Special Report - Finding Certainty in the Midst of Change
Most people believe thats impossible. In reality, you can predict and shape the future. Its all a matter of knowing what youre certain about. Perhaps no one knows better than the CIO how quickly change is coming at us these days. Between hardware and software revolutions, advances in cloud-based technologies, and the ever-increasing processing power and bandwidth capabilities, those who work on the technology side of things cope with changes daily.
So, yes, it does seem true that the only thing that never changes is the fact that everything always changes. The only permanent thing about our world is that all is in a state of constant flux. At some level, thats pretty disturbing, isnt it? After all, if were looking for certainty, that doesnt give us much to go on or does it?
Actually, it does. In fact, it gives us everything we need because there are certain patterns in how things change that are as dependable as clockwork. When you can find the certainties within a state of change, you can create innovations and advance your company. In addition, certainty allows you to convince people to take action and is perhaps the greatest sales tool of them all.
There are two distinct kinds of change we can use to find certainty. The first is cyclic change.
Cyclic change provides us with all sorts of certainty. For example, winter turns to spring, which turns to summer and then fall. Nature is brimming with examples of cyclic change. Cycles of seasons, weather, crop development, animal migration, tidal fluctuations, and other such cycles helped create the first civilizations. In fact, the history of civilization is to some extent the story of humanity getting a grip on cyclic change and using it to increase our chances for survival.
There are also cycles in our economy and body politic, of boom times and lean times, expansive and defensive behaviors. Prices and interest rates rise and fall; Democrats rule Congress, then Republicans. There is a push toward the apparent safety of totalitarianism, and then a counter-push toward the greater personal freedoms of liberalism. Social standards grow more permissive, then more restrictive, and then back toward more permissive. The pendulum swings until it can swing no further, then reverses course and backtracks.
Politically, economically, socially, in every channel of human expression, we manifest with a tide that perennially ebbs and flows. Like a great social heartbeat, the mood of the people expands and contracts; now progressive and gregarious, now more conservative and protectionist. Moods cycle, reflected in fashions, politics, and even international relations, as well as personal relationships. In fact, humanity has identified over 300 distinct cycles that allow us to accurately predict the future to some extent.
Keeping a sober eye on the truth of cyclic change lies at the heart of Warren Buffetts uncanny success as an investor. He is a master of tides in the affairs of men. His investment philosophy is, Be fearful when others are greedy, and greedy when others are fearful.
His words are the perfect example of understanding cyclic change and illustrate the dictum start with certainty. If the market is contracting, then what can we know for certain? That before long, it will expand again. And if the market is going through a robust expansion, what does certainty tell us? Get ready for contraction.
However, cyclic change is not the whole story. Having a clear grasp of cyclic change is an important element of gaining certainty, but its not the core of the matter. Developing a keen sense of flash foresight depends more on the certainty that comes from understanding another pattern of change, one that is quite different from cyclic change.
This second pattern is acyclic and progressive -- that is, it does not cycle back on itself but progresses forward in one direction only. In other words, within this second type of change, what goes up does not necessarily come down. I call this linear change.
A simple example of linear change is your age. Your life progresses in one direction. No matter how well you take care of your health, you are not going to start aging backward. Other examples include a growth in the Earths population; increase in data, information and knowledge; increase in worldwide literacy; increasing number of patents and inventions; acceleration of computer processing speed; convergence of features and functions; and globalization.
In other words, once you get a smart phone, youre probably not going back to a "dumb" one.
Linear change takes place in many forms, from the sudden, logarithmic burst of a population explosion to the gradual accumulation of interest on a CD, yet they all share in common the trait that they curve in one direction only, and do not cycle back on themselves.
Linear change is where the real action is, precisely because it is not a repeating pattern and therefore creates entirely new and unique circumstances and opportunities. Linear change is what makes the future fundamentally new, and grasping this type of change is what allows you to begin making the invisible future become visible.
To a significant extent, developing your sense of flash foresight means being able to recognize linear change and its interplay with cyclic change. However, this is not always as easy as it might seem at first. Some changes are nothing but temporary blips on the radar of time, and contain no reliable information about the future. Other changes are so substantial and reliable that they offer very clear glimpses into the future. How do you know the difference?Consider this: In 1999, the United States government told us we were going to have a trillion-dollar surplus over the following decade. This projection was based on numbers that seemed sound. This was not an error committed by just the federal government. Of the 50 American states, 47 made similar projections of whopping budgetary windfalls. State governments got used to those rapidly increasing property tax revenues and spent that income as if there were no end in sight. They bet the farm on those projections and, we have all seen, came close to losing that farm.
So what happened?
They bet on trends that looked solid, but werent. Its a recipe for disaster, and it gets us in trouble over and over; trouble that could have been avoided if we knew the difference between hard and soft trends.
Hard and soft trends
People typically dont believe forecasts because forecasts are based on trends, and people dont trust trends. We think trends are like fads: here today, but for who knows how long?
Science sees the word trend differently. It means a general direction in which something is developing or changing. And one of the principal findings of my 25 years of research is that there are two distinct kinds of trends, which I call soft trends, (like the trillion-dollar surplus that never materialize), and hard trends.
A hard trend is a projection based on measurable, tangible, and fully predictable facts, events, or objects. A soft trend is a projection based on statistics that have the appearance of being tangible, fully predictable facts. A hard trend is something that will happen: a future fact. A soft trend is something that might happen: a future maybe.
This distinction completely changes how we view the future. Understanding the difference between hard and soft trends allows us to know which parts of the future we can be right about. It gives us the insight we need to start with certainty, because it shows us where we are dealing with future facts and where we are dealing with hypothetical outcomes, future maybes.
The reason we typically dont trust trends is that we havent learned how to make the distinction between hard trends and soft trends. Once we know the difference, we know where to find certainty and the future suddenly becomes visible.
That trillion-dollar surplus the government predicted at the end of the nineties was a soft trend, only we treated it like a hard trend. We were not only expecting it to happen, we were acting on it as if it had already happened: hence we were spending like crazy. So much money was coming in during 99, we were going nuts. We were gazing at the soft trend like a rabbit hypnotized by a snake.
Telling the difference
Unfortunately, the distinction between hard and soft trend is not always quite so obvious. To many observers, that trillion-dollar surplus looked quite believable. Thats the problem with soft trends. Sometimes they have the appearance of being credible. Still, soft is soft, and unless the trend is based on a direction of change that is clearly fixed, there is nothing certain. Saying something could happen is very different from saying it will happen, and that difference makes all the difference.
A hard trend can be either cyclic or linear in nature; both types of change yield hard trends. For example, if the stock market is falling today, we know that in the future, it will go back up again and we know that with certainty. The rise and fall of the stock market is a cyclic change, and a hard trend.
Exactly when will it turn and start going up again, and how high will it go when it does? We dont know. The exact timing and extent of the markets behavior is a soft trend, because our behavior and choices can influence it. What we know is that after it falls, it will rise, and after it rises, it will fall. That may sound like a fairly simplistic hard trend, but it has been reliable enough to make Warren Buffett a very rich man.
On the other hand, if the rate at which our laptop computers can process an audio or video clip has gotten a lot faster in the last few decades, what can we know about the future? Theyll be even faster. The increasing speed and capacity of computer processors is not cyclic, it is linear and a hard trend.
Exactly which manufacturers will be introducing the newest, breakthrough models five years from now? We dont know. The acceleration of the technology is a hard trend but who takes advantage of that technological advancement and brings it to market, thats a soft trend.
Here is an example of the difference between a hard trend and soft trend: Ten years from now (assuming you are still living), you are going to be ten years older than you are today. Thats a hard trend. Why? Because theres nothing you or anyone can do to change that fact.
What will your state of health be like then? Worse? Much worse? Better? About the same? I dont know. Neither do you, and neither does anyone else. It is not definitively knowable, because that is a soft trend. Why? Because you can do things to affect it.
This is, in a nutshell, the power of flash foresight: Knowing how to identify hard trends gives us the ability to see the future. Knowing how to identify soft trends gives us the ability to shape the future.
Finding the fortune
In 1993, I was invited to address a convention of the National Booksellers Association, attended by a crowd of some ten thousand bookstore owners. My keynote address included these remarks:Within the next two to three years, youre going to see a huge, successful virtual bookstore opening up online, and its going to transform the way people shop for books. It could be one of you here in this room who does this -- but chances are, it will be someone from the outside, someone who is not already invested in the present way of doing things. Someone who will look at things with fresh eyes and have a flash foresight.
No one in the room took my comments too seriously; after all, this was 1993, and hardly anyone even knew the World Wide Web existed, much less what it was. Mosaic, the first graphical-interface Web browser, had just been released that April, and the first widely used browser, Netscape Navigator, would not appear until the end of the following year. The concept of e-commerce as we know it today did not yet even exist.
And you already know what happened next. A year later, a thirty-year-old entrepreneur incorporated a brand-new company called Cadabra.com. A year after that, Cadabra launched an online bookselling portal, which its founder eventually renamed Amazon. That entrepreneur was Jeff Bezos, and four years later he was Time magazines Man of the Year cover story. Bezos saw the hard trend; today he is one of the richest men in America.
Back in 1993, of course, none of this had happened yet, but given the state of development of the World Wide Web and the increasing capabilities of home computers and modems, I was certain that it would; certain enough to risk my reputation by going on record with that prediction to an audience of thousands. It wasnt a lucky guess, and it had nothing to do with being psychic: given the hard trends, it was fully predictable.
Hard trends make the future visible. Once you see the distinction of hard trends, you start opening all sorts of doors to new possibilities.
Remember that strategy based on certainty has low risk and high reward. Base your strategies on certainty, on the known future visible in hard trends and the soft trends that you can manipulate, knowing which is which and acting accordingly, and you will build something that will not only survive but even thrive in the years ahead.
Hope is not a strategy. Certainty is.
History may be bunk
We can learn from history. Thats true -- to an extent. But there may have been more insight than wise-crack in Henry Fords remark, History is bunk, because, in fact, hindsight does not necessarily bring wisdom. If it did, everyone would have lots of wisdom. Yet we still keep making the same mistakes.
No, too often what hindsight brings is not wisdom but lament. I should have bought Google stock when it first hit $100 a share. We should have entered that new market two years ago. I should have taken that job with that technology startup company. I should have known This is a universal lament. But if were operating out of hindsight, we never see it coming.
Why does it always seem that we learn about something too late to take advantage of it?
The answer is so simple its shocking: We didnt see it coming because we werent looking.
Looking into the visible future is no longer a luxury. In an era of rapid, epic change, it has become a survival necessity. When we buy into the myth that we live in an uncertain world, and, indeed, that in the 21st Century, the world is becoming more uncertain than ever, we do so at our peril. It simply isnt true.
Here are some things to do right now to increase your certainty:
- Focus on what you can know. Every time you bump into something you aren't certain about, put that to the side and keep focusing on the things you are certain about.
- Make a list of all the cyclic changes that are affecting you, your company, and your industry.
- Make a list of all the linear changes that will have an impact on your business.
- Make a list of all the hard trends that are taking place in your industry, so you know what you can be certain about. Eliminate from this list anything you are not certain is a hard trend.
- Make a list of all the soft trends taking place in your industry, so you can see what you can change or influence.
- Instead of being blocked by the uncertainties around you, ask yourself: "What can I be certain about? What do I know will happen in the next few weeks, months, and years? And how can I innovate to take advantage of what I now know for certain about the future?"
- Business planned on certainty have low risk. Does your business plan take advantage of certainty?
- Involve others from your company, department, industry, and even your customers in the process of identifying what will happen versus what might happen. Use the results to co-create the future.
- Question your assumptions. Examine each item on your list to see if it is truly a hard trend or a soft trend, a certainty or only a possibility.
Is the world changing faster than ever before? Absolutely. But within that bewildering maelstrom of change, there are always vast currents of certainty; currents that allow us not only to predict the future, but also to positively shape it. We just have to know where to look.
If we dont make this shift today, it will be far more difficult tomorrow. Because as dizzying as the pace of change has been these past few years, this has been only a warm-up. Things are about to start changing a lot faster. The more you operate from certainty, the better you and your company will fare.
Daniel Burrus is considered one of the worlds leading technology forecasters and business strategists, and is the founder and CEO of Burrus Research, a research and consulting firm that monitors global advancements in technology driven trends to help clients better understand how technological, social and business forces are converging to create enormous, untapped opportunities. He is the author of six books, including The New York Times and The Wall Street Journal best seller Flash Foresight: How To See the Invisible and Do the Impossible as well as the highly acclaimed Technotrends.