Of all the passions of mankind, the love of novelty most rules the mind. In search of this, from realm to realm we roam. Our fleets come loaded with every folly home —Shelby Foote, American historian and novelist
In our most recent strategic plan, we highlighted the Japanese word kanji-ii-kurashi. It’s difficult to translate into English, but essentially it means living as part of a community, simply, conscientiously, and in harmony — Masaaki Kanai, President of Ryōhin Keikaku (Muji brand of products) in HBR Jan-Feb 2018
We are chasing novelty but not for novelty’s sake. Instead, technologies end up widening the gap between the wealthy and the underprivileged. Most technologies are commercialized by the for-profit sector. Venture Capital, which now has a new form in Initial Coin Offerings, essentially supports innovation from a returns perspective. If all new technologies are funded with the objective of creating more money than the initial investment, it is not hard to understand why we see the unintended consequences of the technologies first and the remedial measures soon follow. The debate around misuse of social media as well as abuse of social media resulting in anxiety and depression is a classic example. Rampant speculation of crypto currencies and the Fitbit episode are all manifestations of the unintended consequences of innovation. This article examines some solutions to change incentives to redirect innovation to the masses or the common man first. Innovation, in that sense, should be crowdsourced through an ecosystem built on public and private partnership. While this concept may not be new, the tools to build such an ecosystem are. If only, we chose to use them to chase nobler goals.
Missing The Human Connection
Macaulay Culkin, once remarked in the movie Home Alone “I am 8 years old, TV’s my life”. Growing up, the personal computer certainly wasn’t my life. Let me rephrase, not until college at at least. I was not born a digital native but I empathize with one. In other words, my childhood was spent playing on grounds near and far. It was filled with the laughter of friends and a cacophony of sounds that feels normal in a typical, active childhood. I still remember my first childhood friend and a friendship not tainted by social media addiction.
I bet, for most of us, the memory of simple human relationships always brings a smile. Yet, with the dawn of the personal computer, things changed. When the reflection of reality in a virtual world called the Internet was more seductive than reality itself, it was hard to resist surfing the Internet.
Today, I am afraid I suffer from social media addiction. A fact I am not proud of. The good news is I am actively trying to reduce my time on non productive, dopamine inducing activities. The alternative is the good old fashioned habit of reading books.
Money Is Always In The Equation
In 2016, the amount of charitable giving in the US totaled to approximately $390 billion. The crypto currency market in a very short time has a market capitalization of $474 billion — a lot of it is a result of pure speculation.
As per research (High End Bias) performed by Ronny Reinhardt and referenced in the January-February 2018 issue of the Harvard Business Review, managers generally have an implicit bias to make products that are upscale possibly because of society placing a premium on high status. Even though innovation can be targeted towards the lower scale, managers end up targeting it towards more upscale solutions.
Unless we invent a more universally accepted medium of exchange and store of value, the pursuit of money will always dominate our consciousness and most of our endeavors will be guided by a singular motivation.
The Fascination of Science Fiction With Dystopia
I have always wondered: why is the future in many movies dystopian? Perhaps, because the humans react more instinctively to crisis and bad news. Or, perhaps, science fiction has always focused on the uninhibited negative effects of technology resulting in a scenario where the super rich live in a utopian Elysium while the common people live under dark clouds and neon signs blanketed by acid rain.
While such a savage world doesn’t exist yet, science fiction is a result of asking the question: what if disruptive technologies get out of hand? A question whose time has certainly come.
Turning The Logic On It’s Head
Generally speaking, most advanced technologies get funded by for profit enterprises or the military. The for profit enterprises, naturally look for profits to build more capital. The cycle of capitalism continues unbroken with the result that the benefits of technologies seldom reach the poorest income brackets. In a world where wealth is the universal goal and money is the most important yardstick of growth, it is easy to understand why.
By its very nature, capital flows to the highest return. Venture capital, which is one of the primary sources of funding innovation, also seeks a healthy return at the end. There are very few instances where funding for innovation is directed towards technologies with solely altruistic purposes. While it is much easier said than done, few solutions are worth exploring:
- Today, an entire ecosytem including an Impact Investing Exchange (IIX, Mauritius) is mushrooming to support social enterprises. Impact investing from corporates, impact VC funds, billionaires is growing. BNY Mellon defines social finance as any investing activity that generates financial returns but includes a social or environmental impact. The Global Impact Investing Network is a nonprofit coordinating activities across the globe.
2. With democratization of technologies and crowdsourcing, it is easy to build an eco system of entrepreneurs, suppliers, government representatives and the common people to create innovation that targets the masses instead of focusing on wealthy and sometimes the only early adopters. Thus, there is a need to change our mindset towards innovation to bring it to the masses.
3. Donor Advised Funds (DAF) are not a new way of doing charity. However, they are now increasingly being used in the US as a way to do charity. In a donor advised fund, the donor opens an account at a financial institution such as a bank. The donor doesn’t have to donate immediately. Rather, he/she can take his/her time and donate once ready. These contributions qualify for a tax break. In 2015, there were roughly 269,000 donor advised funds in the US managing $78 Billion in assets. While charity is not the same as funding social enterprises through public and private debt, it is a noble cause that bridges the gap between the short and the long term.
4. Utilizing technologies such as the Blockchain to track and provide funds to the weakest sections of society. Unfortunately, Blockchains are being used to create financial bubbles today.
5. Larry Fink, the CEO of the largest asset manager in the world BlackRock urged his fellow CEO’s of Fortune 500 companies to steer their organizations towards a higher social purpose. In fact, dedicating a portion of profits to support entrepreneurs that are motivated to use disruptive technologies towards the greater good will not only create employment but also direct funds to worthy causes.
6. Academia can play a major role as well. I remember the example of Pranav Mistry, a student at MIT that invented sixth sense technology — a completely new way to interact with computers. However, what’s remarkable is the fact that Pranav was quick to declare that he will provide the technology only for the betterment of the underprivileged. Thus, research that focuses on practical, grass roots solutions which are tried and tested in some of the worlds most underprivileged regions is a must.
Many people say capitalism and democracy are broken. Flawed even. However, what many don’t have is a workable, practical replacement of both the economic and political systems they criticize. It is much harder to tear down the entire system and create a new one in its place assuming the new system will also have its flaws. Secondly, time is running out. Instead, reorienting capitalism towards a higher purpose is a good middle path.
It is also not the case that CEO’s of businesses aren’t aware of their social responsibilities but educating shareholders to change their mindset is a great challenge. One that truly begins by redefining real success as living for others. Thus, an education in character is indispensable in most schools today.
The ends justify the means, they say. This is no more evident today than in the world of innovation. Cryptocurrencies have become icons of greed and rampant speculation, autonomous vehicles can obviously not be afforded by masses at the outset, there is already a lot of research around curbing the unintended consequences of AI and algorithms can be used to widen inequality.
While the answer is glaringly simple, it is impossible to achieve unless we change the existing incentive structures in a world that is generally chasing profits and capital accretion. Developing technologies to benefit humanity beginning with the weakest sections is a noble goal. However, when the whole world speaks the language of money, it is impossible to achieve.
Therefore, it is imperative that we all do our best in turning the tide. Perhaps by starting something new or by supporting those who are directing innovation to benefit the disenfranchised.
Dystopia can be avoided if and only if we have the will to live as humans.