Gamechanging Insights No. 14:
Geoffrey West in Conversation with Candice Faktor
At Gamechanger, our goal is to understand and support companies that are creating the future. We have found that the key to understanding and helping early stage companies is to view them as entities with exponential growth potential that exist in a complex system.
The COVID-19 pandemic has taught the world what exponential growth and complex systems are in real time. Never before have we been so aware of how interconnected our personal networks are and the exponential consequences of our sometimes seemingly trivial actions.
Before COVID-19, did we ever think that an arbitrarily random mutation of a virus originating in Wuhan, China, could cause Hertz to go bankrupt in the United States, supply chain disruptions of everyday consumer goods, or social unrest in cities around the world?
Perhaps not, but Geoffrey West certainly did.
Geoffrey, renowned physicist and author of the bestselling book Scale: The Universal Laws of Growth, Innovation, Sustainability, and the Pace of Life in Organisms, Cities, Economies, and Companies, joined us on the 14th episode of Gamechanger Sessions on Monday, June 29th, and showed us that with a sound understanding of the world as a complex adaptive system, we should not have been surprised that COVID-19 had such far-reaching consequences, nor that it happened at such an exponential rate.
1. The World is a Complex Adaptive System
One of Gamechanger’s core investment theses is largely inspired by Geoffrey’s work—that humans, companies, and industries exist in a complex adaptive system with intended and unintended consequences. He reminded us of why this understanding is ever more crucial for society today.
Geoffrey emphasized that we have to recognize our world is highly-complex and continuously adaptive. It has a vast number of agents all interacting with each other, and those interactions drive the system’s continuous evolution. Geoffrey stressed that as a complement to the traditional scientific method involving reductionism, we need to think more integratively and systematically about all aspects of human life.
This understanding is crucial to dealing with exponential phenomena such as COVID-19. They are hard to predict and very hard to control unless there is intervention at the beginning.
2. The Ubiquity of Scale
Geoffrey’s findings on the laws of scale are pervasive. He discovered scaling laws that apply across biological systems at all scales, whether they encompass humans, animal species, plants, or cities. Though, some phenomena scale sub-linearly, while others scale super-linearly.
Biology is dominated by sub-linear dynamics. The bigger the organism, the greater economy of scale achieved. The bigger the organism, the less per capita is required, by ~ 25%.
Cities are different. The physical infrastructure of cities, such as building and roads, follow sub-linear scaling. However, the socio-economic activity that the infrastructure facilitates is super-linear—cities enable social interactions that create wealth, generate ideas, and increase living standards.
The socio-economics goods of super linear systems, such as cities, scale exponentially. Due to positive feedback loops, the bigger the city, the more socio-economic goods per capita are created.
Super-linear systems also amplify unintended consequences— a doubling in a city’s size comes with 15% more patents, innovations and wealth, but also 15% more crime, disease, inequality, environmental damage, and so on. This is because the good and bad outcomes depend on the same underlying social connectivity.
3. The Future of Cities: Are We At an Inflection Point?
The unintended consequences of super-linear systems grow exponentially when left unchecked, just as the intended outcomes. For this very reason, it should have come as no surprise that cities are epicentres of COVID-19. So, is the current pandemic a turning point for cities as we know them?
Geoffrey’s thesis is that cities will remain incredibly resilient in the aftermath of COVID-19, just as they have been throughout history. He noted, “we’ve dropped atom bombs on cities. 25 years later, they’re fine. COVID-19 is a bit of an atom bomb, frankly.”
Further, Geoffrey emphasized that he does not view COVID-19 as an inflection point that will force virtual networks to replace physical ones entirely. Instead, COVID-19 has disproportionately accelerated what was already happening, such as work from home trends.
The scale of unintended consequences society has experienced during COVID-19 comes down to a chronic problem in society according to Geoffrey: the gap between scientific knowledge and thinking and policymakers, politicians, and traditional leadership.
Geoffrey highlighted that we see examples of the unintended consequences of scale in all aspects of society. In business, the idea of maximizing shareholder value via profit, and profit alone, has obviously led to unintended consequences. Companies are slowly starting to realize that they have a social responsibility, which only governments had before.
COVID-19 has provided Geoffrey with new and unexpected data to test his theory. He’s currently writing about how the size of the social group has a huge effect on the spread of COVID-19, which hasn’t been acknowledged by traditional leaders yet. The bigger the city, the faster the disease spreads, according to scaling laws.
Geoffrey concluded with two hopes. First, he hopes that we discover a vaccine and find a short term solution to COVID-19. But in the bigger picture, he hopes that this will be a lasting lesson for individuals and leaders to better understand exponential growth, and the need to start thinking much more systematically and holistically about our challenges. The shortcomings of our traditional problem-solving approach are palpable, and now is the perfect opportunity to change that. We hope you enjoyed these insights from our session with Geoffrey West.