Trend Modeling with Three-Valued Logic
Overview
Based on research in trend-based optimization for product innovation, this skill applies three-valued logic (increasing/decreasing/constant) to analyze markets when precise numerical data is unavailable. This approach enables meaningful analysis with minimal information.
Required Frameworks
| Framework | Output Section | Required | Condition | |-----------|---------------|----------|-----------| | Variables Table | Variables | yes | — | | Relationship Matrix | Relationship Matrix | yes | — | | Scenario Generation | Generated Scenarios | yes | — | | Transitional Graph | Transitional Scenario Graph (Mermaid stateDiagram) | yes | — | | Terminal Scenario Analysis | Terminal Scenario Analysis | yes | — | | Multi-Objective Trade-offs | Trade-offs | yes | — |
Core Concept
Traditional market analysis requires extensive quantitative data. Three-valued logic provides an alternative when:
- Data is scarce or unreliable
- Relationships are qualitative
- Uncertainty is high
- Quick directional insights are needed
The Three Values
Load and apply the trend indicator definitions from protocols/TREND-INDICATORS.md. This skill uses the formal notation variant (INC(X, Y), DEC(X, Y)) and the extended notation (AG, DG, AD, DD) for acceleration/deceleration modifiers. See the protocol for full definitions.
CRITICAL: When the user provides correlation data, you MUST:
- Explicitly label each correlation as "positive correlation" or "negative correlation"
- Use the
INC(X, Y)orDEC(X, Y)notation format for each relationship - Show the conversion step clearly before building the relationship matrix
Example:
- Market size and competition have positive correlation →
INC(Market Size, Competition) - If Market Size = INC, then Competition = INC
- If Market Size = DEC, then Competition = DEC
- Price and demand have negative correlation →
DEC(Price, Demand) - If Price = INC, then Demand = DEC
- If Price = DEC, then Demand = INC
Trend Model Construction
Step 1: Identify Variables
List market variables of interest:
- Market size
- Competition intensity
- Price pressure
- Innovation rate
- Customer adoption
- Regulatory burden
Step 2: Determine Relationships
For each pair of variables:
- Identify correlation direction (positive/negative)
- Convert to trend relationship (INC/DEC)
Step 3: Build Trend Matrix
| Variable | Market Size | Competition | Price | Innovation | |----------|-------------|-------------|-------|------------| | Market Size | - | INC | DEC | INC | | Competition | INC | - | DEC | CONST | | Price | DEC | DEC | - | DEC | | Innovation | INC | CONST | DEC | - |
Step 4: Generate Scenarios
A scenario is a consistent assignment of INC/DEC/CONST to all variables that satisfies all relationships.
Step 5: Identify Terminal Scenarios
Terminal scenarios are equilibrium states where:
- All relationships are satisfied
- System is stable
- No further transitions occur
Transitional Scenario Graphs
Create Mermaid diagrams showing scenario evolution:
stateDiagram-v2
[*] --> S1: Initial conditions
S1: Scenario 1<br/>Market=INC, Comp=INC<br/>Price=DEC, Innov=INC
S2: Scenario 2<br/>Market=CONST, Comp=INC<br/>Price=DEC, Innov=CONST
S3: Scenario 3 (Terminal)<br/>Market=DEC, Comp=CONST<br/>Price=CONST, Innov=DEC
S4: Scenario 4 (Terminal)<br/>Market=INC, Comp=INC<br/>Price=DEC, Innov=INC
S1 --> S2: Market saturation
S1 --> S4: Sustained growth
S2 --> S3: Commoditization
S2 --> S4: Innovation breakthrough
Multi-Objective Trade-offs
From the research: "No scenario satisfies all objective functions simultaneously."
When analyzing terminal scenarios:
- Identify competing objectives
- Map which scenarios favor which objectives
- Highlight trade-offs required
- Recommend based on priority alignment
Application to Market Analysis
Use Case: New Market Entry
Variables:
- Market Growth (MG)
- Competitive Intensity (CI)
- Entry Barriers (EB)
- Customer Awareness (CA)
Relationships:
- INC(MG, CI) - Growing markets attract competitors
- INC(MG, CA) - Growth increases awareness
- DEC(EB, CI) - Lower barriers increase competition
- INC(CA, MG) - Awareness drives growth
Scenarios Generated:
- Explosive growth: MG=AG, CI=AG, EB=DEC, CA=AG
- Mature equilibrium: MG=DG, CI=CONST, EB=CONST, CA=CONST
- Consolidation: MG=DEC, CI=DEC, EB=INC, CA=CONST
Output Structure
## Trend Model Summary
### Variables
| Variable | Current State | Trend | Confidence |
|----------|---------------|-------|------------|
| [Name] | [Description] | INC/DEC/CONST | High/Med/Low |
### Relationship Matrix
[Matrix showing INC/DEC relationships]
### Generated Scenarios
| Scenario | Var1 | Var2 | Var3 | Terminal? |
|----------|------|------|------|-----------|
| S1 | INC | DEC | CONST | No |
| S2 | CONST | CONST | DEC | Yes |
### Transitional Graph
[Mermaid state diagram]
### Terminal Scenario Analysis
**Scenario X**: [Description]
- Conditions: [What leads here]
- Trade-offs: [What must be sacrificed]
- Recommendation: [Strategic implication]
### Key Insights
1. [Insight about scenario transitions]
2. [Insight about trade-offs]
Best Practices
- Start simple: Begin with 4-6 variables
- Validate relationships: Check with domain experts
- Document uncertainty: Note where relationships are speculative
- Update iteratively: Refine model as new information emerges
- Focus on transitions: The paths between scenarios often matter more than endpoints
- Large models (7+ variables): Focus the relationship matrix on direct relationships only. Not every variable pair needs a relationship — use CONST for pairs without clear correlation. Generate 3-5 key scenarios rather than exhaustively enumerating all combinations. Prioritize terminal scenarios and the most likely transitional paths.
Advantages of This Approach
From the research:
- "No numerical values of constants or parameters are needed"
- "A complete list of all futures/histories is obtained"
- "Results remain easy to understand without knowledge of sophisticated mathematical tools"
Additional Resources
For theoretical background and advanced techniques, see:
references/three-valued-logic.md- Theoretical foundationreferences/scenario-generation.md- Algorithm detailsexamples/trend-model-example.md- Worked example
Orchestration Hints
Confidence tiers (universal scale):
- High: 3+ independent, recent (<12mo) sources that converge
- Medium: 2 sources OR sources >12mo old OR indirect evidence
- Low: Single source, inference, or extrapolation
Dimension-specific confidence criteria below REFINE (not replace) these universal definitions.
- Cross-reference dimensions: All dimensions provide input variables for scenario modeling
- Alert triggers:
- Scenario with >50% probability of adverse outcome
- Bifurcation point within planning horizon
- Terminal scenario that invalidates core business assumptions
- Confidence rules:
- High: Model inputs validated by 3+ dimensions' findings
- Medium: Model inputs from 2 dimensions with reasonable assumptions
- Low: Speculative inputs or single-dimension basis
- Conflict detection:
- Scenario probabilities vs other dimensions' confidence levels
- Trend direction assumptions vs actual trend-analysis findings
- Timeline estimates vs regulatory and technology readiness timelines