What is Driving the Exponential Increase in Technology?

In 1965 Gordon E. Moore, the co-founder of Intel, stated that the number of transistors on a microchip doubles about every two years, though the cost of computers is halved. For the last half a century, this prediction has been remarkably accurate and the potential of digital technology has been exponentially increasing. As a result, digital transformation has seen unprecedented innovations in the last few years. From apps to AI, the wave of technology-fueled disruption has already transformed many industries.

Find out more about the exponential increase in digital technology from the Faculty Directors in the Digital Business Strategy: Harnessing Our Digital Future online short course from the MIT Sloan School of Management.

Transcript

So, Andy, you and I are lucky enough to be here at MIT, and we’re surrounded by technologists. And I think we’ve seen how technology has been the catalyst for these huge changes and, probably, there’s been no catalyst more important than Moore’s Law. For over 50 years now, the number of transistors you can put on a chip has been doubling about every 18 to 24 months. And that means the power of computing that you can get for a dollar has been dropping by 50 percent, year in and year out. 

Like clockwork, right?

Like clockwork, exactly. And, you know, Gordon Moore predicted this back in the 1960s, and amazingly it’s been continuing more or less to the present day. And because of that, we have so much more computer power available today than we did 10, 20, or 30 years ago. 

And I completely agree, “catalyst” is the perfect word to describe Moore’s Law. I think it’s probably the single most important thing that’s been happening in the global economy over the past half a century or more. But it brings up an interesting point: like you say, Moore’s Law has been going on for more than half a century, but we’re just seeing all these weird science fiction technologies — self-driving cars — in the past few years.

That’s right.

And our MIT colleague, Ray Kurzweil, has the single best story to illustrate how hard it is for human beings to understand the exponential function. It also helps us understand why we’re seeing all these crazy examples of science fiction technology now, even though Moore’s Law has been going on for over half a century. 

So this is a really powerful story that we heard from Ray, and it’s a story about the inventor of the game of chess. This is an apocryphal story, and it goes that the inventor took his creation to the emperor of India and demonstrated this beautiful, elegant strategy game, and the emperor was so impressed that he said, “Wow, you can name your own reward.” And the inventor said, “Your Majesty, I’m a humble person, all I want is some rice to go feed my family. And we’ll figure out how much rice by putting one grain on the first square of my chessboard. And we’ll double that, we’ll put two grains on the second square of my chessboard. We’ll double that, we’ll put four grains on the third square of my chessboard. Give me all 64 squares’ worth of rice and I’ll go home happy.” So you see the analogy to Moore’s Law is this constant doubling. 

Doubling each with each square. There’s what, 64 squares, eight-by-eight?

The emperor thinks that’s a pretty fair deal, so he says make it so. It turns out that if you actually do that doubling for all 64 squares you wind up with a pile of rice that is physically bigger than Mount Everest. It’s more rice than has been produced in the history of the world.

Now, Ray makes the further point that the doubling only really gets into crazy numbers in the second half of the chessboard. It turns out if you do 32 squares’ worth of doubling you wind up with something like four billion grains of rice. It’s only in the second half of the chessboard that the numbers get staggeringly big. 

We looked up when the United States government started tracking this new thing called information technology as a category of stuff that a business could invest in. And that was in about 1958 — first time you see the words “information technology” in the national statistics. So we’ll take that as the start, and then you and I said let’s take a year and a half as the doubling period. When did we enter the second half of the chessboard, with the business use of digital technologies? We shouldn’t read too much into it, but it helps us understand the smartphone era, self-driving cars, drones, computer Go champions — all these crazy sci-fi technologies, they’re second-half-of-the-chessboard technologies. 

It’s a silly story, but it’s also a very serious one because a lot of people say, “Well, Moore’s Law just keeps doubling. Why are we suddenly seeing this takeoff?” 

If you believe this analogy at all, then you have to conclude that we’re early in the stages of the second half of the chessboard.