Cambridge’s Daniel Ralph on Forecasting Over Predicting in an Unstable World

“Three- to five-year plans are not plans, they are bets. This is one of the main driving ideas of Daniel Ralph, director and founder of the Centre for Risk Studies at the University of Cambridge: the professor believes that companies should replace traditional predictions with forecasts, “in a crazy world” that is changing rapidly.

This is what Daniel Ralph defended during his speech Fashioning foresight in a mad world, this Thursday at the fourteenth edition of the Barcelona Fashion Summit, the event that brings together more than five hundred managers from the fashion industry at the Palau de la Música Catalana. “The job of a manager is to foresee situations that the company will have to face,“ he said. He gave as an example the Covid-19 pandemic and the impact it had on companies. “These are situations that seem impossible, but that can happen,“ he reflected.

Ralph has urged companies to look at those blind spots and ask themselves, “What is it that I’m not anticipating, but may have a big impact?” For example, in the fashion industry, managers should ask themselves, “If I change the sourcing of one material or another, what will be the impact on my business?” In conclusion, Ralph has insisted that, in such a changing world, “it’s the companies versus the world.“

“Clearly something is wrong with the relationship between the U.S. and Europe.“

“Many times companies’ short-term plans fight with long-term forecasts,“ he has assured, “because priorities and needs change at great speed,“ Ralph points out. At this point, he anticipated that “quantum computing is developing behind the scenes and will accelerate the development of technology”. Therefore, he insisted: “we cannot forget what is happening in the background of the industry”.

The professor was also very critical of the governance of the US administration, and of the geopolitical and economic risks it could pose at a global level. On this point, he said: “it is clear that something is not working in the relationship between the United States and Europe”.

During his presentation, he asked the audience to choose the worst shocks that could impact on their organizations, and the answer was overwhelming: geopolitical risks are in first place as the problem most feared by companies in the fashion industry in Spain. In second place, although far behind, are technological risks and, in third place, governance, laws and regulation. “It is clear that companies have realized that geopolitics impacts their results and must be reflected in their strategies and business plans,“ he said.

“The world is becoming very expensive to defend.“

As for technology, Ralph has assured that Artificial Intelligence (AI) is here to stay, and has assured that there is still a long way to go, of which society is not yet aware. “We must not forget the things that happen behind the scenes,“ he said. At this point, he explained that the digital environment “will not only help us to understand vulnerability to risks but also to be able to make forecasts about your possible decisions to change your supply chain or the origin of your raw materials”.

Natural phenomena, increasingly intense due to climate change, have been one of the professor’s turning points. “The world is becoming very expensive to defend,“ he has lamented. This is not just coming from one place, although Ralph points to the importance of the role of the United States and, specifically, of its president, Donald Trump, and his way of governing with forceful decisions taken quickly.

He also reflected on the current risks in a globalized world with increasing instability in the geopolitical sphere. In this regard, he argued that companies should focus on the medium term, since it is becoming increasingly complicated to plan both in the short and long term. “Everything is evolving very quickly,“ he said.

Barcelona Fashion Summit, the largest professional meeting of the fashion industry in Spain, celebrates today in Barcelona its fourteenth edition, with the sponsorship of Bleckmann, Splio and TikTok, the support of Comerzzia, Mixer&Pack, Moinsa, Nextail and Reveni, as well as the impulse of 080 Barcelona Fashion. Throughout the day, more than five hundred executives from Spanish and international companies will gather at the Palau de la Música Catalana, in an edition of the Barcelona Fashion Summit entitled Crossroad. Making fashion in a world that trembles.