The other day, I was listening to the radio and the host mentioned a new phenomenon: smart speakers are challenging the position parents occupy in their children’s minds.  At the dinner table, kids prefer speaking to these boxes to learn things they do not understand — questions like, “Ok Google! How big is the moon?” — which basically downgrade their parents from “old and wise teachers” to “dinner guests.”

It struck a chord with me, because it reflects a broader social development, that is the foundation of the notion that “old is wise” is cracking.  I am convinced that investing in younger people and younger organizations will increasingly become the right choice for all investors.  This article offers my thoughts on why these changes have been happening, their implications for investors (investors in the broadest sense, not just financial: like parents invest in children, bosses invest in apprentices) and what the old generation should do going forward.  Please note that I am strongly in favor of “respecting your elders” but think we need to respect the younger people more than we do.

First, why is there a long-time notion that “old is wise”?  I argue this notion has three supporting pillars.  One, big data: older people have been around longer, so they have observed more.  Two, people network: older people have had more time to meet people, so they know more people.  Three, skill mastery: older people have been doing their chosen task longer, so they do the task better.  These three reasons explain why in ancient societies, elders had tremendous respect from their tribal members:  by listening from the elders’ wise words — which carry the collective knowledge of several generations — the tribe as a whole learns and benefits.

Today, however, these three pillars hardly stand.  Google, Wikipedia, and collectively the Internet, know much more than any one person can possibly comprehend.  We consult Google and it can give us answers.  Parents and the elders have lost their positions as the “go-to source of knowledge.”  LinkedIn, Facebook, and other social sites have a people network that is so broad that no individual can possible compete — depending on your user status, you can reach out to just about anyone you want.  Again, the older generation has lost its function as the “community connector.”  Industrial automation, and the AI revolution, will surely displace some skilled workers and cause everyone to question what is the value left in hiring “an experienced worker”?  Two years ago, I toured around one of the largest automobile assembly plants in China; for most of the tour, I did not encounter any human beings except my tour guide — tasks are performed by machines and skilled workers are not needed as much as before.

The crisis for “old is wise” is deepening.  But the opposite is happening on the younger generation. In industry after industry, young people are showing they are more productive; younger organizations are showing they are more successful.  Consider these facts:

• Isaac Newton made most of his discoveries before he turned 30 (and in his later life, he lost millions in the stock market.)
• Younger hedge fund managers tend to produce better investment returns.
• Many of the most successful consulting firms have a mandatory retirement age. McKinsey has been implementing the mandatory retirement age of 60 since the 1960s.
• The age of an average employee at ByteDance, one of the most dynamic organizations in existence today, is below 27! (ByteDance could be a serious threat to Tencent, where employees are much older.)
• Mark Zuckerberg reportedly said, “Young people are just smarter. Why are most chess masters under 30?”  (Ironically, the quote was later used to support a lawsuit for age discrimination against Facebook.)

Of course, we can also list cases where people achieve great success at senior ages, such as “Colonel” Sanders who founded KFC in his 60s and Ronald Reagan who was an actor until his 40s before becoming a political figure (first in California and later as the President).

Arguably, though, we tend to observe more successes among the young than the old.  Why?

People have different theories here but let me offer a “shortcut” — from the perspective of human evolution.  Ask yourself these questions [the answers are spelled out reversely in the square brackets].

• How many generations ago did humans first reach Europe? [dnasuoht owt]
• How many generations ago did humans build pyramids in today’s Egypt? [derdnuh owt]
• How many generations ago was Europe still in The Dark Ages? [evif ytnewt]
• How many generations ago was the U.S.A. founded? [evlewt]
• Do you know that two grandsons of the 10^th U.S. President are still alive today?

All this shows how quickly we humans evolve.  Merely 600 generations ago, we were still hunter gathers.*  Within the past 10 generations, we evolved from a pre-Industrial to a post-Industrial society.  During the previous two generations, we invented the Internet and digitized a large part of our lifestyles.  It is fair to say that not only we are evolving fast, we humans are evolving faster and faster!

That, hopefully, offers us a perspective into the comparison between the young and the old.  For the older generations, on the one hand, they are naturally aging — an average person’s overall task performance peaks in their 50s and significantly deteriorates in their 70s** — on the other hand, they must deal with a technological and social environment that is evolving at an increasingly fast rate.  What a double whammy we face when we age!

For the younger generation, they are free from historical elements (they do not need to unlearn outdated knowledge) and they grow up organically embracing modern elements (kids now grow up using smart phones).  As previously mentioned, humans are evolving so fast that a generation or two make a HUGE difference.

It is like software: newer versions usually have improvements upon the previous versions.  (With the noticeable exception of Windows 8!)

That is why I argue — invest in younger people, in younger organizations!

So, I have already reached my conclusion.  But wait!  Eventually one day, I will look up and realize I am in my 50s or 60s.  What is the advice for “the future me”?  Broadly speaking, what is the advice for the older generation?  These are what I have in my mind:

• Make room for younger generations to grow.  There are reports** showing the frustration shared by young academics: aged tenured professors just will not retire and by doing so they are preventing younger professors from being promoted.  This is probably a common phenomenon across fields and industries.  As our life expectancy increases, this will surely be a bigger generational problem.  Will I have the heart to step down?
• Stepping back is not stepping out.  An aged CEO might want to move himself to the chairman position.  An aged tenured professor might want to step back and become an industry expert consultant.  The role may not be the same, but older people can still pursue their passions.  While you should make room for the young, you can still leave room for yourself.
• It is probably in your best interest to step back.  Bill Gates stepped back from Microsoft to launch one of the greatest philanthropy efforts we have ever known, enhancing the well-being of millions, including his own (his reputation was damaged in his later years at Microsoft).  Jack Ma stepped back when Alibaba was still arguably the No.1 Internet company in China, effectively guaranteeing his legacy as the firm’s greatest leader of all time.
• Live today fully.  Yesterday is gone.  It will not come back, no matter how much you miss it.  Open your mind please.  If you hear about a new mobile phone app, download it and try it out.  If you have the luxury to travel to a new country, pack and go for it.  Live today fully.  Do not close your mind to new experiences and learnings and live only based on your past successes.
• Embrace the future.  Your past does not limit your future.  Your past does not define your future.  Think second-act careers.  Think KFC’s “Colonel” Sanders!

References:

*NYT: We Still Have the Bodies of Hunter-Gatherers

https://www.nytimes.com/roomfordebate/2011/05/12/do-we-want-to-be-supersize-humans/we-still-have-the-bodies-of-hunter-gatherers

**PBS: Colleges See Older Workforce Holding On to Coveted Positions