indicators’, by Mark Abrams; and No.7
(1976), Subjective measures of the quality of life in Britain, by John Hall. Survey Unit,
Social Science Research Council.
 5. Meadows, D, H.and Meadows, D.L., The limits to growth (Potomac Associates, 1972).
 6. Coyle, R.G.Management Systems Dynamics (Wiley, 1977)
 7. Kahn, H.World Economic Development: Projections from 1978 to the year 2000
(Boulder, Colorado: Westview Press, 1978).
 8. Hayek, F.A. Individualism and Economic Order (London: Routledge & Kegan Paul,
1949).
 9. Mitchell, A Life ways and Life Styles (1973) and Elgin, D., Voluntary Simplicity (1976)
 Social Change: Implications of Trends in Values and Lifestyles 91979)
 Rao.S.L. and Natarajan.I, ‘Indian Market Demographics’, Global Business Press, 1996.

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Thank you and your kind comments

Prof.K.Prabhakar
prabhakar.krishnamurthy@gmail.com

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