Have you considered the productivity perspective?

Financial Planning & Investments: Mark Hinds, Charles Stanley Norwich

Innovation, creativity, and vision – I suggest these are all fundamental traits hard-wired into our DNA. They embolden us to try different ways of doing things – hopefully smarter and faster – and, indeed, to do things that were previously impossible. The overarching aim is to make our human lives ‘better’. As good ideas emerge and are widely adopted, the far greater array of failed efforts is ignored and forgotten.

Given the incredible power of these traits in shaping our world, why is it we still face so many challenges?

The only truly scarce resource on our planet is human time, but with the exponential advances in technology that empower us to do more with less, and better, a world of far greater abundance is possible. However, this is a journey – one which we started around 200,000 years ago – and not a destination. More importantly, the changes are coming at pace and we are now on the part of the curve that is pointing to the moon, so hang on! 

Improving output

When considering attractive investment opportunities for our clients, innovative, creative, and visionary companies of course vie for attention. As we weigh up their relative attractions, we are mindful of the difference between a good idea and its economic impact.

While all these qualities should be welcomed and celebrated, it is really the ideas that improve our productivity and are adopted at scale which allow our lives to improve to the greatest extent.

Indeed, virtually all politicians across all continents believe this, so it must be true! (Of course, it is also helpful for them in tackling the ‘herd of elephants in the room’ scale of debt they have accumulated on our behalf).

By using this productivity perspective, I believe we can make a little more sense of the wave of new ideas heading our way and their potential impact. For example, fresh thinking in arts and entertainment is all important for a fulfilling human life, but we should not expect it to transform our productivity. Meanwhile, spending on advanced defence plans and armaments is understandable in unsettled times, but I hope we can all agree that producing bombs – at best to deter and at worst to destroy – is not improving our productivity even if it does increase our GDP.

This perspective to assess the economic impact of new ideas is, I believe, equally useful and applicable when, as business owners, you face decisions about investing in new ideas. Those that will help strengthen your business are those with the greatest productivity gains.

The value of investments, and any income derived from them, can fall as well as rise. Investors may get back less than originally invested. Charles Stanley & Co. Limited is authorised and regulated by the Financial Conduct Authority.