Innovator’s Dilemma
“Innovator’s Dilemma” – a cartoon that illustrates how incumbent businesses run the risk of missing the AI market shift if they treat it like other technology waves.
Previous technologies benefited a small elite and then trickled down and were costly to build out (e.g. steam powered factories, nuclear power plants).
The internet unleashed the ability to broadcast information that decentralized the power of the individual voice, but AI unleashes a new wave of enabling users to accomplish activities.
AI provides the power for anyone to become a film writer, run a hospital, discover new drugs and accomplish tasks that used to take an army of people with different skill sets. As a potential signal that large companies are going about this wrong, Accenture has done more revenue from Generative AI projects ($1.1Bn in bookings for 1H2024) than all foundation model companies combined.
The most likely scenario for this is that company boards and investors are asking CEOs of incumbent companies to have an “AI story,” which means hiring consultants to come in to give a slide presentation on disruptive change and shift around the deck chairs. Meanwhile, the company’s security team has likely blocked ChatGPT access.
The companies best positioned to win are those that view AI as an opportunity to innovate their cost structures.
As an analogy, AI can improve the whole technology stack as open source provides at the operating system level and Software as a Service provides at the application level.
Rather than having an ‘AI story,’ companies need to be thinking of what does my business model look like when new entrant competitors can come in with a 10x cheaper cost model.
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