Periods of economic uncertainty often spark the same question among investors: Is growth slowing or simply changing shape?
In The Perpetual Growth Machine, William Blair Global Equity Team’s Olga Bitel, partner, global strategist, and Alexa Davis, strategy analyst, argue that growth is not a finite resource or a linear trend. Instead, it’s the cumulative result of humanity’s constant drive to improve living standards—what they describe as “a mechanism that alchemizes needs into opportunity.”
This framework, known as the Perpetual Growth Machine (PGM), offers a lens for understanding why economic progress persists across market cycles, geographies, and industries, as well as why innovation continues to emerge even when prevailing narratives turn cautious.
Innovation Doesn’t Stand Still
While some critics may believe that the most transformative inventions are behind us, the PGM suggests that breakthroughs tend to emerge precisely when constraints become too pressing to ignore.
“Growth is a highly diffuse, organic, and continuous process,” Bitel and Davis said. “Our individual and collective appetite for improvement is constantly bumping up against others’ vested interest in the status quo, misaligned incentives, or just plain unwillingness to change.”
A century ago, automobiles unlocked geographic mobility. Today, artificial intelligence (AI), semiconductors, clean energy, and advanced healthcare technologies are reshaping productivity in ways experts are only beginning to understand. Each wave improves efficiency while introducing new constraints, fueling the next chapter of innovation.
Where Institutions Matter Most
A central theme of the PGM is that innovation depends not only on human ingenuity but also on whether economic systems reward productivity, risk-taking, and competition. As Bitel and Davis noted, individuals’ desire to improve can only take them so far if they lack access to capital, infrastructure, or secure property rights.
The authors distinguish between systems that enable broad participation in economic activity and those where growth is constrained by concentrated power or entrenched incumbents. In environments where entrepreneurs and businesses can retain the gains they generate, innovation compounds. Where barriers to entry or weak incentives prevail, growth tends to stall.
Importantly, the PGM doesn’t prescribe a single policy solution. Different countries and industries face varying constraints, including access to capital, workforce skills, infrastructure, and competitive markets. What matters is whether institutions consistently clear a path for new ideas and entrants and efficient capital allocation.
This distinction helps explain why some markets may sustain long-term earnings growth, while others struggle despite achieving near-term profitability. Systems that reward innovation and competition tend to produce more durable growth opportunities over time.
What This Means for Investors
For investors, the PGM also reinforces the importance of looking beyond short-term market noise and focusing on the underlying forces, such as technological, institutional, or human, that shape long-term earnings growth. The PGM becomes a practical toolkit for identifying growth opportunities, as it encourages investors to ask:
- What urgent needs are emerging?
- Who is building the tools to solve them?
- Which industries are ripe for disruption?
- Where are institutions supporting—or inhibiting—progress?
Great companies often emerge where innovation meets real demand. Conversely, markets dominated by incumbents or complacency tend to experience slower growth and thinner long-term returns.
A Framework for the Decade Ahead
At its core, the PGM supports optimism, but not complacency. Progress requires continuous reinvention, and the most durable opportunities often arise where the pressure for change is most significant.
In a period marked by technological acceleration, energy transition, and shifting demographics, the PGM offers a clear lens: growth favors those who remain curious, adaptable, and willing to look for opportunity where others see only limits.