In December 2021, TIME magazine named Elon Musk Person of the Year, a long-held tradition of recognising someone with a profound impact on society. With climate change, the issue of the day, the person with a solution became the man of the moment.
It’s worth looking back at the power of innovation in the past century.
In May 1925, TIME magazine acknowledged Thomas Edison on its cover for his inventions of the electric light bulb, phonograph, movie camera, and alkaline battery. The light bulb, in particular, brought a jump in living standards – illuminating streets, homes, offices, factories, and cities across America.
The late 19th and early 20th centuries were an age of innovation and economic development in America – Henry Ford’s cars replaced horses, Andrew Carnegie’s steel forged cities, George Westinghouse built power stations, Alexander Graham Bell introduced the telephone, and in 1903 the Wright Brothers took flight at Kitty Hawk, North Carolina.
Since then, inventors and entrepreneurs have contributed to human progress, prosperity, and well-being. Last century, Bill Gates and Microsoft revolutionised computing. Steve Jobs and Apple created a device combining a phone, music store, and computer, unleashing the age of mobility. Jeff Bezos and Amazon pioneered e-commerce. Innovations have changed the way society operates, increasing productivity, reducing costs for consumers, and improving the quality of life for hundreds of millions of people.
The spoils of solving big problems
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Musk is the latest person to transform culture through innovation, and rise to the status of business super-hero. In 2021, proving an army of detractors and sceptics wrong, Tesla showed it could be viable, declaring a record quarterly profit of US$ 1.6 billion and opening factories in both China and Germany.
In a classic David versus Goliath battle, the brash disrupter had won the first round of the electric vehicle (EV) wars. Left in its wake were old-school car manufacturers, rushing to retool their production facilities for the electric age. By the end of 2021, Tesla’s stock market value exceeded the rest of the industry combined.
Still, all innovators face the same problem – succeeding in the marketplace and establishing the systems and processes of a sustainable enterprise is another. We need only look to Edison for a lesson in history.
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The electric transportation revolution
As Edison and Westinghouse were waging war for dominance over the nascent electric power industry, a young engineer Henry Ford who worked for Edison would found his own company in 1899 and launch the Ford Model T in 1908. Yet Edison and Ford failed to apply the use of nickel-iron batteries to automobiles. The project was abandoned, proof that innovation can be an expensive and high-risk game with no certain outcomes.
Fast forward to 2003, with climate change concerns looming, Musk, a South African-born entrepreneur with degrees in physics and economics, took up the challenge of the age. “We did Tesla essentially out of desperation, not because we thought it could be lucrative, but just to show that it could be done,” he told the Financial Times, which had also named him Person of the Year.
Telsa’s success has inspired other entrepreneurs, spurring competitors in the electric vehicle revolution. Lucid, Rivian and Nikola are such examples. Innovators and investors have also taken an interest in companies making electric vertical take-off and landing (eVTOL) vehicles. While the technical challenges remain considerable, the age of flying cars is no longer science fiction. Neither is the space economy.
The space economy
Since time immemorial, the stars have enchanted us. When Galileo, the 17th century Florentine astronomer, looked up at the constellations, the idea of space exploration was born. On 20 July 1969, NASA’s Apollo programme would put a man on the moon.
Last year, much global attention focused on two missions in space led by billionaire and serial entrepreneurs Bezos, and Richard Branson of the Virgin Group brand.
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Musk took a different path. His SpaceX had launched an (unmanned) vehicle in September 2008 to become the first private-sector firm to orbit around the Earth. Since then, the company has developed a profitable launch service, deploying thousands of satellites into space for government and private sector customers. The company is now designing a lunar lander for NASA and launching Starlink, a constellation of thousands of small low-orbit satellites, creating a global broadband network.
While Musk has no formal engineering training, his gift – to identify critical issues and solve them by applying a mix of good judgement, out-of-the-box creativity, and hard work – is reminiscent of the late mercurial Apple founder, Jobs. More often than not, challenges that many viewed as impossible, have yielded to Musk’s combination of passionate belief and stubborn persistence.
Rise of data conglomerates
Looking back over history, we can identify successive waves of innovation that had led to step changes in human progress. Each wave shaped our culture and civilisation in new ways, creating both opportunities and threats.
In the ancient world, innovation was about building things – it related to architecture and engineering which bequeathed us the pyramids of Egypt, the Lighthouse of Alexandria and the Florence Cathedral (“Duomo”) built during the Renaissance.
A century ago, innovation was about making things – mechanising everything from agriculture and textiles to railways, power stations and motor vehicles. Half a century ago, innovation with the computer chip meant a leap forward in processing things. In 1984, as Madonna and the Material Girl ruled the sound waves, having things was in and launched the consumer age.
The mobile phone and the internet transformed how society communicates and transacts, birthing the on-demand economy. Today’s culture is about experiencing things . On the horizon, space tourism, virtual reality, and the metaverse beckon – to be paid by your preferred cryptocurrency.
Sustaining innovation requires thoughtful governance and regulation
Innovation delivers long-term benefits when balanced with proper regulation. One risk today is the concentration of economic activity in the hands of a few. Data conglomerates Facebook, Amazon, Alphabet, Netflix, Google, and Microsoft, for instance, wield significant control over societal information. Society has an interest in better regulation over data protection, privacy and anti-competitive practices.
America’s competitive edge is its risk-taking culture and deep capital markets, making it a magnet for the creative class where the likes of Edison, Gates, Jobs, Bezos, and Musk achieved the improbable against impossible odds. While America has leveraged its culture and weaponised its capital markets to create the strongest economy in modern history, sustaining this achievement will be a challenge. Given the outsized impact of innovation on social progress and economic vitality, smart governance is needed to mitigate the risks and ensure the benefits are shared by all.
Richard F. Chandler is the chairman of the Clermont Group
Photo: Dil/Unsplash
