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Picture: REUTERS/STEVE NESIUS
Picture: REUTERS/STEVE NESIUS

As the new year dawns we have entered a decade that will see profound and startling change in every aspect of our lives.

This can be said with confidence given that the exponential change in the technology building blocks that will create this transition is already fully under way, but we can expect it to increase at a faster rate than at any other point in history, bringing with it an enormous opportunity set.

We have traditionally lived in a world that was local and linear. However, we now reside in a world that is global and exponential while our minds remain linearly based. This makes exponential change difficult to comprehend. If you walk 30 linear steps you end up 30m away from where you started. If you walk 30 exponential steps (where each step is double the previous one) you end up going 26 times around the world.

Technological innovation doubles about every 18 months, based on the famous Moore’s Law that postulated in 1965 that computing power would double every 18 months. Almost 60 years later that has proved almost exactly correct and has created the extraordinary world we already live in now, in which video calls on phones are normal, not a Star Trek fantasy.

Even as silicon constraints threaten to slow this progress, the advent of nano tubes (made from graphene, the extraordinary man-made material that is one atom thick and stronger than carbon fibre) will again free any immediate constraints. Quantum computing will then take us into the far future (and is already becoming an accessible resource of computing power on the cloud).

This doubling also combines with the power of compounding (off an ever-higher base) to create the exponential growth in technology we now see. But it doesn’t stop there. The reason this particular decade will be so astonishing is that we have a convergence of many of these exponentially growing technologies, to create even faster change.  An acceleration of the acceleration, if you like.

Moon mining to build space hotels, starting in 2024? I think so. Humans to Mars by 2030? Sooner would be my bet

To name just a few of these convergences now emerging or already part of our everyday lives: artificial intelligence (AI), cloud computing, gene editing, internet of things, 3D printing, blockchain.

One real-life example to emerge from this congruence of technologies is that flying cars are now a reality (and trialling in Dubai) due to a convergence of AI, nanotechnology, drones and big data. It is also why autonomous vehicles are already trialling in the US and we take for granted the speech recognition technology embedded (and continuously learning) in our Alexa home speaker.

These technological feats have emerged much quicker than anyone expected, and others will too — because our brains are linear. Moon mining to build space hotels, starting in 2024? I think so. Humans to Mars by 2030? Sooner would be my bet.

This exponential effect is also transforming the growth of the green economy and the shift to renewable energy. In just the last decade the price of solar power has fallen 95%, with a similar trend in wind technology. It is now cheaper to build and operate a wind farm than to operate an existing coal-fired power station. The Covid-19 pandemic accelerated this trend, both as technological innovation sped up and as humans began to realise that their planet is somewhat precious, and we are all a little more vulnerable than we might have previously supposed.

What this innovation means for investing, and the way in which we can prepare for the staggering change it will bring and benefit from it, is the following:

  • Investors need to look to buy into these emerging, exponential technologies. For example, we are designing a fund that will allow people to invest in robotics, biotechnology, fintech, lithium batteries, electric vehicles and smart cities.
  • Industries that will be disrupted by these new exponential technologies should be avoided: old-world healthcare, basic materials, bricks-and-mortar, slow-moving financial services firms and carbon-intensive industries. There will be winners even in these areas of the market, those that can disrupt themselves and bring scale to the new technologies. Investing in forward-thinking management teams who get this will be critical.
  • ESG should be integrated into everything we do. Aside from the moral imperative, direct investment into the green economy globally will be a profitable endeavour over the coming decade. But also, there is a need to invest in those companies that are transforming themselves to be better stewards of the environment, that understand that their social contract to exist is precious and should be nurtured, and who employ the correct governance procedures to ensure both sound application of smart management and the scope to embrace change in this decade.

• George is director of investments at Old Mutual Investment Group.

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