Author Talks: Azeem Azhar on closing the exponential gap

In this edition of Author Talks, McKinsey Global Publishing’s Raju Narisetti chats with Azeem Azhar, creator of the Exponential View newsletter. In Azhar’s new book, The Exponential Age: How Accelerating Technology Is Transforming Business, Politics and Society (Diversion Books, September 2021)—in the United Kingdom, Exponential: How to Bridge the Gap Between Society and Technology (Random House Business, September 2021)—he explores the widening gap among AI, automation, and big data, and our ability to deal with its effects. An edited version of the conversation follows.

Why is it a good time for a book like this?

I have been thinking about this for a while. I felt that there was something missing in the public discussion about technologies, their opportunities, their costs, and the questions of power that emerge around them. What I’d hoped to do was to provide a road map—a tour guide—of this near future so that readers can start to understand what is real about these technologies in the way that they behave. What can we, as members of society, do to shape their direction? What really are the underlying causes, rather than the symptoms, for many of the technology-oriented frictions that we feel in society now?

Are we in an ‘exponential age’ now?

The “exponential age” is a point at which the advancement of technology is so rapid that the technologies are getting dramatically cheaper. Or on the other side, they’re getting much, much better at a pace that is felt within a business cycle or within a couple of years, not across decades. And what that means is that their impact is felt now.

When I started to write the book, the app TikTok didn’t really have an impact. And by the time the book was published 18 or 20 months later, TikTok was the most downloaded app on the planet. My argument is that this sense of instability genuinely is speeding up, and there was a moment four, five, six years ago where we could feel the speed materially change.

The technologies shaping society

Tell us about general-purpose technologies and your four domains.

A general-purpose technology is extremely important. They are so broadly applicable that they impact society left, right, up, and down and for generations to come, such as the printing press or electricity. What I identified were four families of technologies—computing, energy, biology, and manufacturing—that were broadly applicable, could be used in many different parts of our economies, and were all changing at these exponential rates.

On computing

We’re familiar with computing; computers have gotten more and more powerful over the last 60 years. But what happened in the period of about 2011 to 2015 was an AI boom that created enormous demands for new computing. And entrepreneurs and businesses responded by creating even more powerful chips, providing the comp computational capacity that was required in this new application.

On energy

In the field of energy, specifically renewable energy, around 2016, electricity generated by solar power became the cheapest form of electricity in many, many parts of the world. So the “green premium” related to wanting to have clean and sustainable energy fell to zero. And that’s quite important economically, but there’s a power dimension to this: solar energy is much more equitably distributed than oil is. The countries with the most oil reserves have a million times more oil per square mile than those with the least. When you look at insolation—that is, the energy that comes from the sun—the most well-endowed country only has four times as much as the least well endowed. So that’s disruptive in and of itself.

On biology

The third area is the area of biology, where scientists and engineers are able to apply new technologies to learn from the beauty and the elegance of nature. And rather than having to produce chemicals and materials through explosive industrial processes, we’re able to fine-tune microorganisms to produce useful materials, better foods, or therapies.

On manufacturing

The last area, which is most nascent, is in the field of manufacturing. In recent years, through 3-D printing, we’ve been able to much more precisely build small components and then ever-bigger components and start to use more and more diverse materials. One of my friends works in an office building that was 3-D printed from cement. The beauty of 3-D printing is that it’s very local, it can be very precise, and it can use far fewer materials than traditional manufacturing methods.

So our future is itself being reshaped at the intersections of these four domains?

General-purpose technologies shape societies in tremendous ways. And we can think, absolutely, of the car and electricity and how, together, they brought mass production and factories and factory jobs. And those had knock-on effects, like the creation of suburbs and then of welfare nets. So we’ve understood this because we’ve lived it before. The domains that we have today are very broadly applicable across our economies. And as they intersect, they create many, many new opportunities.

As these domains intersect, we should expect there to be second- and third-order effects across our economies, across our geopolitics, across the ways in which we live our lives. For example, within the field of the economy, one of the things I identify is that these technologies facilitate and enable superstar companies, a winner-takes-most market. I call them “unlimited companies,” larger than we’ve ever seen before. They make us think about competition in markets very differently.

In the arena of employment law and the workforce, you start to see a shift away from traditional permanent employment toward more gig working, more algorithmic management. Which prompts many questions about the balance of power among capital, or the employer, and labor, or the worker, in the area of trade and economic geography. There’s a very curious trend: these new technologies start to encourage much more local production. They provide headwinds against the idea of large-scale global supply chains, and that’s perhaps an unexpected result.

In the area of conflict among nations and among malignant actors working on behalf of nations, what I see coming out is a very febrile environment. Perhaps there won’t be so many kinetic wars of bombs being flung from one country to another. But there will be a constant backdrop of cyberattacks and disinformation—and potentially more.

I think the final, most challenging area is the area of the public sphere, the civic space, where our governing takes place, where the processes of accountability between the state and the citizen occur. One of the things that’s happened because of the power of these new technologies is that the new domains of our activity that we might have thought should have existed in the public sphere—and be governed by the public—are increasingly happening in the private sphere, in the private domains of technology platforms. And decision making is being taken not by accountable, elected representatives—and we may not like the decisions they take, but they are at least accountable to us—but by executives with incentives that are perhaps not those of the wider society.

Isn’t growing nationalism a major challenge for our exponential opportunities?

There is a tension, and that tension revolves around the nation-state. The nation-state may be too small for some of the problems that we face, whether climate change, pandemics, or cyberrisks. And it may be the wrong scale for tackling many of the other issues that we have to deal with, such as air quality in cities, pollution, and where the first impacts of climate change will be felt—which is where people live: in those cities.

One of the things we need to do is figure out how we create the right scale of cooperation. And one of the most important ones will be dealing with those large-scale, transnational issues that no nation can possibly hope to solve on its own. I’m not very optimistic about existing institutions being able to do that. They were designed to do something else, and so asking them to operate in the, say, exponential space is challenging. But I do think that there are small green shoots of optimism that we can look at.

I mean, during the COVID-19 pandemic, an enormous amount of work was conducted in the public space, in the commons, with scientists sharing their knowledge, their know-how, and their research with each other. And we’ve also started to see, in some cases, groups of countries coming together to say, “We need to have some form of common standard that is broader than our borders.”

We can look at geopolitical fracturing. But we should also recognize that, for example, the European Union has stood up and been very well-intentioned and evocative around how we need to regulate the negative impacts of certain things, like digitally based companies and AI—or at least the harmful uses of it.

In the book, I talk about three values that I think are important for navigating the exponential age: commonality, flexibility, and resilience. The idea of commonality is the idea that we might come together and agree that we have a collective outcome that we might want to achieve. How we go about doing that is often constrained by the technologies of the day. And of course, the internet has provided some really great tools to help us coordinate. Whatever you’re interested in, you can find an interest group on the internet and connect with it. And just coming down the pipeline is the use of blockchains and token governance to help bring communities together and create mechanisms for them to allocate resources to tackle whatever present issues they might need to deal with.

So I think that we do have not only some interesting case studies that have emerged—Wikipedia, genome databases, banks, and others—but also some emergent technologies that might actually facilitate some of the challenges. They might eliminate some of the reasons why network-based decision making had always lost out to the centralized power of the profit-seeking firm.

The path to promise

What surprised you when you were researching this book?

One very pleasant surprise was how good the thinking by academics over the previous decades was—how pertinent it was, how insightful it was, and how applicable it was. One slightly less pleasant insight was realizing that many of the trends I’d identified had been going on for decades. For example, one of the trends that I think is a consequence of the exponential age and the nature of complex technologies—and in particular, complex knowledge economies—is the decline of the share of national income that goes to the worker relative to capital.

And that was a trend that had been running for nearly 50 years and one that I think continues unless we come in and take remedial steps. So part of the disappointment was also part of the frustration and part of the opportunity that drove me to write the book: these things are going on now, we’re not drawing attention to them, and we’re not doing anything about them.

You seem to believe collective action will help workers in this age. Can you explain?

Types of tech collective action have really struggled in Silicon Valley. There’s no long-term political-historical culture for it over there. But you are starting to see more and more collective action, often supported by changes in legislation. That starts to send out a signal about the balance of power. Once we start to see that power shift, we can feel that things are moving in the right direction. I don’t necessarily think you have to successfully organize to have the impact that you want. Even the threat to organize might give you that impact.

But there is another thing that we have to consider: these companies all succeed by the quality of the people who work for them. And I think books like mine and others draw attention to the fact that there are incredible benefits, including human benefits, from new technologies that don’t necessarily reside in some of the eponymous giants of the technology industry. And once that becomes more widely known, then talent will sit down and say, “Do I really want to optimize an online advertising platform? Or would I rather go out and work on some kind of issue, like how to tackle the intermittency problem with renewable power or how to use machine learning to improve agricultural yields?”

I don’t necessarily think you have to successfully organize to have the impact that you want. Even the threat to organize might give you that impact.

We are starting to see that shift, as well. I think this is about telling the stories partly to identify the problematics but also to identify how we can navigate our way through them. And I don’t know if I’m an optimist or a pessimist, but I know that optimists tend to get things done.

What was your experience as a first-time book author?

As a first-time author, I went through an incredible learning curve. I really loved going into great depth in subjects that I had only ever skimmed. And therein lies one of the lessons: most of that depth doesn’t make it into the book, because my editor understood the mission of the book and would always be pulling me back. And I have many thousands of what I think are beautiful words that haven’t seen the light of day.

For anyone who is thinking about writing a book, I strongly recommend it; it’s an incredible process. Start with a reasonable hypothesis, a reasonable idea that you have that holds water. And try to stay true to it as you go off and do your research and writing.

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