Why Most Underestimate The Impact Technology Will Make
Have you ever noticed how most forecasts, especially when it comes to technology, underestimate the impact?
Take someone who is looking out into the future. They make a prediction about a certain technology and, like most forecasts, it is wrong. However, the trend, with technology, seems to be to not realize the full impact of what can take place.
This is something we see in the blockchain/cryptocurrency world. People are looking at things with disbelief at some of the forecasts. Of course, most of these center around the price of tokens when the shift is, indeed, much bigger than just that.
The answer to all of this can be summed up in the idea of linear versus exponential thinking. Here is a chart that illustrates this concept.
Of course, this is nothing new yet most people do not fully internalize what it means. While they will acknowledge it on an intellectual level, even agreeing with it, they simply return to their linear approach to things. It is how we were reared by evolution, thus it is very difficult to break.
The challenge is that linear thinking makes things seem absurd. However, the reality is that we saw a lot of cases where the absurd is exactly what happened.
For example, in 2007, would it be absurd to say that within 7 years, smartphones would be used by 70% of the American mobile phone population? When the fist IPhone was introduced, this would have been an outlandish claim. Yet that is exactly what happened.
Elon Musk is known for his claims. Many laugh at him on social media. His latest is that Tesla will sell 20 million vehicle in a year, by 2030. For a company that just racked up 500K in annual sales, that is absurd. After all, the competition, companies that build cars for 100 years, are not going to allow that to happen.
Bookmark this post and see how close things get in 2030. I would not bet against Musk attaining that goal.
The reason: Musk fully understands the power of exponential activities. Nothing he does is with the intention of growing on a linear scale. In financial terms, this is called compounding.
Most are familiar with a chart that looks like this. It is the difference between linear and compounding trajectories.
When placed on a numerical scale, we can easily see the difference. This is exactly what happens with technology.
It is why Facebook, in less than 20 years, was able to get near 3 billion users globally. This is also the reason why companies can go from nothing to a billion dollar entity in a couple of years. In the digital world, growth rates can go off the charts.
So when a guy like Musk makes the statement about having 20 million cars sold in a year, it is something to listen to. He understands engineering and manufacturing. The company is also becoming very adept at factory building. All of this leads to generating even greater production.
And it all leads to an even larger economies of scale.
Going back to the smartphone, the reason why it was such a massive success is because of convergence. This is when multiple technologies are brought together. In this instance, we saw the combining of mobile phones, the Internet and computing. When put together, at that time, it was an instant success.
Each area had its own growth rate. Yet, in less than a decade, more people started accessing the Internet via a mobile device than using a desktop. That is how powerful exponential impacts are.
What other ideas are out there that will do the same thing? This is the major challenge for technological forecasters. One thing we know, computing power is getting more powerful and communication systems are becoming faster.
This will impact a number of areas. Autonomous cars (back to Musk again it seems) is one area that comes to mind. The significance of edge computing can be seen here. We are going to see 5G networks used to enable autonomous vehicles to operate seamlessly without interaction to the cloud. Obviously, there will be that connection for sending and receiving data since that is where the training of the AI will be. However, for the driving activities, that will be handled at the vehicle level.
For this to take place, we need progress not only with the communication system but also sensors, AI chips, and image recognition. Each of these area, whatever benefits they have, will be compounded when tied together.
We are going to see this is a number of areas going forward. Energy, transportation, medicine/health, and food are all going to see similar results. It will not be just one thing that improves each area but a culmination of different technologies.
That is why the 2020s, and beyond, are primed to be an explosive decade and change how society operates in many ways.
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