Martin Gilbert: 'Impatience is a virtue'
Investors can play an important part in recognising innovations and accelerating their adoption
Fifty years ago this month, the Xerox Palo Alto Research Centre (PARC) opened in California. It went on to develop numerous important technologies, including the first computer with a mouse and graphical user interface (GUI). These innovations transformed our lives.
I was still at school back then. Today, our teachers' blackboard and chalk look like relics of a bygone age. But that is a very recent shift. It is only because of the Covid-19 pandemic that traditional classroom teaching has given way to iPads and Microsoft Teams. Parents may hope that this will be temporary, but the best aspects of distance learning are likely to persist.
Education is just one area in which the pandemic has accelerated technological change. Others are videoconferencing and working from home. The technologies and opportunities have been there for years - but in the past few months, we have all become a lot more familiar with Zoom.
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Thankfully, global pandemics are rare. But a sizeable lag between innovation and adoption is a well-established pattern. The enormous boost in productivity that occurred in the 1950s and 1960s came as a result of the slow diffusion of innovations developed in the 1920s and 30s. In those decades, a wave of patents swept across industries such as petrochemicals, mining, electrical utilities and telephony. It was those innovations that laid the foundations for the breakthroughs at Xerox PARC.
The Xerox innovations provide a further example. Crucial though the mouse and GUI are the way we live now, Xerox never commercialised the Alto, the first personal computer to include them. They did not enter our lives until Apple and Microsoft took advantage a decade later - and reaped the benefits.
So while we might think of our current online age as arriving through a revolutionary shift, it was actually the result of a gradual evolution. First came the rise of the semiconductor industry in the 1960s. That facilitated the development of personal computers and then their commercialisation, and that in turn led to the internet. And then we went online not only in our homes and offices, but perpetually - through mobile devices.
That process eventually allowed businesses to create a direct connection with their customers and to use data to understand consumer needs better and gain competitive advantage. The obvious examples are Netflix and Amazon. But both companies took the best part of two decades to establish their current hegemony. Remember when Netflix sent you DVDs in the post and Amazon was just an online bookstore?
Martin Gilbert: The times they are a-changin'
And while information technology dominates stockmarket headlines these days, the most important innovations are those that go well beyond the tech sector to utterly transform our lives. These are known as ‘general purpose technologies' (GPTs).
These GPTs are relatively few in number - some count just 24, including the wheel, the railway and the internet. The latest - still in its infancy - appears to be artificial intelligence (AI).
In the years ahead, AI - facilitated by ultra-fast internet speeds and advances in robotics - is likely to disrupt and transform virtually every industry. It may well be the answer to the current slump in productivity growth. And crucially, it could play an important part in recognising other innovations and accelerating their adoption.
Investors have a role to play in this too. By funding the best ideas early on, investors can help to accelerate their adoption - and in a much more benign way than Covid-19. The crucial thing is to ensure that game-changing innovations do not languish in development when they could be enabling progress today. As Ursula Burns, a former CEO of Xerox, once said, "Impatience is a virtue".
Martin Gilbert is chairman of Aberdeen Standard Investments
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