If you have not read the previous post, go to part 1 here.
For much of history, we have been in linear thinking mode. We are not be fully faulted for that. For centuries, we have been conditioned to be so.
Julius Caesar was born in 100 B.C. There wasn’t much difference in technological advancements even up to the 14th century after Caesar. People still got around on horseback. People typically travelled only to make wars or conduct trade; used oxen and donkeys to pull carts; carried the same old swords and took medicines that mostly didn’t save lives.
I think the beginnings of exponential developments started with the invention of the printing press in Germany by Gutenberg in 1450. Then came the steam engine, electricity and light.
Henry Ford with his automobile assembly line, Andrew Carnegie with his steel mass production, Rockefeller with his oil explorations and distribution, and J.P. Morgan with his overall acumen in banking and equity investment paved way for exponential thinking. No doubt, commercial air travel brought the world a lot more closer.
At that time, nobody even used the word ‘exponential’. If anything they didn’t understand it. All these above developments without a question improved productivity and utility. Any discussions on linear and exponential thinking only created cognitive dissonance.
Linear thinkers believe the pace of tech innovation will mimic that of the past. Exponential thinkers know that growth can surprise you in many multiples. But a flawed understanding of exponential growth can also destroy your hypothesis especially with the advanced spreadsheet analysis that you can make. Only a good understanding of macro and world developments can keep you grounded, balanced and point you in the right direction.
Gordon Moore telegraphed the power of exponential growth to the world in 1965. He was the cofounder and later the CEO of Intel Corporation. Moore theorized that ‘computing power doubled roughly every two years’, thanks to how many transistors you can pack onto a microchip . This principle famously came to be known as the Moore’s Law.
Actually, the doubling of computing power now happens faster than every two years. This may not sound anything much for a linear thinker but if you understand the power of compounding and exponential thinking it makes a world of difference.
So what do you think about the future? Is it going to be linear or exponential? Your answer will shape how you process information and invest in new technologies.
Remember technological innovations compound one top of another. It works something like this. Faster microchips lead to faster computers which leads to better robot chip makers and fabrication methods. This leads to even faster microchips which leads to even faster computers. Each step in the exponential chain makes the next step even more impactful.
I know it baffles the mind of anyone that is thinking linearly. I have no doubt we are in an age of exponential growth. Are you prepared for it? Can you handle the truth in growth and profit. I will close this series of writing with one final piece. Stay tuned.
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Abraham George is a seasoned investment manager with more than 40 years of experience in trading & investment and portfolio management spanning diverse environments like banks (HSBC, ADCB), sovereign wealth fund (ADIA), a royal family office and a hedge fund.