The IT revolution of the last two decades has recast the fabric of American society, dramatically impacted nearly every other, and unleashed a torrent of entrepreneurship globally. And yet, in a world fraught with challenges around education, healthcare, economic development, governance, natural resources, and the environment, the latest fruits of Silicon Valley are easier means of hailing cabs and more efficient short-term apartment rentals. Even the sequencing of the human genome has yielded underwhelming clinical impact. Two years ago, PayPal founder Peter Thiel lamented, “we wanted flying cars, instead we got 140 characters.” More recently, entrepreneur turned investor Joe Lonsdale penned an article in Tech Crunch suggesting that “our society has failed to imbue young technologists with a sense of duty. [As a result] they have ignored the great challenges of our time.” So, what to make of this? Is technology falling short of its promise or are we on the cusp of something more?
Thiel attributes the allegedly disappointing pace of technological innovation to a shift in our collective psychology. For the bulk of the 20th C., he claims, the US was a country of determinate optimists with a shared vision of the future and the will to forge it. Since 1982, however, indeterminism has edged aside determinism and, arguably, post-2007, pessimism has replaced optimism. This is significant, Thiel argues, because determinists pursue great breakthroughs and undertake grand endeavors like the Apollo Project and the interstate highway system; indeterminists, convinced that the future is uncertain, favor portfolios of less audacious options. Determinate optimism takes us to the moon; indeterminism takes us home in a car with a pink mustache on its grille. Clayton Christensen, author of “The Innovator’s Dilemma,” has picked up on this theme. He describes three types of innovations: empowering (Model T, PCs, cloud computing), sustaining (Toyota Prius), and efficiency (mini-mills, Geico). He asserts that allegiance to metrics like IRR and ROIC – which measure capital efficiency not absolute gains – has led to under-investment in empowering innovations in favor of quick win sustaining and efficiency innovations. (As an antidote, he proposes a regressive capital gains tax that declines with holding period.)
While Thiel and Christensen are extraordinarily lucid thinkers, my take is that the true magnitude of innovation and actual pace of progress can be difficult to assess in the moment. Twitter’s 140 character tweets facilitated the Arab Spring. Seemingly banal applications, like Facebook’s use of facial recognition technology for photo-tagging or document sharing in the cloud, are first markets that incubate technologies with profound potential (medical image computing and massive open online courses, respectively). And beneath the surface, as articulated by McKinsey, a “vast, silent, connected, unseen, and autonomous” second economy of digitized business processes has taken root; a neural system controlling increasingly vast amounts of the economy, from flight check-ins to supply chains.
A compelling summary of this counter to “innovation pessimism” was published in The Economist, in January. It frames economic history as a story of punctuated equilibria defined by two characteristics: 1) decades long lag between introduction of an innovation and its full effects rippling through society as commercial technologies; 2) acceleration-of-effect as a given technology matures. The implication of this perspective is that the best of IT and biotechnology is yet to come. And behold, we see around us today the emergence of driverless vehicles, big data analytics, machine learning, and biological 3D printing, phenomena which may well augur a future that looks remarkably different than the present. There is a strong case to be made that we are at the very knee of the curve when it comes to technology reshaping our world.
This, of course, does not imply that our generation will inevitably rise to meet the grand collective challenges we face. But it is our only hope of doing so. Take as an example the clean-tech industry, which boomed from 2006 through 2008 and has been a bloodbath since. Claimed disruptive breakthroughs turned out to be capital intensive, long time-to-market incremental improvements. Helped along by the great recession and shale gas revolution, investors have retreated en masse. Outside of Elon Musk, desire and capital have proven to be insufficient ingredients for addressing resource constraint and climate change. Instead, it will only be through application of the aforementioned emerging digital technologies to energy and resource challenges – enabling development of thorium or small modular reactor based nuclear power, high density large format energy storage, efficient CO2 capture and conversion to liquid fuel, nanomaterials, and synthetically engineered food – that the cleantech industry may rise like a phoenix from the ashes. A sense of duty is a strong force; exponential technological advance is even more powerful. Together, their potential to change the world for the better is downright scary.