CEOs… managers… employees… investors… Let’s face it, we all love a bit of stability. So what do you do when the outside world pulls the stability rug from under you?

Seriously, Ray Kurzweil should be paying me a commission. Ever since I stumbled across his Law of Accelerating Returns in New Scientist in the mid noughties, I’ve been touting it ad nauseum to anyone who wanted to listen (and a few who didn’t).

I’ve presented it, blogged about it and used it to bend the ears of a great many colleagues into cauliflower. If I had the guts, I’d probably parade around the city mall on stilts be-decked in a Law of Accelerating Returns sandwich board. Sadly, decorum prevents me.

There’s a simple reason for this fervour. The Law of Accelerating Returns is one of the core fundamentals upon which technological (and business and human) evolution is being built.

And this Law is already demanding some quite taxing shifts in the way businesses are managed.

The Law of Accelerating Returns

In his 1999 book, The Age of Spiritual Machines, Kurzweil broadened the application of Moore’s Law (which applies specifically to semiconductors) to technology in general.

He talked about how technology is advancing at an accelerating pace, while the cost of technology reduces. He talked about how this exponential change is actually fairly uniform and, therefore, can be measured. But, ironically, he also observed that people are only capable of thinking in linear terms. They struggle to get their heads around exponential change and, as a result, tend to undershoot when speculating about the future.

 

Brainy computers

Kurzweil then went on to demonstrate this Law, in the most graphic of terms.

He mapped the growth in speed of a US$1,000 computer (and its predecessors) from 1900 to 2000 (known) and then from 2000 to the late 21st century (predicted).

This mapping showed (if it holds) that a US$1,000 computer will be about as fast as a mouse’s brain by 2005, a human’s brain by around 2025 and as fast as every human brain on the planet by around 2050.

Its early days, but this staggering growth seems to be holding the line.

In 2009, Kurzweil found that you could achieve a trillion calculations per second with a US$1,000 computer using high performance graphics cards. That’s pretty much bang on prediction, with our US$1,000 computer running something like 10,000 times faster than its 2001 counterpart. Mind you, it’s only half the speed of a PlayStation 3 which, Kurzweil said, could hit 2 trillion calculations per second by 2009.

Kurzweil then contrasted the prevalent rate of change for today and the near future with the past.

“…we won’t experience 100 years of progress in the 21st century—it will be more like 20,000 years of progress (at today’s rate).”

Yikes!

 

So what?

Clearly, Kurzweil’s Law isn’t just about faster computers. If that was the case, it would be a source of salivation for online gamers, but little more than a novel curiosity for the rest of us.

No. Kurzweil’s Law of Accelerating Returns is about everything because technology in all its forms is (increasingly) underpinning everything.

This Law is about the very fabric and nature of our society and the possibilities for human evolution. It’s impacting every corner of our lives: from our computers and phones to government, manufacturing, communications, health, education and entertainment to the very social and economic structures that underpin our welfare.

And, as long as technology continues to grow faster, more powerful and cheaper (although the ability to do so is a source of some debate), these changes will only accelerate.

You know those conversations you sometimes have in the corridor or lift?

“Bloody hell, I’m busy.”

“Yeah, me too. Hopefully it’ll slow down soon.”

No, it won’t. Everything will only get faster. So much so, that Kurzweil predicts:

“By 2045, the pace of change will be so fast we won’t be able to follow it unless we enhance our own intelligence with artificial intelligence.”

Which is, apparently, just what we’ll be doing by then. If that sounds far-fetched, consider this recent newspaper report:

“Scientists have designed a brain implant that sharpened decision making and restored lost mental capacity in monkeys, providing the first demonstration in primates of the sort of brain prosthesis that could eventually help people with damage from dementia, strokes or other brain injuries.”

 

Change is now business as usual

These changes are already impacting business in a myriad different ways across every single department. Perhaps the most challenging impact of all involves the way rapidly decreasing cycle times are demanding change in the fundamental way businesses are run.

As Kurzweil intimated above, the cycle times from planning, production and adoption to maturity and obsolescence are falling at a dramatic rate.

The result is that transformational change isn’t a one in ten years event anymore.

It’s business as usual.

This leads to an important but not so palatable question for business leaders and the markets and employees they support.

How do you maintain stable momentum when transformational change has become a constant?

So, after what I confess is a ludicrously long introduction, here’s four thoughts on how today’s businesses can respond.

 

Embrace change

Not surprisingly, the first is the simple (?) act of embracing change.

So often, future performance is guided not by what happens in the business but what happens in our heads.

Without the ability or preparedness to accept and manage for constant change, gearing up for the future will be nigh-on impossible.

Actually, you could probably take this a step further.

Those who see change as a source of competitive advantage rather than just an inevitability will be the ones most likely to prosper.

And this applies as much to employees as to businesses.

As we all know, the days of the job for life are virtually gone. Increasingly, a person’s career involves not just several employer changes but a few significant evolutions and probably the odd revolution. Just like businesses, the person who can embrace change and seek out opportunities to evolve will be more successful both as an employee and as a careerist.

 

Strategic is the new tactical

At the same time, businesses must become more strategic. Most businesses engage in long-range strategic planning. Too often, however, this careful work gets noted, but then ends up consigned to the filing cabinet at the hands of more pressing operational priorities.

But long range isn’t so long range anymore. Which means this way of doing business just won’t cut it.

It’s vital that companies now think beyond the next results announcement. If they’re to avoid being trapped in a cycle of catch-up, they must build a far greater understanding of prevailing and potential future trends and put the wheels in motion now to stay ahead of them.

And, if they’re truly interested in long-term sustainable investments, markets need to break out of this annual cycle as well. They must come to accept the need for businesses to invest in tomorrow today. Encouraging quick wins could (and increasingly is) setting up investors for a mountain of medium-term pain.

 

From group-think to global-think

Of course, mapping even a medium-term strategy when the forward view’s opaque can be fraught with danger. In many industries, the pace of change is so fast (and getting faster) that it’s often difficult to predict what will win… even two or three years down the track.

Which is why capabilities need to share more of the spotlight.

It may be difficult to envision the products you’ll need in the next few years, but you sure as hell can build a view of the capabilities.

And it’s these capabilities – not the products – that will ultimately define you.

A good example relates to knowledge.

As I mentioned above, success hinges more than ever on our understanding of customers, markets, technologies and trends.

But, in this respect, companies often run the risk of running on the spot. They look at the future in terms of incremental steps. They measure and talk about the same things with the same people … over and over again.

This isn’t a criticism. It’s just a reality. Group-think is an unwelcome, but inevitable, by-product of successfully building a stable team.

But a business in constant change needs a constant flow of ideas and feedback: not just from internals or consultants, but from the very people who benefit from what the business does.

This is where digital media, while creating all this change, offers us the tools to manage it as well.

People want a say in what matters in their lives. And there’s an ever-growing army of businesses who are proving just how keen customers and other external stakeholders are to get involved.

And, more importantly, how much they can contribute.

Through social media, beta testing, labs and co-creation, these businesses are creating a fluid dialogue with their stakeholders – customers, consumers, industry peers, experts, potential suppliers and their own people – from all over the world. This dialogue is proving to be a powerful and unprecedented way of injecting businesses with a constant flow of knowledge, ideas and feedback.

There will always be a place for surveys, analysis, consultants and a competent, stable executive team.

But, to succeed in the future, business must also call on the outside world.

Especially given that now they can.

 

The fail-safe business

Another capability example is innovation.

When we think about innovation today, we tend to think about the commercialisation of ground-breaking ideas.

We should think more about our ability to fail. I don’t mean embracing or wholeheartedly accepting failure – that’s death. I mean our capacity to take failure in our strides.

And the trick here is to match (or better) the faster environmental cycle times with our own rapid (and more efficient) internal cycles. Speeding up internal cycles can dramatically impact not just the timing of returns, but the capacity for risk as well. It’s this increased capacity for risk that ultimately makes a company more innovative, flexible, aggressive and competitive.

Sadly, achieving this is far from simple. It requires the re-engineering not just of the strategic planning operation, but of governance, product development, operational processes, marketing and, underlying all of that, culture.

Similarly, the type of business you’re in will heavily dictate just how fast you can be. An auto manufacturer, for example, will never be able to reach the same cycle times as, say, a services or digital media provider.

Nevertheless, this is an area on which every business must – and can – focus. The opportunities for advancement are enormous – even in the largest scale manufacturing businesses.

Just have a look at the recent National Geographic Ultimate Factories series (particularly the episode about John Deere) and you’ll see what I mean.

 

The never-ending journey

When Ray Kurzweil talks about the future, he talks about a never-ending evolutionary journey involving nanobots, brain implants and goodness knows what else down the track.

I confess that as intriguing as this is, they are concepts that stretch beyond my meagre cerebral capacity.

But what I can see – what we all can see if we look – is that we are already well into this journey. That we – and the world around us – are changing faster and faster every day.

Whether we like it or not, these changes are demanding the constant reinvention of business practice on a scale none of us are used to: a scale that will only grow.

So embrace this change, be ready to grab the opportunities when they no doubt arise and keep this quote (one of my favourites) from Ralph Waldo Emerson in mind:

A foolish consistency is the hobgoblin of little minds, adored by little statesmen and philosophers and divines… speak what you think today in words as hard as cannon balls, and tomorrow speak what tomorrow thinks in hard words again, though it contradict everything you said today… Is it so bad then to be misunderstood? Pythagoras was misunderstood, and Socrates, and Jesus, and Luther, and Copernicus, and Galileo, and Newton, and every pure and wise spirit that ever took flesh. To be great is to be misunderstood….