Technology Builds Fortunes

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The great growth of fortunes in recent decades is not a sinister development. Instead it is simply the inevitable result of an extraordinary technological innovation, the microprocessor, which Intel INTC in Your Value Your Change Short position brought to market in 1971. Seven of the 10 largest fortunes in America today were built on this technology, as have been countless smaller ones. These new fortunes unavoidably result in wealth being more concentrated at the top.

But no one is poorer because Bill Gates, Larry Ellison, et al., are so much richer. These new fortunes came into existence only because the public wanted the products and services—and lower prices—that the microprocessor made possible. Anyone who has found his way home thanks to a GPS device or has contacted a child thanks to a cellphone appreciates the awesome power of the microprocessor. All of our lives have been enhanced and enriched by the technology.

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Our Generation’s Greatest Innovator

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Few would argue against the proposition that Steve Jobs was an iconic figure who took the notion of innovation to new heights. Many would agree he is the greatest innovator of our generation. This is what innovation means, in Steve Jobs own words:

Some people say, “Give the customers what they want.” But that’s not my approach. Our job is to figure out that they’re going to want before they do. I think Henry Ford once said, “If I’d asked customers what they wanted, they would have told me, ‘A faster horse.’” People don’t know what they want until you show it to them. That’s why I never rely on market research. Our task is to read things that are not yet on the page.

Innovation – The Only Source of Competitive Advantage

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As Steve Jobs famously said, “Innovation distinguishes between a leader and a follower.” Innovation not only distinguishes individuals, it differentiates peoples and nations.

Imagination is not only the uniquely human capacity to envision that which is not, and therefore the fount of all invention and innovation. As the writer J.K. Rowling puts it, “Innovation is arguably most transformative and revelatory capacity, it is the power to that enables us to empathize with humans whose experiences we have never shared.”

When one speaks of innovation, our thoughts immediately go to the icons of Silicon Valley, the Steve Jobs, Bill Gates, and Mark Zuckerberg’s of this world. We look to the tech industry to be our innovative engine.

But new theories are challenging this assumption. Increasingly, however, economists and social thinkers are challenging the conventional wisdom on innovation. Speaking at the Institute for New Economic Thinking conference in Toronto, Mariana Mazzucato, a professor at the University of Sussex, described the most notable technology innovations as coming from the government, not the private sector. Read more about this controversial new theory in this New York Times article here.