As they say “a picture is worth a thousands words”. I felt this picture is worth that and the reason why I left my job in banking.
If you are a believer of “accelerating change” like the futurist and inventor Ray Kurzweil, then you will appreciate and agree with the green dotted line (above), illustrating the increasing rate of technology change. It’s certainly exciting times; drones are no longer science fiction; autonomous cars are in already in our streets; AI and Robots are present in the workplace today. We laughed in 2015 on the anniversary of the film “Back to the Future” and its depiction of the future and what it got wrong. We might not have hover-boards or flying cars yet, but I feel the writers were right with their assumptions; the assumption of an accelerating change and rapid take-up.
There are many examples to illustrate the theory of “accelerating change” and with my background in finance the chart below is a good example. It shows the average lifespan of companies in the world’s largest stock market the S&P500 is falling. The average time spent in the S&P500 has decreased from 61 years in 1955 to just 17 years today, a run rate that would mean that by 2027, more than three-quarters of the S&P 500 will be companies that we have not heard of yet.
Computer chips have become increasingly powerful while costing less. The reason being that over the last five decades the number of transistors, or the tiny electrical components that perform basic operations on a single chip have been doubling regularly. This is not linear but exponential, graph nominal world GDP, human life expectancy, DNA sequencing, its all the same. Exponential charts = exponential change?
An issue and something which can’t be ignored from the first chart above, is the widening gap that seems to exist vs business productivity. The Bank of England’s Chief Economist Andy Haldane recently raised this lagging productivity issue, highlighting that the UK has shown its longest stagnation in more than 200 years. Though this is not central to UK alone, but a crisis seen globally. That chart may also resonate with other social concerns on rising inequality, geopolitical tensions and reasons for sluggish global growth.
So should we be scared? Elon Musk could be right for us to fear that the work of Google’s AI, and Terminator’s Skynet could be here sooner than we think. With this one could sympathise Bill Gates idea of a robot tax too.
Personally, I’m not in that camp of fear and we need to look no further than to some of the winners today. Fast growth isn’t just happening at start-ups but is also being witnessed at some of the largest companies today. Last year the OECD wrote about productivity and it referenced these companies as “Frontier companies”. One of the points cited is that these companies are embracing is new technology, new trends and ultimately change. These companies are famous to us, with the names of Amazon, Google, Facebook, Lyft and Airbnb.
SO WHAT IS THEIR SECRET SAUCE? HOW TO KEEP AHEAD?
For me its nothing to do with being an internet or e-commerce business, but what I see is a trait within their business which allows them to constantly adapt, react to changes in their business environment, even redesign and always be optimising. Their business works on a feedback flywheel of optimisation or innovation.
Where the design (products or service offering) creates usage, with usage it generates data, with data they use to promote better design.
This cycle is constantly on-going, and and so they are able to react quicker to a world which is changing and accelerating. They effectively have real-time receptors or sensors, monitoring and generating data which they turn into intelligence. I’m a fan of L2inc research and Scott Galloway the founder said in a presentation earlier this year, business value formula today = receptors x intelligence. Link here, worth a watch. https://youtu.be/T9OQGK5uXzg
What is also common is that these companies are utilising key technologies in the form of sensors, connectivity, cloud infrastructure, data analytics and turning that into better informed decisions or intelligence. In the OECD productivity report I mentioned earlier, it concluded there is a technology diffusion or dispersion issue at hand. They fear that this machine of diffusion is slowing, and so I believe that no infinite amount of money-printing or a short-sighted political policy will solve this issue. We must address the causes not the effects. We must focus on lowering as many barriers to technology adoption as much as possible, from not only the costs to ease of use and promote wide-spread innovation.
This is why I left “the City” to join 30MHz.