Over the course of my career, I’ve seen technology advance at a breathtaking pace.
I began my professional journey at McKinsey in the ‘90s, when the internet was still in relative infancy. In January, I spoke to a CEO who used ChatGPT to craft his family’s holiday card—and in the handful of months since, it’s become clear that generative AI has the potential to unleash the next wave of productivity. As they say, life moves fast.
Against this backdrop, it was a privilege to speak with Andrew McAfee—cofounder and codirector of the Initiative on the Digital Economy and a principal research scientist at Massachusetts Institute of Technology—about the impact of technology on our world.
Andrew is a leading expert on the digital economy and how technology is transforming the way companies operate, compete, and organize themselves. Our conversation was nothing short of fascinating —but what struck me most was Andrew’s perspective on technology as a force for good.
The world is divided on the broad consequences of technology. But despite legitimate worries about privacy, trust, security, and more, I found myself nodding in agreement with Andrew’s stance: technology is integral to addressing the world’s biggest challenges, and holds the key to unlocking its most exciting opportunities. Transforming energy systems, advancing scientific discoveries, and driving equitable, broad-based wealth creation—technology is central to all of it.
Said differently: if applied correctly, technology can be a tremendously positive force for humankind.
Andrew, let’s start with the basics. Can you set the stage with a short perspective on the impact of the digital economy and how it’s shaping our world?
One way to approach this very big topic is to start with the view that economists take.
Occasionally, a technology emerges that is so powerful it interrupts and accelerates the normal march of economic progress. This doesn’t happen often, but when it does, it puts humanity on a different trajectory. The classic example is the invention of the steam engine and the ensuing Industrial Revolution.
Most economists would say that the bundle of digital technologies we have today belong in this category. And we can debate what we want to put in that bundle. Do we kick it off with the mainframe, the PC, the web, the smartphone, or maybe AI? Or is it some combination of all these technologies? I’m less interested in what belongs in the exact bundle and more interested in the fact that we are living through a period where technology has profoundly changed the game.
I’ve spent a lot of time studying the industrial technology sector—or the Titanium Economy. This is an industry seeing significant disruption due to technology. Do you believe there is a connection between Titanium Economy companies and the digital economy in terms of supporting the innovations of the future?
I find it fascinating when companies in the Titanium Economy confront the kinds of disruption that has transformed other sectors. Take consumer electronics. That industry is very, very different now than it was even 20 years ago. The incumbents have largely been displaced and replaced by digital upstarts.
The thing to keep an eye on is what happens when the geeks show up and want to take on the incumbents in the Titanium Economy. And I define “geeks” here in a fairly specific way. I mean people who are not just investing in technology or creating technology for a living, but people who look at the way a company is run and say, “Wait a minute. We can do things in a fundamentally different way.”
Electrification is a good example; it was profoundly disruptive. When we went back and looked at why it was so disruptive, it was because the people who were running factories in the era of steam couldn’t visualize or accept all the possibilities that were offered by electrification.
I believe that the incumbents of the industrial era are now being confronted with new possibilities for running their organizations differently. It will be interesting to see whether they will accept these opportunities and bring on new possibilities.
What I’ve observed is when the geeks come to town and take on an incumbent, they generally win. The geeks are obsessed with speed, iteration, experimentation, and delivering value on a very rapid cycle. The title of the book that I’m finishing right now is actually The Geek Way. Within it, I contrast the geek way with the traditional playbook built up over the industrial era.
What I’m hearing from you, Andrew, is that you believe innovation is enabled in large part via a focus on speed and learning through doing.
Yes, these are two central themes in The Geek Way. Speed, of course, is critical: increasing the pace and cadence with which you deliver something while also ensuring that it actually works. But just as important is a commitment to learning.
It turns out that the way humans learn is not primarily by studying. Rather, we learn by watching the people around us, finding those who are good at what they do, and picking up and integrating their behavior.
When I look at the rapid progress that geek companies make, much can be traced back to their high rates of learning. The work is often more visible and has a fast iteration cycle; you learn very quickly what works and what doesn’t. This lends a major competitive advantage.
To shift gears slightly: As you think about the narrative surrounding the digital economy, are you satisfied with the public discourse around it?
I think we are too negative about it.
In the past ten to 15 years, we have interconnected humanity for the first time ever. I believe most human adults now have at least a phone. We have given the average person on the planet—not just the average person in a wealthy country—access to a decent chunk of humanity’s accumulated knowledge and the ability to contribute to it. I appreciate that there are challenges that come along with this, but I think you have to be a pretty sharp pessimist to think that, overall, it’s a negative development for humankind.
Every day as I scan social media, I encounter breakthroughs in AI, reasoning ability, and more that feel like science fiction to me. Yet there is still a discourse that focuses on the negatives. I appreciate the need to be vigilant, but I think we’re getting the balance wrong.
Sure, the digital economy is far from perfect, but it is one of the most transformative things that’s ever happened. We’re also still in the early innings, and I believe that’s cause for optimism and celebration.
To build on that optimism, what are the biggest opportunities that the digital economy offers?
There are so many.
First, in the history of our species, we have never seen faster reductions in extreme poverty than we’re witnessing right now. There are fewer people living in extreme poverty today than there were 200 years ago, even though our population has skyrocketed. Our demonstrated ability to tackle extreme poverty through contested markets, open economies, and a powerful technology bundle is a big, big deal.
Second, a team at Google DeepMind recently announced they had essentially solved the problem of protein folding. This has been one of the great challenges in biology for the past 50 years. We know that our cells are assembly lines for proteins and that proteins assume this very complicated, three-dimensional shape as they roll off the end of the assembly line. But we didn’t know the rules that they follow; we couldn’t predict the final form of a protein. We can do that now. So, we now have tools that can let us make progress on some of our toughest scientific challenges.
And third, we all know that we must go through an energy transition over the course of the 21st century. We are not going to get there any other way except through innovation and technological progress. I am optimistic that our tech bundle is going to lead us through the energy transition much faster than we could without it.
So when I put these things together, I walk away more optimistic, not more pessimistic. These are things worth celebrating.
Andrew McAfee’s new book The Geek Way, will be released on November 14, 2023, and is available for preorder now wherever books are sold.
Asutosh Padhi is a senior partner and the managing partner for McKinsey in North America, leading the firm across the United States, Canada, and Mexico and serving as part of McKinsey’s 15-person global leadership team. He is also a member of McKinsey’s Shareholders Council, the firm’s equivalent to a board of directors.
He is also a coauthor of The Titanium Economy, a new book that explores the industrial tech sector and the bright future that it can help create. It’s available now.
Mentions of organizations or individuals are not endorsements by McKinsey & Company.
This piece was originally posted on LinkedIn.com as part of Asutosh Padhi’s interview series, Leadership Rundown.