The AI slowdown is irrelevant
The pace of AI change is not unprecedented. Real change will be slower than people think for well understood reasons. Learn from past experience and make sure its change for the better.
In 1987 Robert Solow famously quipped: "You can see the computer age everywhere but in the productivity statistics."
By then computers had been around for decades and the PC revolution was well underway. Yet it took until the late 1990s for the economic statistics to prove the Nobel laureate wrong.
I think we are suffering from the same confusion about the pace of change in AI. Technology is changing fast. That doesn't mean real change is happening fast. Solow coined his phrase more than 20 years after Moore suggested his Law. And Moore was commenting on an already established tech trend.
In the last few weeks, the technosphere has been full of chatter about an AI slowdown. Hard to say whether this is true or not. And billions of paper dollars may disappear if it is. In reality, it's irrelevant.
The pace of change
My instinct has always been that AI is not really different from other waves of tech driven change. The tech is exciting and new and feels like it is all happening very fast. The real changes in our economy and society will take a long time.
Beyond an old man's intuition, why is that? There are 5 main reasons:
People drive change, not business. Business will change in response to how people use AI in their lives and work.
Businesses need to invest. Investment means money. It also means people, resources and time.
Businesses need to figure out how to integrate the new tech into their operations. "Integrate" is a very loose concept here. It may mean completely reconfiguring the business to seize the opportunity.
Once you understand how and what to change, implementation takes time. Steven Sinofsky has a great explanation of why in 222. Automating Processes with Software is HARD. One quote:
"Automation is fragile because steps are not followed. Tools and connections fail in unexpected ways. Or most critically because the inputs are not nearly as precise or complete as they need to be. And they come to know that addressing any of those is wildly complex.”
Prices need to fall. This is less obvious but it matters. Change is a risk. So regardless of the hype, businesses factor that in when making investment decisions. When more people adopt a technology, the price falls. As the price falls, the returns become more attractive and even more people adopt. This is known as Wright's Law.
Doing the next right thing
A wise man once said:
"The four most dangerous words in investing are: 'this time it's different. '"
All around, I see people suggesting “new” approaches, thinking or methods to deal with the unique and special case of AI. These are always the methods of top down control and central planning.
We know these don’t work. AI is not different. The important questions are:
How will people use AI?
What can we learn from past experience of change?
Which new possibilities does AI open up?
If you want to explore what these questions mean for your business and you need a sounding board, that’s what I do every day. Please get in touch.
Thanks for reading.