Patrick Schwerdtfeger is a business futurist specializing in technology trends including big data, artificial intelligence and blockchain. Patrick is the author of the book Anarchy, Inc.: Profiting in a Decentralized World with Artificial Intelligence and Blockchain (2018, Authority Publishing) and a former speaker for Bloomberg TV. He has lectured at various academic institutions including Purdue and Stanford Universities. The macro trend from centralized to decentralized power structures is sowing the seeds of anarchy in our society and businesses need to understand these trends in order to thrive in tomorrow’s economy. Patrick’s keynote program on decentralization and anarchy will explain the tribal, individualistic and increasing self-reliance we see growing within our cultures, contributing to movements such as Brexit, Donald Trump, the Tea Party, Black Lives Matter and Occupy Wall Street.

Anarchy is coming! Will you be ready?

Profiting in the new economy will take vision, boldness, and knowledge which is why Anarchy, Inc. is a must-read for the leaders of today … and tomorrow!

Jerry Ross

President, National Entrepreneur Center

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Excerpt from “Anarchy, Inc.” (which is being released in March 2018)

When Costs Collapse, Innovation Thrives

The fundamental ingredient in modern technology is data. Data processing, data bandwidth, and data storage form the backbone of all digital technologies. Over the past sixty years, the cost structure of that processing, bandwidth, and storage has collapsed. Let’s look at data storage. In particular, let’s look at the cost of storing one terabyte of data. Just to review:

1,000 bytes = 1 kilobyte (KB)
1,000 KB = 1 megabyte (MB)
1,000 MB = 1 gigabyte (GB)
1,000 GB = 1 terabyte (TB)

In 2000, the cost of storing one terabyte of data was about $17,000. In 2020, the cost is anticipated to be just $3 for the exact same thing (Amazon S3 “glacier storage” pricing was $4/TB in 2018). Think about that. In just twenty years, the cost will have dropped by 99.98%. And it’s not just happening in data storage. The same thing is happening in data bandwidth and data processing.

That’s the nature of exponential growth. Technology is evolving along an exponential curve. When people think about exponential curves, they automatically think about the hockey stick curve that launches practically vertical on the right-hand side of the graph, and that’s exactly what the line does. The capabilities explode over time. But the inverse is that the cost of any one capability plummets.

That’s what’s happening in the data space. Costs are plummeting. Everything involving data is becoming cheaper—quickly! Everybody is going to be in the data business in the future. What would happen in your industry if all of your competitors were fully leveraging data in their businesses? Today, it might still be a competitive advantage to be data-driven. Tomorrow, it will be a competitive disadvantage not to be.

Exponential Thinking

Business leaders need to think exponentially. Unfortunately, humans are hardwired to think in linear terms. That’s our instinct. It’s unnatural to think in exponential terms. The numbers expand too quickly after a while. The growth seems impossible.

There’s a parable of an Indian ruler who wanted to reward a wise man who invented the game of chess. The wise man could pick a reward of his choosing. He requested one grain of rice for the first square of the chessboard, two grains of rice on the second, four on the third, eight on the fourth, and doubling on each square thereafter. Initially, it seems quite reasonable. But after about half the board, the numbers start multiplying at an insane pace. By the last square, the wise man would receive more rice than the country’s entire annual harvest.

Another classic example of exponential growth involves lily pads growing on a pond. Every day, the number of lily pads doubles. On the 30th day, the pond is 100% covered by lily pads. The question is: When was it just 50% covered?

The answer is the 29th day. If the number of lily pads doubles each day, and the pond is completely covered on the 30th day, it would be only 50% covered on the 29th day, one day earlier. It seems counterintuitive at first, but it makes perfect sense when thinking exponentially.

That’s what business leaders need to do. It’s not natural. You literally need to coach yourself to think exponentially. I do that myself. Exponential thinking can be learned. It’s like a muscle. You get better at it with practice. Make it an essential part of each day. Remind yourself constantly to think in exponential terms.

What could you do if your analytics were 10 times more powerful than they are today?

What could you do if the software was 1/10th the price that it is today?

Who would invest in this technology if it cost 1/100th of the current price?

The Human Genome Project, started in 1990, is one of the best real-life examples of exponential progress. By 1997, seven years after the project began, they had only completed 1% of the job. With that announcement, many scientists assumed they’d need another 700 years to finish the project. But of course, that’s not what happened. There were a few people who understood that at the time.

Ray Kurzweil, author of among others The Singularity Is Near, founder of Singularity University and Director of Engineering at Google, is well known for thinking exponentially. He’s been predicting the future for decades with remarkable success, and he looked at the genome situation very differently. He said, “If we’re at 1%, we’re almost done.” Think about that! “If we’re at 1%, we’re halfway there.” From a linear perspective, it seems impossible. But exponentially, it makes sense.

If something is scaling at 100% per year (in other words, it’s doubling every year), how many years does it take to get from 1% to 100%? The answer is about six and a half years. In the first year, 1% goes to 2%. In the second, 2% goes to 4%, then 8%, then 16%, then 32%, and then 64%. That’s the sixth year. So in the seventh year, you pop up over 100%. In an exponential environment, progress happens quickly!

That’s exactly what happened. The project was completed in April 2003, slightly ahead of that schedule. Since then, the cost of sequencing the human genome has dropped from $2.7 billion to under $1,000 today. Raymond McCauley, Chair of Digital Biology at Singularity University, believes it’ll cost just pennies by 2020. That’s the power of exponential growth.

Solar power is another area that’s evolving along an exponential curve. It’s not scaling at 100% per year. Instead, it’s been scaling at about 25% per year recently. But at that rate, with global energy consumption growing at about 1.8% per year, solar power could supply global demand as early as 2041.

We don’t yet know if those trends will continue into the future. There are lots of variables involved. But if the current growth rates continue, solar power could play a dominant role in the global energy mix within twenty years, and that’s regardless of who’s in the White House. Technology is completely independent of politics. When looking at a chart of technological innovation, major political events (like the Vietnam War, 9/11, or the 2008 financial crisis) have almost no impact at all. Technology continues to evolve either way.