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You Can't Break the Loom

On technology innovation and creative destruction.

Key takeaways

• Technological resistance like Luddism is futile; technology always advances.

• The idea of a fixed number of jobs is false; new technologies create new jobs.

• Economic growth involves replacing old methods with new, efficient technologies.

• Resistance to tech changes doesn't stop progress; adaptation is essential.

• Companies embracing new technologies outperform those resisting change.

During the early 19th century in England, a group of workers destroyed factory machinery. Especially cotton and wool mills. New innovations they believed threatened their jobs. The group was called Luddites, named after a mythical figure, Ned Ludd.

From this history, " Luddism " has evolved to describe a broader skepticism and opposition to new technologies. Especially when these innovations are perceived to disrupt the status quo, threaten jobs, and alter society.

Put in simple terms, they want to break the loom so the loom doesn't replace workers.

But this approach has a problem: you can't break the loom.

Technology's steady march forward

The concept of Luddism was very present during the early age of the internet. It's still alive and well today, for instance:

• Digital detachment (kids spend "all their time" on screens."

• New financial rails (crypto is just a scam)

• Advanced AI (robots will take our jobs)

Everything was better before.

Or was it?

Sure, the loom replaced some jobs. As did the printing press. And the internet. Yet, the evolution of world GDP since 1820 looks like this:

(Source: Our World in Data)

The Luddite perspective is anchored on a key misconception:

That there is a fixed number of jobs to do.

That's wrong.

Time and time again, we've shown our ability to adapt. When we can access productivity increase through innovation and automate some of the jobs we did yesterday, we find new jobs to do tomorrow.

Entire industries have risen from this concept. The fashion industry ($1.5 trillion+) would not have been possible without the loom.

This leads us to the other side of the coin of innovation…

Creative Destruction

Economist Joseph Schumpeter coined the term "creative destruction." It's the idea that an economy grows by destroying and replacing old structures, processes, and business models in favor of new ones, often powered by technological innovation.

Creative destruction is hard because it often creates a momentary vacuum – work displacement. A short-term effect that all but confirms the Luddite fear. 

When a new technology makes old jobs redundant, and it takes time to shift. To grasp and pursue new opportunities, which leads to job growth (net new jobs).

It's this momentary gap that adds fuel to the Luddite fire. If you're highly selective with your timelines, you'll be able to provide examples of technology displacing workers. But if you zoom out and expand the timeline, it's impossible.

You can't break the loom.

Unknown Territory

Technology is a net good. But, it can be very uncomfortable if and when you feel it breathing down your neck in an "I will take your job" fashion.

This was recently displayed during the writer's strike in the entertainment industry. What started with a strike focused on revenue splits and residuals from streaming eventually shifted to the point where AI took center stage.

The two sides of the strike made the necessary concessions to "meet in the middle." And so continuation was restored.

But it doesn't change anything, really.

You can't break the loom.

Winners and Losers

Generative AI came out with a bang last year. The cat is out of the bag, so to speak. Technology never moves backward. Nor can you tuck away an uncomfortable innovation and pretend it's not there.

Well, you can do that. But, it will simply put a hood of competitive disadvantage over your head. A self-inflicted wound, if you will. 

Because it's doubtful that every one of your competitors will do the same.

Some will instead lean into the new thing and reap the rewards.

However uncomfortable or disrupting, the only path is forward. Advancing towards new innovations with openness and curiosity.

Imagine placing a bet on one of the companies

• Company A embraces the "new thing" and pushes forward

• Company B rejects the new thing and digs in to defend

I will bet on company A. 

Every.

Single.

Time.

You can't break the loom.

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