Pivot Point!

Every so often, a major innovation creates a decisive turning point. In times like these, the world changes rapidly. Often, companies or countries focused on established technologies—the very ones that brought them extraordinary success in the first place—are left behind (in áit na leathphingine), while others are willing to embrace the new technology and push it forward aggressively. The consequences can be profound, reshaping markets, power structures, and even the world order.

This dynamic is discussed in Clayton Christensen’s landmark book, The Innovator’s Dilemma. Christensen showed that leaders fail not because of bad management, but due to a lack of strategic decision-making. They continue to invest in technologies that serve their existing customers and revenue streams, while casting aside new technologies as weak, dangerous, or unprofitable.

Initially, that assessment is often correct. New technologies are immature, expensive, and weaker than established ones. But over time, the balance shifts. The new technology improves rapidly, and the legacy technology reaches its physical limits. The profitability of the legacy system decreases just as the capability of the new technology increases. By the time established leaders realize what is happening, the gap is too large to fill. They are left with no choice but to be followers or, worse, to be rendered obsolete.

Identifying such a turn in advance is extremely difficult, however. Sometimes, the perceived disruptions are false alarms. A famous example is Betamax versus VHS in video recording. Betamax was widely considered technologically superior to VHS. Consequently, many analysts thought Betamax would win the battle. Instead, VHS gathered strength because that technology was cheaper, more flexible, and had stronger support from the industrial sector. Those who followed the seductive call of Betamax were wiped out.

Today, we are seeing major turning points in the fields of energy and artificial intelligence (AI), and in the combination of the two. For a long time, the United States of America (USA) held (and still holds) a dominant position in fossil fuels. The USA is currently the largest oil producer in the world, with massive reserves and an extensive economic ecosystem based on hydrocarbons. This position shaped the world order, from foreign policies to domestic infrastructure.

But that era is drawing to a close. The world's energy system is turning toward renewable energy rapidly. Solar energy is now cheaper than oil-generated power. It is cheaper to drive electric vehicles than petrol vehicles. But China is the primary driver of these changes. China has made massive investments in energy manufacturing, battery technology, and electric vehicles. It does not see these industries merely as commercial opportunities, but as strategic priorities.

The results are clear. Chinese companies now lead in solar panel production worldwide. They are ahead in battery manufacturing. And in the field of electric vehicles, China’s BYD has overtaken Tesla in terms of global market share. Instead of competing directly, the USA has adopted protectionist policies—for example, with high tariffs on Chinese vehicles. This might protect domestic manufacturers in the short term, but history shows that this is a poor long-term strategy.

The U.S. approach is even worse because fossil fuels are a central cause of climate change. Politics does not change physics. Although the debate continues, we can all see the climate change that is underway. Meanwhile, China continues to export renewable technologies and solidify its role as the primary provider of the energy systems of the future.

The danger for the USA is marginalization. As global adoption of renewable energy accelerates, countries will rely more on Chinese supply chains, standards, and expertise. If the USA delays too long, it will have to adopt these technologies from a place of weakness. In that case, not even Silicon Valley—the innovation engine of America and the world for so long—can be sure it will survive.

Recent events have shown that Chinese power is increasing rapidly. China's threat to restrict rare earth minerals, combined with its total dominance in clean energy research and development, forced the USA to retreat from its plans to impose 60% punitive tariffs on China. This strategic countermeasure demonstrated that Beijing’s control over intellectual property and the supply chains of the future was a more powerful weapon than Washington’s traditional economic sanctions.

A similar competition is taking place in the field of artificial intelligence. Here, the USA is still ahead in foundational models and software. But China is advancing rapidly. The combination of artificial intelligence and energy could also be decisive. Consider mobile AI systems like humanoid robots. They rely not only on software, but on hardware, manufacturing, and power systems as well (solar energy, batteries, etc.). China’s strength in these areas gives it a structural advantage. Reports that humanoid robots are already being used to patrol cities like Shenzhen show that this technology will have a major impact not only on commercial affairs, but on security and military affairs as well.

It is highly likely that we are on the edge of a new era. It is clear that the USA is heading in the wrong direction. The country’s regime threatens its allies in Canada and Europe and imposes tariffs on them at the same time as being very friendly with Putin's regime in Russia. A major political divide has also opened in the country, where democracy is under pressure from authoritarianism.

Because of these significant changes, Europe and Canada are strengthening their ties with China, India, and South America. This will change global trade and influence for decades to come, and the USA will be the worst affected. The danger is also that, without the leadership of the USA as the champion of democracy, the world order will slip toward authoritarian dominance. History shows that it is a long and violent path, full of oppression, instability, and a terrible human cost. A world shaped by authoritarian power is not a safe or predictable world.

We are late in the game, but it is never truly too late. The USA must rebuild alliances, make serious investments in the technology of the future, and restore trust in itself at home and abroad. We barely survived the nuclear age—through restraint, cooperation, and imperfect institutions. Artificial intelligence could be even more dangerous, especially in the hands of dictators who care only for their own benefit.

The turning point is near us now. How the people of the USA meet this challenge—that is the vital question for us all.