In the opening session of the 66th CFA Institute Annual Conference in Singapore, Vijay Vaitheeswaran, author and award-winning correspondent for the Economist, quoted Mahatma Gandhi, who, when asked whether he thought India could follow the British model of industrial development, said, “It took Britain half the resources of this planet to achieve its prosperity. How many planets will India require for development?”
Today, the challenge of sustainable development in a world of finite resources seems greater than ever. “We’ve entered a century of wicked global problems we have yet to come to grips with,” warned Vaitheeswaran, author of Need, Speed, and Greed: How the New Rules of Innovation Can Transform Businesses, Propel Nations to Greatness, and Tame the World’s Most Wicked Problems.
But while terrorism and financial crises continue to grab headlines, he believes that, as serious as these issues are, they pale when compared with three mega-trends humanity must address in the coming decades — and which are likely to affect all of our lives:
- The trend of urbanization that will place 70% of the earth’s peoples in cities by mid-century;
- Demographic trends that will inevitably result in older and longer-living populations; and
- The continued economic rise of China, India, and other emerging countries, which Vaitheeswaran expects could amount to a transformative economic force akin to the discovery of the New World.
The combined impact of these three mega-trends will be like nothing the world has ever seen — a “perfect storm” that will put immense pressure on the world’s resources and man’s capacity to solve problems. Meeting these challenges will require a bolder and more ambitious approach than we can imagine.
“Some say it is beyond us, that this must inevitably lead to conflict and war,” said Vaitheeswaran. “Others maintain that growth must stop, that only conservation will help us, but I reject the notion of the ‘population bomb’ (espoused by Paul Ehrlich in 1968), and the limits-to-growth thesis of the Club of Rome.” He said these dire forecasts failed to take into account the Green Revolution and other innovations that were market responses to the challenges of scarcity. Likewise, the promise of future innovations provides hope for the future. “There’s nothing wrong with conservation,” said Vaitheeswaran. “But it won’t save the world.” He has faith, however, in human ingenuity — “the world’s infinite natural resource.”
Vaitheeswaran believes that true innovation — born of incentives, self-interest, and market forces — could be the source of currently unimaginable solutions to the seemingly intractable problems facing the world. The key is recognizing that innovation is not the same as invention, but is instead “fresh thinking that creates value.” He went on to outline his three rules of innovation that he believes should be encouraged and followed by governments, organizations, and individuals:
- Move nimbly: Advances in technology and connectivity allow ideas to spread faster than ever before in history. Product life cycles have been drastically reduced, and organizations around the world must “move at the speed of China” to stay relevant.
- Open wisely: Collaboration and the power of incentives are transforming entire industries as crowd-sourcing and open collaboration remove barriers and foster the development of transformative ideas. As an example, Vaitheeswaran cited a collaborative team that won a Netflix (NFLX) open-source code-writing competition but had never met until the day they collected their prize.
- Fail gracefully: Abandon failures quickly, learn from the experience, and move on to other opportunities (a notion “often said but bloody hard to do,” said Vaitheeswaran, because people don’t like to give up on their ideas).
In response to the suggestion that financial innovation was the root of the financial crisis we still live with today, Vaitheeswaran was quick to note that financial innovations throughout history have been enormously valuable to society, citing the development of paper currency and life insurance as just two examples that have had enormous positive impacts. “But novelty is not necessarily innovation, and finance should be held to that standard,” he said. True innovation should create enduring value for society, “and finance let us down on that front.”
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