Innovation has been the driver of the extraordinary progress from which humankind has benefited for a couple of centuries, but it faces a largely hidden threat: Innovation is becoming harder and more expensive. This article is a collaborative effort by Alex Singla, Alexander Sukharevsky, Elia Berteletti, Lareina Yee, and Michael Chui, representing views from QuantumBlack, AI by McKinsey, and McKinsey's Operations Practice. It's instructive here to take the long view. For most of recorded human history, improvements in human welfare from generation to generation have been limited. Take, for example, GDP per capita as a measure of economic prosperity. For most of human history, roughly until the early 1800s, the measure barely moved to $1,200. But since that time, it has grown by more than 14 times (Exhibit 1).1Jutta Bolt and Jan Luiten van Zanden, Maddison Project Database 2023; Jutta Bolt and Jan Luiten van Zanden, 'Maddison-style estimates of the evolution of the world economy: A...
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