Why We Overestimate the Short Term and Underestimate the Long Term in One Graph

We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten.

- Bill Gates, The Road Ahead
I'm always suspicious of aphorisms. Usually you run into this situation. But Bill Gates' often-quoted line above is one of the better ones I think. I do believe, though, you could add to it -- i.e. that in 20/30/50 (?) years, our hopes and expectations about the future often tend to converge with reality (e.g. ARPANET -> today's Internet).
I got to thinking why Gates' rule of thumb seems to consistently hold true. It feels to me it basically boils down to two curves graphed over one another:
Of course the above is an over-simplification, but as you look at the curves, you might start to surmise a few things:
  • Carlota Perez and others have characterized the S-curve (a sigmoid function to be precise) as an installation stage leading to a deployment stage. To me it looks like three main phases that could be characterized as a) a slow build up to some kind of critical mass, b) compounding taking effect and driving exponential growth, c) ultimately diminishing returns once some kind of limiting factor (e.g. number of hours in a day we're awake, number of humans on Earth, etc.) starts to take effect. 
  • If the intersection point is truly somewhere between two and ten years as Gates suggests, those five year strategic planning processes that stodgy corporatations love so much may not be such a bad idea in tech after all.
  • Maybe there's an evolutionary reason why we tend to think linearly. But maybe evolving to thinking more like an S will be one of the signs of the Singularity :)

Reader Comments

There are no comments for this journal entry. To create a new comment, use the form below.

PostPost a New Comment

Enter your information below to add a new comment.

My response is on my own website »
Author Email (optional):
Author URL (optional):
Some HTML allowed: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <code> <em> <i> <strike> <strong>