6/18
Vol.11
Why is a liberal arts education important in the context of investing? It sharpens the right brain, the development of which is vital to be a successful investor. Analysing and drawing trends from financial data is becoming increasingly commoditised. Machine learning and artificial intelligence will only hasten this pace. While a sound technical education helps you think analytically and gives you a better understanding of numbers, it also makes you extrapolate trends linearly rather than focusing on the disruption that lies ahead.
The convergence of technologies such as blockchain, artificial intelligence, biotech, genetics, 3D printing, solar energy and cellular agriculture is occurring at an exponential pace. It is this convergence that will ultimately disrupt business models in the near future. Yet investors continue to largely focus on projecting the next quarter or year, a futile exercise in a scenario where most businesses are increasingly prone to disruption. Recently, Vijay Kumar, the Dean of the Engineering School at my alma
mater, the University of Pennsylvania, told me, “Technology is the new liberal arts”. This means that as an investor I may not need to know the intricacies of the underlying technology (though coding is going be a critical skill) but I need to imagine the change that it can bring about and be willing to rapidly learn and adapt. Investors need to be able to draw on a reservoir of diverse knowledge and subjects and recognise patterns across multiple areas and disciplines. This is fundamentally a right brain activity.
My role model, Charlie Munger (better known as Warren Buffett’s business partner) says, “The first rule is that you’ve got to have multiple models—because if you just have one or two that you’re using, the nature of human psychology is such that you’ll torture reality so that it fits your model and the models have to come from multiple disciplines because all the wisdom of the world is not to be found in one academic department.” Integration of diverse subjects learnt in a liberal arts program is critical to developing the mental model that Munger speaks about.
Based on the current rate of increase in computing power, our computers will be a thousand times faster in 10 years, one million times faster in 20 years, and one billon times faster in 30 years! This will impact our lives in ways that are difficult to comprehend. Human history is expected to be disrupted more over the next 20 years than what has occurred in the past 20,000 years. Ray Kurzweil, Google’s Director of Engineering, says: “The future will be far more surprising than most people realise, because few observers have truly internalised the implications of the fact that the rate of change itself is accelerating.”1
Most businesses are not moving fast enough. Company managements need to recognise the transient nature of the competitive advantage or moat that they have benefited from so far, identify areas where innovation is vital and instil an organisational culture that fosters rapid execution. Whether you become an investor in these companies or work in them, a liberal arts education will be critical and I am delighted Ashoka University is rightfully characterised by the Financial Times as “Ivy League, Indian Style.”
'Ray Kurzweil, The Singularity Is Near
Ingrid Srinath, Director, CSIP, says both businesses and NGOs have much to learn from each other
Harshali Dalal, CMGGA, speaks of a digital solution that will reduce corruption in the Panchayati Raj Department in Haryana