Although climate change can seem to be an insurmountable challenge, I learned that coordinated effort among the largest companies in the world could significantly impact the impact humans have on the climate. This brings us to the most interesting bit that I learned from the PredictionX interview with Rebecca Henderson: about 1,000 companies make up 70% of the world’s GDP. The interview with Henderson not only identified the number of companies that make up the majority of the GDP but also explained a method through which companies can evaluate uncertainty. I was fascinated to learn about the two-by-two matrix method of considering industry-wide uncertainties Henderson discussed during the interview. Despite its simple appearance, the two-by-two matrix method is an impactful way to visualize uncertainties. To create the matrix, Henderson explained that industry experts are first asked to choose which two uncertainties are most pressing by evaluating which questions would result in significant company changes. Next, she drew the matrix and wrote in the extreme scenarios for each question on either side of the matrix. After identifying the time frame, Henderson explained that the industry experts are then asked to generate the odds of each scenario. I found it intriguing that the generated odds pointed towards normal business functions.
The process of creating an uncertainty matrix was especially surprising to me because it revealed how psychological limitations can impact the predictions individuals make. Although psychological factors can make accurate predictions more challenging, they can also allow people to evaluate their own biases and visualize alternatives. By writing down implications, firms may take tangible steps to confront climate change. This also reminded me of a later part in the interview where personal beliefs and employee opinions influence how companies think about climate change. Despite models that predict climate change with high levels of certainty, it seems that what people want to believe (i.e. with the financial crisis and physics models) and psychological limitations can often have outsized impacts on the course of events.
To watch the PredictionX interview with Rebecca Henderson, you can find it here!