The world is in the midst of an economic, social and environmental crisis that is overturning conventional wisdom. The best course of action is to tackle it head-on with new ideas, fostering creativity and encouraging "black swans." According to author Nassim Taleb, those are events that have a "rarity, extreme impact, and retrospective (though not prospective) predictability." Technology shocks are one of the best examples of this maxim in action—examples range from personal computers and creation of the Internet to the demise of the traditional telecommunications infrastructure. Often underestimated at first, black swans can transform markets or create new ones. We need to encourage them.
My own focus is on energy, a crucial part of any nation's economic and security agenda. The only way energy transformation will happen is through technology black swans that rid us of our dependence on oil and dirty coal. If the 9 billion people who will likely populate the planet in 2050 are to have a standard of living similar to what the best-off 500 million people have today, the world must generate a lot more energy. The only way will be a clean-energy black swan. Our main focus should be research. The National Institutes of Health receives about $29 billion in federal funding; the National Renewable Energy Laboratory's budget is about 1 percent of that ($308 million). Sen. Richard Lugar has estimated the United States spends $50 billion a year in military costs on protecting its Mideast petroleum interests—yet spends far less on trying to replace oil.
Beyond increasing support for research, the government can mandate a market for renewable fuels and renewable electricity, which will encourage entrepreneurs to develop these technologies and venture capitalists to invest in them. I am convinced the best companies that emerge can achieve unsubsidized market competitiveness relative to their fossil-energy competitors. Is the idea of such fundamental change in the energy industry too idealistic? I think not. Just over a decade ago, every major telco said that it would not adopt the Internet protocol as its core network, even as a company called Juniper was being launched to produce IP equipment. Now Juniper is a successful public company, and carriers using its equipment are offering free long-distance calls using Internet technologies that have become the norm. As a result, telecommunications has changed more in the past 10 years than the previous 50.
At the most fundamental level we need a restructuring of capitalism. We need to get rid of the "incumbency capitalism" that entrenches participants in a market while stifling innovation by raising the barriers to entry for innovative ideas. Today every bill out of Washington is engineered by K Street lobbyists to protect the interests of incumbent corporations. Entrepreneurs often don't even know what legislation is being formulated. We must have new rules that bias the playing field toward "innovation capitalism." As the Silicon Valley computer scientist Alan Kay said, "The best way to predict the future is to invent it." We may try and fail, but let's not fail to try.