How is it possible to say anything meaningful about the future of business? I mean, we’re all witnessing how things are changing so rapidly, right?
It’s exponential change. As described by Moore’s law from 1965. Back then, Gordon Moore observed that the number of transistors in a dense integrated circuit doubles about every two years.
Today, it’s the amount of data in the world that’s doubling every two years. Which also explains why the term “disruption” has become a favourite among digital gurus and similar.
Jim Morrison (The Doors) said: “The future’s uncertain. And the end is always near.”
Bill Gates (Microsoft), on a slightly more optimistic note, said: “Most people overestimate what they can do in one year and underestimate what they can do in 10 years.”
All this exponential change makes business extremely difficult. It’s dizzying to think about for CEOs, if not downright scary.
If you search for e.g. “rapid change” you will find endless articles on the topic, written by established voices and published by highly regarded business media.
A false presumption
The problem? That it’s simply not true. Change is not accelerating.
At least, that’s what business historian Chris McKenna of Saïd Business School at Oxford University stressed in my recent conversation with him.
– It seems like things are changing faster. Do you agree?
“Well, they said the same in 1900. They said it in 1920. In 1940, in 1960, in 1980 and in 2000. So the presumption is that the people who said it before were wrong, but we’re right now.”
“What I’m asking is: Why do we think they were wrong before? And why do we think we are right now? And what’s the basis of that?”
Chris McKenna has a good point.
After all, in the early years of the 20th century they put petrol engines on boats, planes and automobiles. Over a very short period, Henry Ford, the Wright brothers etc. essentially changed the world.
Now, fast forward to today and the most revolutionising thing the past year was arguably the iPhone 10… In the bigger scheme of things, it’s not exactly changing anything at all.
Fetishizing the second derivative
What we’re doing, says Chris McKenna, is that we’re “fetishizing the second derivative”. That we’re preoccupied with the rate of change.
It’s a Western story: that things are not only changing, but that they are changing more and more.
This idea is not only false. It’s also ridiculous.
In real life, exponential development cannot happen forever. It would outgrow us all in no time.
It can only happen for a limited time, in a limited area, e.g. describing the amount of data in the world or the growth of transistors in integrated circuits.
So why do we fetishize this idea?
There’s no doubt a psychological aspect to it. All the while new generations drive the change, their parents and grandparents will feel that the world has gone mad. It feels like exponential change.
And then there’s a business aspect. A reason to keep the idea alive.
In short: The idea leaves business leaders unsettled or even scared. CEO’s feel they need to act now if they are to survive. And they think that the change that is coming is so radically new and unknown to their organisation that they need outside help – now.
So in comes the management consultants. At a point in time where these consultants can basically name the price. After all, it’s do or die.
A third reason is the concept of industrial revolutions. At this moment in time, we’re arguably in the middle of the 4th industrial revolution.
Historically, during those periods of time, things have changed at a higher pace than in other periods. So in those periods we do see some level of acceleration. Which in turn nourishes the idea that change is coming, and that it’s going to completely change the shape of business.
The next question begs: “Is the story about the industrial revolution flawed too?”
I will focus on that in my next post. Which will also draw heavily on my conversation with Chris McKenna.