The Exponential Age
Tech and our future in the 21st Century
Hello readers,
It sometimes blows my mind to think that just a couple of decades ago we were ordering food by calling restaurants, asking people for directions to our friend’s places, and never imagined buying expensive shit by pressing buttons on a screen.
Technology has been evolving at a faster pace than ever and creating crazy upheavals in the world of business, politics, and society.
We’re living in the age of exponential technology, as technology writer Azeem Azhar likes to put it. Let’s understand what it means and its implications in under 5 minutes:
Exponential technologies (ETs) are those that are improving at an exponential rate year after year. Think of computers- the first models were as big as an elephant with an obesity problem and would cost millions. But today they fit into our pockets and are a million times faster. In the 21st century, we’re seeing the rise of exponential tech in 4 key areas: energy, biology, manufacturing, and computing.
A random image representing technology Each area gives rise to general-purpose technologies (GPTs) that change the shape of our economies, geopolitics, and social life. The 3 key GPTs of the 20th century were the telephone, car, and electricity. Take the example of cars. Their advent changed life completely- leading to the construction of roads, physical infrastructure like fuel stations, roadside hotels and restaurants, big box retail stores, and the development of suburbs. Imagine what can happen when multiple such GPTs interact with each other. That’s what it’s like to live in the exponential age.
3 major forces came together, leading to the rise of ETs. First is our new networks of information (the internet) and trade (global shipping) which allows ideas to combine and benefits of new advancements to spread out in no time.
Secondly, we’re able to combine these new technologies thanks to standardization and componentization. For instance, if you build a D2C brand you need not build a location-tracking software from scratch- you can just integrate a pre-existing API. So many of our applications are thus built using pre-existing packages, making it much more efficient to build new ideas. Standardization emerged as a military practice in the 18th Century because it was much easier to carry spare parts and assemble guns on the go- having a unique build for each gun made life so difficult and war so inefficient.
The third big force is called learning by doing and is encapsulated in Wright’s Law, which states that every doubling of production (of a good/service) leads to a certain % reduction in the cost of production. As we build more, we gain a deeper understanding of what it takes to build a new machine (say a 3D printer or a reusable rocket), and this drives greater efficiency and lower costs. You can quickly see how the lower costs drive greater demand and create a virtuous cycle.
ETs lead to unexpected effects. Chewing gum sales decreased 15% between 2007 and 2017, and it’s no coincidence that this happened exactly when millions started buying smartphones. Gum packs are placed at the point of sale in retail stores and rely on impulse buying, but with people increasingly looking down at their smartphones, gums failed to grab as much attention and took a major sales hit over the years!
But while technology improves exponentially, the institutions and policies used to regulate them move at a linear pace, leading to the exponential gap. The rise of smartphones has led to millions doing gig work as drivers or delivery boys. Still, our labor laws haven’t adapted to this new reality, which has led to worker exploitation: gig workers aren’t recognized as employees and hence don’t get sick pay, PF, or insurance. The same happened in Industrial-era Britain, where the rise of factories and the fatal working conditions it created weren’t addressed for many decades as the policymakers were stuck in the feudal mindset.
But that isn’t it. ETs produce a double whammy: it’s not only hard to adjust to the new reality created by these technologies, but we also suck at predicting their impacts. In 1980 AT&T asked McKinsey to determine how many smartphones there’d be in 20 years to see if it was a lucrative market. McK arrived at an estimate of 900k and the actual number turned out to be…109 Million! The world’s best consulting firm was wrong by a factor of 100. Predicting the future is hard, but more so when it involves exponential technologies.
If creating chaos for business and society wasn’t enough, ETs also impact the global order. If 3D printing grows fast enough, we might be entering an era of re-localization, where rich countries can manufacture locally using this tech and cut their business ties with developing nations. This might create major troubles for economies dependent on low-cost manufacturing, upending global politics.
So how do we deal with the exponential age? One, we must focus more on cooperation- working with other nations to reduce conflict and strengthening worker collectives to get them better rights. Secondly, we must build resilient systems (the Danish flexicurity model is a good example) that can withstand shocks and aren’t too fragile- like most supply chains at the beginning of COVID-19. And most importantly, we must be flexible, ready to tweak our policies in the face of new conditions, always learning and adapting to a changing world that we’ve never seen before.
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