The exponential age. From Azeem Azhar. Distraction books; 352 pages; $ 28.99. Published in the UK as “Exponential”; Random house business; £ 20
Human limits. By Michael Bhaskar. MIT press; 432 pages; $ 29.95. Bridge Street Press; £ 20
Master of the scale. By Reid Hoffman with June Cohen and Deron Triff. Currency; 304 pages; $ 28. Bantam press; £ 20
HISTORIANS OF SCIENCE distinguish between useful discoveries such as flossing and “general purpose technologies” that can be applied to a wide variety of purposes – such as electricity, which powers everything from factories to street lights to televisions. These transformative inventions, and the devices that spawned them, were developed at a rapid industrial pace in the 19th and 20th centuries. Now, however, a new phase of progress is beginning: Many technologies do not follow linear, but exponential growth rates. This not only accelerates innovation. It poses drastic challenges for companies, governments and society.
Many Western institutions are unprepared for this shift because they are stuck in an industrial age mindset, say three new books. There’s a good reason for this: linear growth, where things change or add little by little, is generally far more familiar than exponential growth, where they double or triple (or more) with each step. For example, if a step is one meter long and you do 25 of them, you are 25 meters. But if each step grows exponentially, doubling from one to two to four meters, and so on, your seventh step would cover a soccer field – and your 25th would be 33 meters or almost the circumference of the earth.
It may seem slow and boring at first, but the exponential shift suddenly becomes incredibly dramatic. The world is in the midst of such a transformation, argues Azeem Azhar. Computer technology has long followed Moore’s law, according to which the performance of a computer chip (measured by the number of transistors) doubles every two years, with practically no increase in costs. But, says Mr Azhar, such exponential growth is now also characteristic of other technologies that have been charged by digitization or advances in artificial intelligence (TO THE). These include solar cells, batteries, genome editing, augmented reality, 3D. Manufacturing, online business, even electric cars and urban farming – and unfortunately online misinformation, cybercrime and warfare.
A number of superstar companies emerge on the basis of these technologies. They dominate their sectors due to network effects, and using the same platform is widely beneficial. For example, Alibaba, a Chinese e-commerce giant, created an online payment system in 2004. Nine years later, it became the world’s largest mobile payment platform called Ant Financial. The abundance of data allowed it to improve its service, which made it more popular, which in turn resulted in it collecting more data – a cycle known in a term known as the “data flywheel” by Jim Collins, a management scientist, is known.
Ant Financial data scientists found that women who bought skinny jeans were also more likely to pay for phone screen repairs. They speculated that the phones slipped out of their pockets. So the company started targeting screen insurance offers to women who wore skinny jeans. Based on this knowledge and the targeting, 80% of customers use at least three of the five financial products. Traditional banks that lack such data have one major disadvantage – what Mr. Azhar calls the “exponential gap”.
With his experience as a startup entrepreneur, tech investor, innovation manager at large companies and journalist (25 years ago at The economist) Mr. Azhar is well placed to decipher these digital trends. He has a knack for challenging and reversing conventional mindsets, for example by arguing that the introduction of exponential technologies will lead to an increase in jobs, not a decrease – testify to the increasing workforce of expanding companies like Amazon or Ocado, a UK company Online grocer. The resulting unemployment is due to the companies that do not adapt, not those that do.
Exponential or Bust
The importance of using technology for business is the topic of Masters of Scale by Reid Hoffman, a co-founder of LinkedIn, and his two co-authors. Readers of his book (based on a popular podcast of the same name) have to ignore the annoying clichés he uses to conjure up budding tech moguls to “Shoot for the Moon” or “Get in the Trenches”. Conversely, when he engages with the stories of his co-entrepreneurs, Mr. Hoffman skillfully brings out the essence of their strategies.
Kevin Systrom, for example, launched a photo sharing app that grew exponentially by reducing its features rather than expanding them as you might expect: within ten weeks, it had 1 million users. The company, later dubbed Instagram, was sold to Facebook for more than $ 1 billion with just 13 employees. (Mr. Hoffman duly advocates “lightning scaling,” or doing whatever it takes to grow big fast.) Often a founder’s narrative is a mixture of myth and truism, but these usually include bold choices that will determine the fate of the Influenced the company. The book highlights the critical, often eccentric, insights that in some cases have led to warp speed successes.
The effects of these technology and business trends on economic growth and knowledge advantage are Michael Bhaskar’s topic in “Human Frontiers”. He enters the debate about the “great stagnation”: the notion that innovation becomes more difficult because the most tangible progress has been made. According to this provocative thesis – a much darker one than Mr Azhar’s – the research will be more expensive and its results less dramatic. Much of today’s innovation is aimed at deepening understanding of existing science rather than exploring new territory.
Mr. Bhaskar was a former writer at Google DeepMind, a top company TO THE Laboratory, and he is fluent in explaining the challenges of the debate and the way in which the boundaries of knowledge are expanded in episodes from the scientific revolution to the upheavals of the TO THE. But he mistakenly refuses to answer the question he asked. “Our ideas,” he writes Badetisch, “will either quickly retreat from the border or continue to rush towards it.” Exponential or bust, in other words.
Cynics may giggle at the tech company hype. But companies of exponential age often enjoy the last laugh, be it Amazon’s routing from Sears, Netflix’s victory over blockbusters, Apple’s defeat of Tower Records, or Instagram’s Kibosh from Kodak. In any case, the upstarts were better at adopting digital tools and using them creatively. These books convincingly prove that extraordinary things are happening in business and society. But they are far from the end of the conversation. ■
This article appeared in the Books & Art section of the print edition under the heading “The Rise of the Machine”