(En español aquí)
The speed of change in the world is accelerating and is reaching daily life scale. This creates anxiety as people have to continuously adapt to different layers of change during their lifetime while the institutional framework is not ready to support them. This has dramatic consequences for companies, that lose their position and people who lose their jobs and investments.
The speed of change has been accelerating due to the compounding of complexity. As complexity accumulates it allows creating more complexity at a faster rate. It is the power of compounding returns applied to how the world works. Nowadays we see this compounding power, especially around IT-enabled technologies. In these technologies the effect of Moore’s Law, with the doubling of complexity every 1.5–2 years is well documented. As other technologies become digitized they also accelerate to a comparable rate.
This started with paradigm shift acceleration through evolution. While life took billions of years to emerge and evolve to eukaryotes, the Cambrian explosion took only hundreds of millions. Then primates tens of millions, modern hominids millions of years and Home Sapiens Sapiens hundreds of thousands. Accumulated complexity allowed increasing speed of change and complexity accumulation. Then with the human brain, society and spoken language, we moved from evolution to invention.
Invention at historical scale. Agriculture, writing, iron smelting and the wheel took millennia, gunpowder and navigation centuries. In this period life was unchanging for most and very few experienced adoption of even one new technology. The invasions of the Hittites powered by iron smelting or writing in Ancient Mesopotamia were equivalent to a miracle or a natural disaster, and most people were “safe” from them.
Invention at human lifespan scale. The steam engine, railroads, and electricity took close to a century, TVs and Telephones took several decades. For the first time, human beings who lived long enough were guaranteed to experiment a significant difference in the world they joined as babies and the one they exited as seniors. Still, that change was slower than their lifetimes, and only a few felt differential effects from one part to the other of their adult years.
Invention at human life scale. Mobile phones and personal computers took few decades, for the first time you could remember a time in which a core technology didn’t exist. Broadband internet took around ten years, the world changed radically in less than a generation. Smartphones were ubiquitous in less than a decade, even to places in which electricity hadn’t yet diffused, making change happen at the speed of the yearly cycle.
Inventions at daily life scale. The next stage promises to be even faster. There are several technologies like artificial intelligence, blockchain, autonomous cars, energy or bioscience that promise revolutionary changes in the very short term. We could live substantial change even within a year increasing turbulence even further
This pace of change leads to anxiety in humans. We were programmed to accept rapid changes in our circumstances, like lions attacking us on the savannah. However, we are not programmed to accept continuous radical change in the world we live. My grandmother was born into a radically different world nearly one hundred years ago. Even my eldest daughter has seen substantial change, as she was born just at the dawn of the smartphone age. Our psychological make-up is not natively prepared for this.
Our social and economic systems are also woefully unprepared for this kind of change. Democracy is slow, with technologies being deployed in just one electoral and changing the results cycle (e.g. Twitter, Cybersecurity). Economic institutions assume stasis and punish severely those that are kicked out of the system, something that is increasingly inevitable in extreme fast change. Institutions prepare us for education in our early life and then a long life of static productive employment, something that is almost unthinkable today.
All of this compounds to anxiety for all of us. Anxiety as individuals as businesspeople and as investors
Anxiety as individuals comes from our risk of losing our jobs, careers, and livelihoods. Losing our jobs has dire consequences for us, and the system is not geared towards retraining people in useful ways. We have seen job destruction in manufacturing, and are now seeing automation plow through routine cognitive tasks like clerical tasks or even driving. We also see companies die often, lifetime employment is no longer an option
Anxiety as business people comes from the very short shelf-life of companies and business models. It used to be that a sound business model could be in the family for three or four generations. Now we can see companies rise to stellar leadership and fall for grace in a couple of decades or less (e.g. Blackberry, Nokia). The darlings of the internet era like Yahoo! or eBay are already stodgy corporations by the next generation standards. Even Facebook and Google had near-death experiences in their transition to mobile.
Anxiety as investors comes from the pace of financial innovation and the risks of assets. As complexity increases, we face new bubbles and bursts. The safe world in which a rentier could live on a steady return on assets is being challenged, as the return of traditional assets dwindles. And as changes happen once safe “blue chips” wither and die, while seemingly risky new investments like Google, Alibaba or Bitcoin skyrocket in value.
All this anxiety takes an important toll on us and on our institutions. Mental health issues are at an all-time high. Political turmoil is bringing increasingly radical options to the table as people grasp for something familiar and stable. Our institutions and our worldview will have to change dramatically to accommodate the reality of a world in daily transformation.