TGIF! February 17, 2017

Innovation is a powerful thing. Human beings have consistently innovated throughout history, in pursuit of better ways of life. It’s evolutionary. Today, there’s so much we naturally take for granted. Our ancestors didn’t have the same, handy devices at our disposal in this digital age. But of course, we have our own stresses and challenges that we deal with on a daily basis. Life is never perfect. But the greatest inventors are always striving for perfection. The invention of the wheel was a big one. Maybe the biggest. It sure made hauling things easier. Transportation took off. The oldest wheel ever found was in Mesopotamia, and believed to date back to 3500 BC. That sure was a game changer.

The internet of things today connects devices to the web and they’re always on. It’s not just your phone and your iPad. Cars, refrigerators, TV’s and air conditioners are all interconnected to the web and smarter than ever before. Disruptive innovation is making it happen. Companies that don’t innovate face extinction. A Tesla is not a car. It’s more like a supercomputer with wheels. Cars that use gasoline are far more fuel efficient today than they used to be. Will there be a time when they don’t use gas at all? Driverless cars are now the rage, and the future of self driving is very much in question. There will be special, assigned lanes for driverless cars that will be far more efficient, in terms of speed, fuel consumption and accident prevention. Will 6-year olds today need a driver’s license 10 years from now? Will people even need car insurance down the road? These are issues that will undoubtedly change the way we do things and disrupt companies that aren’t prepared.

None of this is new mind you. Innovative machinery and automation has been a driving force for centuries. Henry Ford used to joke that before the roll out of his Model T’s, people simply wanted faster horses. Our President had this to say: “The automation problem is as important as any we face. We must take advantage of every opportunity for technological development. But we cannot disregard the human values involved.”  That President was John F. Kennedy, and he said it in 1962. It still applies today. You could argue that existing global leadership is not set up for the new connected world. A case is being made that Brexit and the Trump victory are really about going backwards to a place more predictable and seemingly safe. It’s gut check time on planet Earth.

A common belief in Silicon Valley and at startups across the country is that any company designed for success in 20th century is destined for failure in the 21st. Every company today has to be a technology company or they face extinction. It’s grow or die. Amazon is an obvious disruptive threat. They have come a long way since just selling books. Amazon has changed how people shop forever and its innovative ways continue to disrupt the status quo. Amazon is competing with everyone. It’s great for consumers but scary for companies and employees. Jobs are hard to find in the digital age. In fact, most business models in Silicon Valley are job crushers. Contrary to what politicians think, the greatest source of job loss in the US has not gone to China or Mexico. Innovation and automation have eliminated jobs for decades. Robotic solutions are popping up everywhere and are stealing jobs from humans. Robots don’t take vacations and don’t require medical health care. Jobs that don’t require creative, innovative thinking, and provide a valuable, specialized service to customers are at risk. Robots get upgrades all the time. The last upgrade for the human brain was roughly 50,000 years ago. Disruptive innovation shocks the conventional immune system. The establishment fights change all the time. That is human nature.

One of the most exciting aspects of this disruptive innovation is in the medical arena. Handheld devices are about to beat doctors for accurate diagnosis. Artificial intelligence, such as IBM’s Watson, is having a profound impact on cancer research. The Memorial Sloan Kettering Cancer Center has partnered with IBM and has been “training” Watson for more than a year to develop a tool that can help medical professionals choose the best treatment plans for individual cancer patients. Clinicians and analysts are training Watson Oncology to interpret cancer patients’ clinical information and identify individualized, evidence-based treatment options that leverage the cancer center’s decades of experience and research. This is a fantastic example of human intelligence and artificial intelligence working together.

Innovation is the theme. It’s been the driving force in humanity since the very beginning. There’s a great deal of logic to Darwin’s term “Survival of the fittest”. That applies to physical fitness and intellectual fitness. It also applies to cultural fitness. The digital age has sped up the change, faster than ever before. New ways require new cultures. The world is more connected than ever before. Competition is fierce. Driverless cars and drone delivery will bring a great deal of ease and efficiency to our lives. But like all benefits, it comes with a cost. As an investor, today’s innovation creates endless possibilities for growth. As a father, it is a constant mental weight worrying what the job market will be like for my 3 little girls. Fitness matters. Stay fit America.

Have a nice weekend. We’ll be back, dark and early on Tuesday; we are closed President’s Day.


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