Emerging Tech and Science: We are getting better every day, and that’s good news for the planet

No industry is untouched by technology. Innovation is racing ahead to make everything bigger, better, faster, and cheaper.

technology, science, climate change, technology change, what is ChatGPT, news
Technology is becoming the heart and soul of every company’s growth strategy.

By Anurag Bansal

Do not bet against the technology sector. The industry has bounced back historically from setbacks with a vengeance, and there is no reason it will not do so again.

The pace of innovations and convergence of exponential technologies are gathering unprecedented momentum to solve global challenges, including climate change. Doing so will inevitably disrupt the old business models giving way to new ones—creative destruction in action! Joseph Schumpeter, in 1942 first characterized creative destruction as innovations in the manufacturing process that increase productivity, describing it as the “process of industrial mutation that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one.”

Technology investments have created immense wealth over the last few decades. However, the innate nature of technology is growth-oriented, which means a higher risk and higher return. Therefore, in risk-averse environments such as now, the markets may reduce investments, which leads to a correction in the sector. Here, I’m not primarily talking about the companies like Alphabet and Meta that generate revenues primarily by advertising, but the IT companies that sell technology-related hardware and software. The sector has witnessed steep stock price declines periodically, often more than broader markets leading many to believe that the industry could remain in a bear market for long periods. 

2022 was one of them, which many referred to as the “tech wreck of 2022,” assuming that the IT sectors’ best days may be over, at least for the foreseeable future. The rising interest rates, geopolitical fragility, and the fear of supply chain disruption have hit technology stocks and their IPO market. An analysis by Meritech suggests that the cumulative market capitalization of the fastest-growing software-as-a-service (SaaS) stocks had fallen almost 70%. The technology sector’s IPO volume has reduced by 80% y-o-y in the first half of 2022, while the number of late-stage financing rounds collapsed for emerging startup companies.

But, as the below chart (S&P Tech Index and MSCI World IT Index compared to S&P 500 Index) shows, over the last 25 years, the technology sector has fallen in a risk-off environment and has bounced back faster and stronger than the rest of the market after that. Although the index considered here has companies like Alphabet and Meta, the outperformance still holds without them.

Would you bet against the turnaround in the technology sector, especially now that innovations are accelerating, creating more value for each company and industry besides solving grand challenges? I will not!

The technological advancements have reached a point where they themselves provide further resources for faster innovation. Ray Kurzweil describes this as the “Law of Accelerating Returns.”

Consider this; until a decade ago, every country seems to like solar as a solution to carbon emissions from power generation. Novel innovations in bringing down the cost of installing solar, becoming comparable to fossil fuel, pushed the governments in its favor. Now, every government around the world has ambitious solar deployment goals. Last year, a record $1.1 trillion was invested in clean energy transition worldwide.

We all know the transformation bought by the advent of smartphones. Remember how quickly landlines gave way to mobile phones; now, smartphones are pervasive. It democratized and demonetized several services and products we used separately. We now even have Wi-Fi on a plane, 34,000 feet in the sky; it was unthinkable just a few years ago. Imagine how much business activity will increase and social upliftment will happen when the rest of the unconnected world can access the internet through programs such as Elon Musk’s OneWeb program.

The disruption is not limited to a country or a particular economic sector. Technology is becoming the heart and soul of every company’s growth strategy. No industry is untouched by technology. Innovation is racing ahead to make everything bigger, better, faster, and cheaper.

Every company is integrating technology to connect closely with customers in every corner of the world, innovate rapidly, and gain efficiency in operations. Cloud computing helped us navigate the tough times during COVID-19, and businesses could still operate with remote work amid lockdowns. Industrial processes and the services sector are digitizing, and decisions are being made using data, where digital twins are helping virtually see possible outcomes of a specific solution and adjust accordingly to get desired results. AI/ML and the internet of things are becoming pervasive in decision-making. DNA sequencing and gene editing are promising to treat and even cure chronic conditions, expanding a healthy lifespan. Imagine the disruption ChatGPT is creating in various industries.

Human evolution may have reached its pinnacle in physicality, but our mind is boundless and will keep evolving and innovating. In our lifetime, we will likely see paradigm shifts in how we live, interact, do commerce, and travel, along with solutions to leave the planet better than we inherited.

(Anurag Bansal is a Disruption Analyst. He helps understand how one can utilize unprecedented innovation (hardware) with creative imagination, a positive mindset, and organized action (software). Views expressed here are personal and do not represent any institution or entity)

Get live Share Market updates and latest India News and business news on Financial Express. Download Financial Express App for latest business news.

First published on: 18-02-2023 at 12:40 IST
Exit mobile version