The 1 billion-metre step

Food as software, ultra-fast tube travel and failure bonuses – welcome to the exponential world of Salim Ismail, in New Zealand this week for Callaghan Innovation’s Mind Altering Substance speaking tour.

By Sara McFall, Callaghan Innovation’s External Relations Programme Manager

Salim Ismail is the founding executive director of Singularity University, a NASA-hosted, Silicon Valley institution whose mission is no less than “solving humanity’s grand problems”. This type of massive unifying goal is a hallmark of the exponential organisations that Ismail specialises in studying, writing and talking publicly about.

Salim Ismail in Christchurch. Pic: Jonny Knopp, Peanut Productions

Salim Ismail in Christchurch. Pic: Jonny Knopp, Peanut Productions

Ismail came to Singularity University from – among other places – Yahoo, where we he was VP and Head of Brickhouse, Yahoo’s internal incubator. It exposed him to disruptive technologies and the methods of the new entrepreneurs. It also exposed him to some of the inherent challenges organisations face in dealing with the rapid change exponential organisations bring.

So what makes an organisation exponential? Ismail explains it by explaining the concept of exponential growth.

Linear growth goes 1, 2, 3, 4 and so on. If you take 30 steps, with the first step being one metre, you travel 30 metres. You can see your end point before you start.

Exponential growth goes 1, 2, 4, 8 and so on. In an exponential world, your first step is one metre, your second two metres, and your 30th step takes you 1 billion metres – 28 times around the world.

In real terms, this means the capacity of computation is doubling every year, the price performance of solar energy is doubling every two years. For UAVs (drones), the rate of price performance is even faster – doubling every nine months!

Not surprisingly, Ismail concedes human beings have difficulty plotting our place on an exponential progression – this cognitive flaw affects even those who work in the industries undergoing such rapid change.

Salim Ismail is interviewed by a journalist in Wellington

Salim Ismail is interviewed by a journalist in Wellington

So why do exponential organisations matter? The answer is that in the world of disruptive technology, the small fish eat the big ones – a big company, used to gobbling its small rivals, is instead nibbled to death in a surprisingly swift and efficient manner.

Ismail says a new generation of entrepreneurs is bringing with it not only new ideas, but entirely new ways of doing business.

Rather than create a novel technology and deal in scarcity by selling it exclusively to the highest bidder, exponential organisations are run by people happy to thrive on abundance – open-sourcing their ideas and letting others adapt and improve them.

Ismail provides two examples that deal with fundamental human needs – food and transport.

Soylent is a ‘meal’ in liquid form devised to contain all the proteins, fats and nutrients the human body needs. The idea being that its deviser – a software engineer – could maintain a healthy diet through the most convenient single food source available, leaving more time for coding software.

Not surprisingly, the recipe has been delivered as a sort of open sourced code, added to by others, and updated with version numbers (FYI: version 1.3 gives you gas).

Another example is the Hyperloop – a concept from electric car and space exploration pioneer Elon Musk. The Hyperloop would shoot passengers through pipelines across vast distances at top speeds of 1200 km/h. The current concept would technically kill its passengers, but Musk is undeterred, and has shared his designs widely with the express hope that others can improve them and overcome the current flaws.

Pic: Jonny Knopp, Peanut Productions

Pic: Jonny Knopp, Peanut Productions

If giving away your IP sounds counter-intuitive, it shouldn’t be, says Ismail.

“Entrepreneurship is not economically rational. Entrepreneurs are driven to solve problems, not make money.”

And this is where the concept of exponential organisations really becomes important.

If the aim is to solve a massive problem, and the reach of technology can be expected to grow faster and faster over time, the scale of problem-solving becomes truly global.

Soylent could resolve food security for vast tracts of the developing world. Solar power could resolve the entire planet’s energy needs. UAVs with power and range could make the unreliable roading network in rural areas of Africa and Asia redundant, delivering food and medicine to millions at low cost.

Of course, not all the problems the new entrepreneurs seek to resolve are altruistic. Those same drones could help to drop drugs, money and phones to prisoners, for instance.

Neither are these changes purely charitable. Ismail points out that cheap technology such as $10 tablets and smart phones is opening up third world markets on a scale and speed never before envisaged.

“The biggest marketplace in the history of humanity is being built under our noses, right now.”

Which is not to say exponential organisations are not without their challenges.

For starters, says Ismail, exponential change can’t be slowed. As an example, he cites attempts by traditional energy companies to buy-out and shut down their solar competitors. When there are thousands of solar companies, the strategy fails.

You can’t fight, you have to adapt, or be disrupted.

And, says Ismail, big organisations find it hard to change. In fact they have what he calls an immune system, set up to neutralise risk-taking and keep the organisation onto its core business path.

Firms have to create an appetite for risk. At Indian automotive giant Tata, the boss awards prestigious bonuses for the biggest operational risk that failed, reinforcing that trying and failing is less damaging to the company than failing to try.

At Amazon, the default answer to any new idea has to be yes. A boss trying to nix a concept has to write a two-page business case and publish it across the company, creating stigma around risk aversion.

But Ismail says internal disruption can’t be artificially employed across a firm. It needs to adhere as much as possible to culture of the start-up – underfunded and under the radar, in case the immune system is alerted.  Salim talks about black-ops teams working at the edge of large companies – a model successfully employed by Apple.

Government is also vulnerable to the pace of change. Take stem-cell research, heavily restricted in the US between 2001 and 2004. In that time, developments continued apace – but in other countries. The US went from world leader in stem cell research, to number eight.

So what does Ismail’s crystal ball (or more likely, crystal ball-disrupting app) say is the next big trend to explode? He plumps for micro-payments. Using the block chain technology BitCoin holders use for transactions removes banks from the equation and eventually drops the cost of online transactions to a few thousandths of a cent.

This opens up a world of short-term usage rather than permanent ownership. You could now borrow some of your friend’s WiFi for a few minutes for half a cent, for instance.

After that – who knows? An exponential curve will be gathering pace.

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About Callaghan Innovation

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