AI is Under-Hyped.

The Future Does Not Fit in the Containers of the Past. Edition 175.

“The development of AI is as fundamental as the creation of the microprocessor, the personal computer, the Internet, and the mobile phone. It will change the way people work, learn, travel, get health care, and communicate with each other. Entire industries will reorient around it. Businesses will distinguish themselves by how well they use it.” Bill Gates

My sense is that AI will have far greater impact than the microprocessor, the PC, the Internet and the mobile phone. It will have the impact of the printing press, electricity, the automobile, the telephone, television/radio and vaccinations which were far more impactful in changing every aspect of society than information technology.

There are many who believe AI is hype and just a new form of advanced statistics turbocharged by the data available on the Internet, new algorithms and increasingly powerful processors from Nvidia and others.

To keep up to date on this thinking do bookmark and read the AI Hype Wall of Shame below.

The AI Hype Wall of Shame

Here is why I think otherwise:

1.The keys are in place for AI to truly combust: Oxygen, heat, and fuel are frequently referred to as the "fire triangle." Add in the fourth element, the chemical reaction, and you actually have a fire "tetrahedron."

Fuel = Money. Scott Galloway has written about how he believes that Money rather than Taylor Swift should have been Time’s Person of the Year and there is no doubt that money is overwhelming everything from sports to politics. The largest single tsunami of money movement is to AI both within the worlds of Private Equity and Venture Capital but also within the investment allocations of companies everywhere in the world. Between December 10 and 16 the center of the AI world was not in SF but in New Orleans at NeurIPS 2023 where tens of thousands of people from all over the world including big booths from financial firms like Citadel to major money players from China.

Oxygen= Free. We have seen the marginal cost of compute on a plunge to zero, the marginal cost of distribution due to internet plunge to zero and now we are going to see the cost of knowledge plunge to zero. Massive compute and storage power in the Cloud, world wide access and distribution and global knowledge that is free as open source systems from Mistral and Meta now 4 to 5 months behind the best closed systems from OpenAI (an inappropriate name for a non transparent company filled with intrigue and soap opera ) catch up with far cheaper and faster tech that require less compute and will run on a laptop!

Heat= Disarray. The bankruptcy of old models built for 1945. Here from the New York Times is an extract from an article on something as central as the global financial system:

“Nearly 80 years later, the global financial architecture is outdated, dysfunctional and unjust,” António Guterres, secretary general of the United Nations, said this summer at a summit in Paris. “Even the most fundamental goals on hunger and poverty have gone into reverse after decades of progress.”

The world today is geopolitically fragmented. More than three-quarters of the current I.M.F. and World Bank countries were not at Bretton Woods. China’s economy, in ruins at the end of World War II, is now the world’s second-largest, an engine of global growth and a crucial hub in the world’s industrial machine and supply chain. India, then still a British colony, is one of the top five economies in the world.

Can governments grappled with internal dissensions and the external shifts of a multi-polar regulate a global, exponentially scaling in power, rapidly declining in cost super force soon available to all ?

2. Every knowledge workers job in the developed world and probably in the developing world will be significantly impacted in less than a thousand days.

We are in world where the cost of knowledge is tending towards zero, where the cost of content creation is being dramatically reduced, where the time spent in collecting, collating, organizing and presenting information is being reduced by 50% to 80% and most managerial tasks of allocating, delegating, monitoring and measuring will be done ruthlessly faster with fewer mistakes by AI than what exactly is a knowledge workers job?

If you were impressed by prompt to text and prompt to image now consider Idea to Video via Pika .

A recent Boston Consulting Group study shows the impact of today’s generative ai technology (which will be exponentially better and cheaper next year) including how these technologies enable a flattening of skills.

Most knowledge firms like law to consulting to marketing basically have a system where they charge by the hour.

Now consider that AI a) dramatically reduces the number of hours, b) lessens the need for lower level associates who often did collection, collation, compilation, and co-ordination work done by AI ( and these are the most profitable to a service company since the difference between what they are paid and billed is widest in these firms and c) and allows mid level performers who may be paid much less than the most senior executives to operate close to their level of competence.

Now imagine the impact on jobs in a future where one must bill less time with lower margin and fewer senior people?

No need to imagine. McKinsey has shrunk its new partner class by 35% from 380 people last year to 250 this year. And Ernst and Young has cut 10% of all of its consulting partners. While these are about today’s challenges these firms are smart enough to anticipate tomorrow. ( For the near term AI has been a boon to consulting and other firms but this is the first time what they are consulting about is also likely to revolutionize their business.)

In the media industry of publishing and news already 20,000 jobs have been cut as changes by tech platform from down playing content and news to re-jiggering where they send traffic.

And the impact of AI is yet to be felt

Now imagine a television show where AI creates and powers all the content and is the Talent.

No need to imagine try out Channel 1…

Now imagine you were a translator or a company selling language lessons.

Well Eleven Labs is the first of many that will allow for real time free translation and dubbing of any content in any language or accent for close to free…

And however impressed or unimpressed you are by the above examples its nothing compared to what we will see in a few weeks ( not months or years).

3. The Four Big Horsemen of GDP are in for an exciting ride!

In the US nearly half of GDP is concentrated in the Health, Auto, Finance and Education industries all of which are going to have amazing opportunities along with rapid changes brought about by AI which will require strong leaders to navigate.

Health: Google’s DeepMind has had major breakthroughs in protein folding which will be revolutionary in developing new cures but also is being leveraged to enhance clinical trials, interpret images and provide much more reliable and faster diagnosis.

Education: When knowledge is free and the future of all industries changing rapidly the world of education is or should be asking itself some existential questions such as What should we be teaching? Maybe in a world where allocating, delegating, monitoring and measuring will be replaced by creating, building, making and guiding, education should go back to school on what is education and how to focus less on knowledge but more on insight, wisdom, communications and creativity. Another question is since AI is going to be so disruptive to so many industries should education now focus on re-skilling and up-skilling all career long versus a focus on pre-career training?

Finance: Finance is a unique combination of math and emotion (greed/fear). AI is changing the math dramatically. Let us look at insurance which is an underwriting and claims processing business often based on actuarial tables and deep droves of data including weather patterns and sensors on cars among other objects. All the big Insurance companies are deeply investing in AI to better manage and price risk. Intriguingly AI will reduce risk and liability if cars are safer but increase liabilities if AI drives massive positive health outcomes and people live longer meaning that a lot of insurance and annuities that are sold today may be underpriced!

Auto: It is not just electric cars but all modern cars are increasingly computing engines on wheels and AI has been used for design, engineering and more. Just as we saw the rise of Chinese Auto due to the electric shift, AI be a big driver in auto. A large part of Tesla’s market capitalization is that it is one of the premier AI companies at heart.

4. AI will create great disruption but with proper leadership can be a massive net positive for the next chapter of humanity.

Every major advance from printing press to automobiles to electricity has created great disruptions and significant loss of jobs and the need for new ways of governing and thinking but have in time been hugely positive in a multitude of ways furthering humanity.

While AI will need to be governed it will be hard to slow or stop or control due to its global nature, its exponential and rapid advancement along with the current constraints of government.

While many worry about rogue AI ending the world it is far more likely to enable a better world with amazing empowerment of individuals, catalyze tens of millions of new businesses, provide new opportunities for emerging and smaller countries, allow for a significant extension in healthier lives and much more.

The rate of how fast these changes will occur is not being understood as every firm follows a 3 E strategy of embedding, enhancing and extending their existing products and services with AI as Microsoft has done with Co-pilot or Google with Bard scaling and making available the technology to hundreds of millions of users in a matter of weeks!

The shift from the current to the new world will likely be chaotic and for individuals and institutions to remain relevant in an AI age it will be key to embrace AI, adapt yourself and your business to AI and complement AI.

This will be a time calling for great leaders, continuous learning and open imaginations.

All moving forward with great urgency…

Images by GPT-4

Rishad Tobaccowala helps turbo-charge companies, teams and leaders growth by helping them see, think and feel differently. Forty years of experience delivered through writing, speaking and advising in ways that are actionable and inspirational. For more about Rishad Tobaccowala click here.