The whole field of complexity theory rests on the idea that disruptions cause changes because the world lives on the edge of chaos and the advances are made because the world is set up to respond to these shocks and evolve into the next stage of complexity.
Humans, organizations, social systems, and so on, are complex adaptive systems that live in a world that consists of systems in disequilibrium. These complex adaptive systems deal with disequilibrium by asking different questions, generating relevant information, and creating emerging solutions that bring order back into the world.
I have attempted to examine what is happening today because of the spread of the coronavirus and how the disequilibrium situations we are facing are being responded to. Two recent posts about examined some of the movements taking place in the US economy: see “Business Will Never Be the Same” and “Business Will Never Be the Same: II.”
Investors need to give some attention to these movements because that is where the future is going to come from. And, from these movements, future opportunities for investment will emerge.
A RESPONSE TO THE DISRUPTION
Asa Fitch, Rolfe Winkler and Deepa Seetharaman, writing in the Wall Street Journal give us another picture of how the current disruptions are being responded to in Silicon Valley.
“Silicon Valley’s technology whizzes are mobilized to fight the coronavirus, trying to hack everything from disease modeling to elder care and medical-device manufacturing.”
“Yet it isn’t clear how best to apply the industry’s talents for on-the-fly innovation to a fast-moving pandemic, or whether the U.S.’s wellspring of disruption can make major contributions to solving society’s biggest crisis in decades.”
“Thousands of volunteers from the tech world have begun pitching in on hundreds of hastily assembled projects over the past two weeks, as the virus ravaged Europe and spread in the U.S. Many are concentrated in the San Francisco Bay Area, which locked down before most of the country, leaving thousands of talented techies with spare time to brainstorm coronavirus-related projects.”
Specific Silicon Valley players are getting into the action. For example Silicon Valley investor Sam Altman is organizing an effort to build a million low-cost ventilators in three months. Another one, Kevin Systrom, co-founder of Instagram has build a program modeling the spread of the virus. He has shared his findings with experts. Others are just focusing on developing apps to help elderly people receive groceries delivered to their homes.
JUST GETTING STARTED
As I mentioned in the first of my posts cited above, I have worked in the area of innovation and entrepreneurship for the past twenty years or so. I have worked with venture capitalists and with Angel financiers. I am familiar with the world of new ideas.
My experience leads me to believe that if Silicon Valley is producing a plethora of new ideas and new efforts to respond to the disequilibrium created by the spread of the coronavirus, the same initiatives are being generated in other places around the country beginning in other ‘tech havens,” like around Boston, in universities and colleges, and in other geographic regions around the country that provide opportunities for young entrepreneurs to explore their ideas.
The ideas being generated will run from the most sophisticated, ones that will be forthcoming from our major universities like MIT and Stanford, to the most simple ones, like how rides might be generated locally for the elderly so that they can see doctors.
So many of the ideas popping up right now are related to information technology and given the demographic and social changes that are taking place because of the “social distancing” in force in many areas, one can argue very strongly that “Business Will Never Be the Same.”
This is why investors need to understand the situation and pay a lot of attention to the changes that are taking place because that is where opportunities will be found.
WATCH WHAT GOVERNMENT IS DOING
The other response to the disruptions taking place that investors must constantly keep an eye on is the response of the government.
With the passage of the survival bill in Congress, lots and lots of money will be coming to the US economy. This will give governments, state and local, as well as federal, tremendous power.
Decisions will be made, money will be allocated, and opportunities will arise for individuals and businesses to respond to the crisis. As decisions are made to re-allocate resources one will be able to discern what direction the future is going to take in the “new” world that is being constructed.
Investors must be constantly aware of what this “new” world is going to look like and what the “new” economic structure is going to be.
Times like these, where major disruptions are taking place, complex adaptive systems evolve into the new order. To understand these adjustments, one needs to keep an eye on where the changes are occurring and where the solutions are coming from.
Complexity theory teaches us that this is really how the world works, the world is not an equilibrium machine. Complexity theory teaches us to identify where the disruptions are and what changes these disruptions generate in the environment. Then we must watch to see how the complex adaptive systems respond to bring more order into the world.
These adjustments are going on all the time. It just happens that the current situation is one in which the pandemic has resulted in substantial disruptions that are impacting or are going to impact the whole world in a major way.
We, as investors, must identify these consequences and work with them. In this way, we all work to bring more order into the world and move on to a better time.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.