Our desire to know the future leads us to answer questions that are impossible to answer.
Everyone speculates on what the future holds. The question, “What’s going to change in the next 10 years?” is popular in nearly all industries. The goal is anticipating where things will be so you can gain an advantage. If only things were that easy. The problem is we’re almost always wrong.
Many things have to go right to capitalize on what will change. Not only do you have to speculate the variables that matter correctly, but you have to guess how they will play out in the future. Economists go to school forever to learn fancy math, and they cannot tell what the next year will hold, let alone 10 years. When it works, it’s more luck than skill.
All the effort that goes into unknowable questions comes at the expense of things we can know.
A More Important Question
While it’s fun to guess what will change in the future, a more important question is, ‘what’s not going to change in the next ten years?’
This is how both Bezos and Buffett made their fortunes. Think about that for a second. The leader of one of the most innovative high-tech companies in the world and one of the most boring conglomerates in history both agree that a question about what’s not going to change is more important than one about what will change.
Bezos realizes the energy and effort put into predicting what will change is a speculative bet. It might work, and it might not. The hope is that if it works, it pays off spectacularly, and if it doesn’t work, it doesn’t cost you much.
While investing in what’s changing is risky, investing in what stays the same is not. Bezos realizes investments in what doesn’t change will still pay off in ten years.
“When you have something you know is true, even over the long term,” he said, “you can afford to put a lot of energy into it.”
Rather than the sexy speculation of what will change in the future, our effort is better spent on the boring truth of what stays the same.
Consider the dotcoms. Most people were running around and saying this time would be different. Warren Buffett wasn’t. Instead, he was sitting in his office in Omaha, asking himself what would stay the same. Alice Schroeder, Buffett’s biographer, explained it this way:
There is less emphasis on trying to reason out things on the basis that they are special because they are unique, which in a financial context is perhaps the definition of a speculation. But pattern recognition is his default way of thinking. It creates an impulse always to connect new knowledge to old and to primarily be interested in new knowledge that genuinely builds on the old.
While you can’t determine the future, you can position yourself for multiple possible futures. Rather than plan for one version of the future, you need to be able to adapt to all probable futures.
The answer to how to position yourself often comes down to what doesn’t change.
While you don’t know when a financial panic is coming, you know one will come. While you don’t know what job you will hold in the future, you know you can increase your value by learning more skills. While you don’t know when a supply chain crunch is coming, you know it will happen. While you don’t know which competitors will stumble, you know that when they do, it will present an opportunity for those ready to pounce. While you don’t know what you’ll be selling in ten years, you know that customers will still want high quality, low prices, and exceptional experience.
Positioning over predicting.