Power of Exponential Thinking to Make Better Predictions

Thought Leadership

Power of Exponential Thinking to Make Better Predictions

Our minds have been evolved to function quite nicely in a linear world. That is, where the present looked much like the past, and the future much like the present. Decisions were more simple in a linear world. If I wanted to predict how to hunt and keep my family safe 3.2 million years ago, all I had to do is look at what my ancestors did in the past and repeat the same in the present. Similarly, 10 years ago, if I wanted to predict what the future dividends would be for my investment portfolio over the following next 5 years, I could get a useful result by simply looking at the past 5 years of historical payouts.

Linear thinking has it merits and is great at predicting small changes within space and time and with reasoning through analogy. If we want to determine how much energy we need to walk across our neighborhood for example, our minds can easily comprehend the number of steps we’d need to take and we could therefore intuitively sense whether we have the strength to make the trip. Linear thinking is also great at predicting small changes in time for example, when you know there is traffic outside your house you can simply adjust how early you leave your home in order to get to the office on time.

The challenge however with linear thinking is our world is rapidly evolving from one dominated by linear technology to one dominated by exponential technology. Whether we are speaking about Artificial Intelligence, Blockchain, Computing Power, IOT, 5G, Web 3.0 and more, the honest truth is nobody really knows what the future of these technologies will mean. And try as we might, our linear mind attempts to predict the future of these technologies by use of analogy and through our experiences of the present or past. The end result of this kind of thinking means bad investment timing and getting taken for a surprise by new disruptive technologies that seemed to arrive from nowhere.

If we want to improve our predictive abilities it’s time that we transition from linear thinking to what I call exponential thinking. Exponential thinking means to reason up from the base principles of a thing. That is, to break a problem into its most basic things, which are a wave function, and to use your imagination to deliberately design the outcome.

To illustrate what exponential thinking is let us assume our task is to paint the headquarters of a new office in Los Angeles. The way a linear thinker would approach the problem might be to speak to his peers about how much they paid for painting when they built their first headquarters; Alternatively, a smarter linear thinking might also contact several contractors or subcontractors, conducting an ocular and then negotiating prices. An exponential thinker on the other hand would deliberately design the desired outcome by creating a belief that states, “I can create a masterful paint job at little to no cost” and then break the components of painting a headquarters into their smaller “base principle” parts. These parts would include in this illustration, the (1) cost of purchasing the paint, the (2) cost of purchasing the equipment for the paint job, and (3) the cost of purchasing the labor to finish the paint job.

To the exponential thinker, once the problem is broken down to its base principles, these principles, or parts, exist in a wave state of “possibilities” and they would further believe that they could influence the outcome, by asking good questions and deploying their imagination to deliberately design the desired outcome. As this thinker reasoned through the problem-solving process, they may discover creative ways to purchase the paint cheaper, that they could lease or make the required equipment needed for the paint job at much lower prices, or get the labor needed for less, all in ways that would yield exponentially larger efficiencies and savings than the linear thinker could conceive was imaginable.

Exponential thinking is actually our natural mental aptitude, and one whose abilities are better suited to deal with the complexities and speed of information processing required for the coming future.

Applications of Exponential Thinking

Investment Decisions – Applications in the investment space are enormous. Most decision making by investors is made by reasoning through analogy, predictions based on the past or present, or speculation. By learning to break investment opportunities to their base principles, and reasoning up by use of your imagination, new opportunities and possibilities open up for investment portfolio returns.

Management Decisions — Corporations are rapidly changing. Peter Diamandis is known for saying that 40% of the Fortune 500 companies won’t exist by 2024 due to exponential disruption. Exponential thinking contains the solution to understanding where your business is at risk and to determine what courses of action are needed to create differentiation or as Warren Buffet would say, an “economic moat”.

Entrepreneurship — There are more opportunities for entrepreneurs now than there has ever been before in all of human history combined. Exponential thinking allows you to spot opportunities with enormous growth opportunities, that could require little to no investment and or personal time. We are now entering an age where startups will soon possess greater abilities and capabilities to disrupt monopolies and other companies that have historically dominated an industry’s market share.

Governance & Global Economic Growth — Exponential thinking has the ability to transform civics and governance in a way that is more equitable and compassionate for all its participants. This is because what the science behind exponential thinking shows is that we are all interconnected through a unified field of consciousness. Exponential thinking can be used to generate innovative ideas to balance the human desire for independence and freedom, with our shared identity and need to work together.

o better understand how exponential thinking works, it’s also important to understand what I call the Uncertainty Principle.

The Uncertainty Principle: When you ask a question to determine the base principle of a thing, the end result is uncertain and remains in a state of possibilities (or probabilities) influenced by your own beliefs.

This means when you study a base principle in order to make a prediction, its properties are actually unknown and become influenced by your level of observed thinking about it.

In an age of technological change where the rate of change is growing exponentially, I think it’s about times to accept that our minds are in need of rapid software upgrade, to better adapt and cope with the new possibilities our technologies are enabling for the future. Technology is, after all, a byproduct of the mind’s creative abilities and if our technology is unlimited it’s only logical that our minds are unlimited as well.