Designing a new business model, writing a successful book, producing an award winning motion picture, developing an investment strategy or creating anything that will be relevant when it is finished, requires some skill in forecasting the future.
To look forward accurately, you must first learn to look backward. What has already happened has set the stage for what will happen. Your knowledge of history, understanding of human nature and analysis of trends are the stage where you will imagine the events of tomorrow and beyond.
Game developer and futurist Jane McGonigal explains: “to develop foresight, you need to practice hindsight. Technologies, cultures, and climates may change, but our basic human desires-- to survive, to care for our families, and to lead happy purposeful lives--remain the same. To understand the future, you have to look back at least twice as far as you’re looking ahead.”
As you look backward, one of the easiest forecasting methods assumes that anything that hasn’t changed much, won’t change much and that things which are changing will continue to change. In many cases, this is a good assumption, but it is important to understand that most change is either cyclical or linear.
Cyclical change has a repeating pattern. If it is spring, you can be confident people will soon start wearing lighter clothes just like they did last year. If it is Friday, the restaurants will be busy tonight like they were last week. If the economy is recovering from a recession, most stocks will increase in value just like they did in the last business cycle.
Linear changes move in the same general direction for long periods of time. Most demographic changes are linear because they are based on patterns of human behavior that have developed over decades and can’t be easily changed. Immigration and reproduction rates make it certain that the percentage of the U.S. population that are hispanic is growing and will continue to grow. The birthrate and improvements in life expectancy will also increase the average age of the U.S. population.
Studying the patterns of change and the interaction of cyclical and linear changes can provide a great deal of insight into the future. What leading indicators do you follow to help you understand what will happen next?
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