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The Newsletter | Edition 109
Progress Report is dedicated to providing inspiration for action. In our Off-White Papers, we provide practical guidance on how to respond to our rapidly-changing world. This newsletter explores those topics in real-time, with information and action steps on how to make progress now.

But in this special newsletter series, The State Of, we dive a little deeper into the long-term work that comes after, in the places where we’re seeing new types of progress in action. From brand strategy to design, internet trends to sustainability, music to science, beauty to travel, and more.

There was an idea I encountered several times in the mid-2010s working with big tech companies. It went something like: “There is a money hose and there is a time hose. When you want things to move fast, you open the money hose. When you want things to be effective or efficient, you open the time hose."

The money hose was an embodiment of the “free money” era we now call ZIRP—the period from roughly 2008 to 2022 where companies had zero or near-zero federal interest rates and were awash in capital.

The thinking that emerged in ZIRP was often characterized by phrases like “fail fast and break things,” “fail fast, iterate fast,” and “scale first, profit later.” Speed to market was the name of the game. You could go to market with an MVP (minimum viable product) and find your PMF (product market fit) once the product was live. The investment environment was defined by ideas like “let 1,000 flowers bloom,” where companies would make many smaller investments to see what would blossom into a successful product or service. It led to what Kevin Roose called “The Millennial Lifestyle Subsidy,” where venture capital was artificially reducing the cost of goods like ride hailing, food delivery, and co-working space.

ZIRP sounds like something from a cult. And to be fair, as an outsider of Silicon Valley who occasionally made sojourns into that world, it did at times feel like one.

But ZIRP is dead (long live ZIRP), and we find ourselves at a significant inflection point in the way innovation will play out over the coming years. I know “significant inflection point” is about as trite a phrase as exists in business writing, but I’ve come to genuinely believe that it is true right now. The question remains: how can we use this information to architect and activate a more positive collective future?

People living in seismically active places often talk about waiting on “the big one.” Maybe uncoincidentally—many major tech hubs exist in the Pacific Ring of Fire (e.g., San Francisco, Seattle, Tokyo)—the technology community is often consumed with the anticipatory dread of seismic shifts in their industry. The singularity, quantum supremacy, and the P(doom) of AGI are all areas where dread has been wrought. And while there are different perspectives on why or how the next “big one” might be coming, many futurists are predicting an imminent eruption of innovation.

Some point to the investments in innovation that major companies have made over the past five years, where significant efforts were focused on infrastructure and capability expansion as opposed to consumer-facing products and services.

Alternatively, economist Carlota Perez points to a slightly longer time horizon, happening in staged surges. She sees the wave of technological advancements that have happened since the Dot Com Bubble as a building up of capabilities that have yet to be deployed in ways that achieve their full potential. Like magma building up heat and pressure against the crust of the Earth until it breaks, Perez sees the past 20+ years as a wave of new capabilities, waiting to erupt into the next major technological revolution.

When you take this view, it’s not hard to see the list of technologies we’ve created that are desperately seeking to be deployed in more expansive ways. Sometimes referred to as “solutions seeking a problem,” there are many capabilities we can see the potential of but either the will, economics, or an absent complementary technology has prevented them from becoming more impactful in our daily lives. Technologies like gene-editing, 5G, quantum computing, machine vision, bioprinting, blockchain, advanced robotics, networks, and displays are all only scratching the surface of their full potential.

Look no further than blockchain, a technology that holds promise for improving everything from supply chains to medical records, but has been predominantly deployed through cryptocurrency. Or 3D printing, which has potential to fabricate almost anything we need locally, yet has largely been deployed to create tchotchkes and disposable jewelry.

Perez suggests that eruptions often demand us to “tilt the field,” by which she means a major policy shift. In the U.S. we may be seeing this tilt happen in the form of the CHIPS Act and the IRA—an almost $1T investment in the expansion of domestic semiconductor manufacturing, clean energy production, and healthcare technology.

Still with me? Picking up what I’m putting down?

If you are, the question then becomes: how should companies shift the way they’re calculating risk and investment in the future?

In population ecology, a branch of biology, there is a concept called r/K Selection Theory. It suggests that there are two strategies for investing in your offspring, and it’s an apt metaphor for thinking about ways companies can invest in and develop new innovations. The TL;DR:

When resources are plentiful and there is little food competition, the r-type strategy pervades; when food is scarce or resources are limited, the K-type strategy pervades. r-type animals have large litters with short gestation times, young reach physical maturity quickly, they invest little in offspring, and have shorter lifespans—examples include rodents like mice and rats. By contrast, K-type animals have smaller litters, longer gestation periods, young reach physical maturity much more slowly, and as a result parents are required to invest much more in their offspring—humans, elephants, and whales are a few good examples.

Once you’re looking, you start to see the r/K strategies play out in other places. Actors like Chris Pratt or Kevin Hart, who take on seemingly any project, are taking an r-type strategy. Actors like Daniel Day-Lewis, Will Smith, or Leonardo DiCaprio, who select only the best projects and pour themselves into roles, take a K-type strategy. Performance marketing is an r-type strategy, brand marketing is K-type. Tinder is r-type, Hinge is K-type.

The ZIRP era was one dominated by the r-type strategy. Innovation became a rush to flood the market, with some companies literally applying the Gingerbread Man Strategy—you put out as many innovations as possible with the hope that competition can’t catch you. Run, run, as fast as you can, you can’t catch me, I'm the gingerbread man. Unsurprisingly if you extend the other components of the r-type strategy, this was also how a huge number of those investments died. The site Killed By Google has 293 products and services, with the majority from ZIRP (2008-2022), that were deprecated. This litany of killed innovations isn’t unique to Google; there just happens to be a convenient website dedicated to their dead. Instead, it’s indicative of the ways many companies operated in ZIRP.

It should also then be unsurprising that ZIRP and the incumbent dominance of r-type strategies weren’t necessarily creating massively disruptive products. Free money and an orientation towards speed to market meant that new products were largely deploying the previous wave of innovations in novel ways. Essentially, companies were financializing previous technological leaps. TikTok’s rise wasn’t based on massive changes in their foundational technologies—mobile video already existed, social media was already well-established, influencers prevaded. Instead, it was an incremental evolution to the recommendation algorithm, deploying a breaking news approach instead of a social graph one. Similarly, Uber didn’t invent GPS, the mobile web, or e-commerce—it simply brought those technologies together around ride hailing. The list goes on: Airbnb, Spotify, Netflix, etc. etc. etc.

None of this is intended to diminish what any of these companies have been able to accomplish. Much of it is quite incredible, and some of it has improved peoples’ lives for the better. But what changes when the free money dries up?

Over the past decade, K-type investments haven’t been cash cows, they’ve been “coming soon” or “operating in stealth mode.” Things like driverless cars, AI, quantum computing, and many more fit into this category. One could argue that OpenAI and Google’s Deepmind are demonstrations of K-type investments—not to mention much of what Alphabet does outside of Google. While OpenAI was formed in 2015, ChatGPT didn’t launch until the very end of 2022.

Similarly, Meta’s pivot to the Metaverse is both a massive financial investment and a commitment to an idea that has yet to be fully realized. However, Meta believes in it so deeply, they’ve even changed the name of the company. More recently, Apple’s launch of the Vision Pro, and the alleged 5,000+ patents associated with its development, represents an orientation toward creating the next disruption (K-type strategy).

And how many videos have you seen over the past decade of people kicking those Boston Dynamics “dogs”? While very few of us have interacted with robots in our daily lives, Boston Dynamics is taking a K-type approach to developing their robotics solutions, and is now valued at over $1B.

There is SpaceX and Blue Origin in space exploration. ITER in nuclear fusion. bluebird bio or Novo Nordisk in healthcare.

The question isn’t whether there is opportunity out in the marketplace—simply put, there is abundant opportunity. The question in the near term will be: Which companies will recognize the opportunity of this new environment and adapt to meet the moment?

The picture painted is one of a child in a room full of toys telling you they’re bored; though, Clayton Christensen’s Innovator's Dilemma might be more apt. Companies afraid or unable to shift towards more K-type strategies in our current moment will be turned into gingerbread people at best, or fully supplanted at worst.

There is so much more I could write in this already (overly?) long essay. Suffice it to say the money hose has run dry. However, constraints breed creativity, or so we’re told.

What I hope people take away from this piece is that we’re sitting in incredibly fertile ground to leverage that creativity.

What’s more, as Perez highlights, the period before a golden age is marked by inequality and unevenly distributed access. A new age is an opportunity to build a better system, and to solve ills that exist in our current system. So while we can discuss opportunity, there is also responsibility to do it right.

There will always be r-type and K-type strategists in any given time, industry, or ecosystem. But like the explosion of mammalian diversity in the wake of the great asteroid 66 million years ago, we’re in a moment where K-strategists will emerge winners.

If the theory holds, we’re about to enter one of those moments people speak about in golden age terms. A moment where there is an opportunity to architect the future. Embrace your inner tortoise. Or whale. Or human. Or elephant.

Think slow. Act fast.

Have you checked out A Deck of Science and Whimsy? Consider it a tool for this “golden age” we’re entering: 43 cards outlining emerging technologies across six categories (Power, Compute, Interact, Make, Move, and Optimize). Feeling overwhelmed in the face of this tech “eruption”? Facing an internal innovation challenge? Take a card—it just may help you get started.

You can find the full deck in Figma, but reach out if you'd like a physical copy. We have a few to spare.

Joey is a Chief Strategy Officer and part of the founding team at SYLVAIN. Here, he’s led innovation and brand strategy work for clients including Google, GM, Afterpay, Waze, VF Corp, and Bloomberg.

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