When working in Innovation, a common question you frequently ask yourself is what trends will stay and which ones will slowly fade away. That way you can assess whether investing in something is worth or you should think on the next big thing.
This question also applies for example to you personal investing decision: should I buy a flat in that city so I can expect renting fees to raise as it becomes more popular? should I buy Bitcoins as more people will be willing to buy them next year?
A mental model that I like very much that I discovered when reading “Antifragile” from Nassim Thaleb is “The Lindy Effect”. According to that model, the way to better predict if some trend will stay is looking for how long it has been around. For example, if “Let it be” from The Beatles has been a great success for many generations, chances are high that it will continue to stay with us for many more years to come, while the latest hit from Dua Lipa could eventually be lost in our memory the very next year.
That doesn’t mean that new things are never successful. The truth is that progress replaces technologies from the past as new more effective and efficient solutions are put in place. Think for example about Hyperloop (the ultra-high-speed ground transportation system for passenger and cargo proposed as a concept by Elon Musk, CEO of Tesla and SpaceX). Chances are high that it will sooner than later become a winner way of transportation, but if you think about the fundamental concept behind it is that it is a train. Not a regular train but a very sophisticated one, but fundamentally it is a train. And trains have been around us since Richard Trevithick invented it in Cornwall in 1804.
I would love to read your thoughts on how you manage your “crystal ball” when traying to identify emerging trends. Do you believe in the “Lindy Effect”?
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