Special Report – Finding Certainty in the Midst of Change

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 weren’t. It’s 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 don’t believe forecasts because forecasts are based on trends, and people don’t 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 don’t trust trends is that we haven’t 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. That’s 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 don’t know. The exact timing and extent of the market’s 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? They’ll 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 don’t know. The acceleration of the technology is a hard trend but who takes advantage of that technological advancement and brings it to market, that’s 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. That’s a hard trend. Why? Because there’s 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 don’t 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: