March 28, 2023

The race to efficiency: How AI is changing everything

How the AI revolutionary is as transformative as the arrival of electricity, and equally those who don't move fast enough will be left behind.

When we think about how significant the arrival of generative AI will be in terms of productivity and bottom line impact, let alone the future of work, it’s easy to make comparisons to the advent of the PC in the late 1980s or the arrival of the iPhone, but I believe we should be thinking much bigger. I think it's more like the dawn of electricity in the late 19th early 20th century. It's truly transformative. 

I see what is happening to productivity in our work at Reason right now as being closer to the huge disruptions that transformed the way work was done as electricity became ubiquitous more than 100 years ago.

Prior to the widespread adoption of electricity, the industrial economy was largely powered by steam, which was limited in reach and capacity. Electricity revolutionised the supply of energy because it could be generated and distributed so much more efficiently, leading to a surge in innovation and productivity.  

The initial introduction of electricity disrupted traditional means of production as powerful new electric motors led to machines replacing manual labour throughout industry, leading to increased productivity and dramatically lower costs. But more than that, electricity very soon enabled new production models, mechanising factories and giving rise to the assembly line which transformed manufacturing - best evidenced by the Ford factories of the 1920s. Of course there’s electric lights which began it all and as well as a better standard of life meant factories could operate around the clock, allowing for increased production in a way simply not possible with dim, unreliable gas lighting. Steam trains were quickly swapped out with electric trains that were faster and less expensive to run and meant the transport of goods and workers became quicker and cheaper. 

It’s during a second wave of disruption though that things get really exciting. This is the subsequent set of unexpected developments and innovations that we will see replicated in today’s AI revolution too - but can’t even imagine today. 

For instance, new unforeseen technologies quickly became possible as people began to understand and experiment with the power of the new technology. These include, for example, refrigeration, or the telegraph and telephone which totally reinvented our way of life, making instantaneous international communication a reality and making global food distribution the norm. Nobody predicted the way electric elevators would enable the building revolution that saw the skylines of cities like New York peppered with 100-storey skyscrapers.  The transistor radio ushered in an era of news and entertainment that meant our understanding of the world would never be the same again.

At the time many feared for their jobs and even their own relevance in this new economy. Equally today, AI is automating old tasks but it’s also creating new jobs in fields such as data science, machine learning, and automation: new opportunities are just around the corner. Courses are already emerging in “how to be a prompt engineer” and we daren’t even imagine what new sectors and business models we can expect from the rapidly escalating arms race in Generative AI products and services. 

This race to efficiency will change everything, just as electricity did a hundred years ago. New jobs, new industries and new ways of life even will become possible and commonplace. But the advantages only become available to those who join that race.

Companies that don’t embrace these new possibilities will quickly find their productivity radically outpaced by their competitors who have embedded Ai into their workflow and skill sets. As products and services become available for a fraction of the cost, some businesses will suddenly find themselves completely uncompetitive and no longer viable. Beyond that, those who aren’t already immersed in and experimenting with this new technology will miss out on that secondary wave of innovation that will surely follow as the full reality of what’s possible dawns.