Redesigning the entire enterprise from the top down around AI agents is most unlikely to work out well...although it would surely generate large amounts of consulting revenue.
Also: "McKinsey reuses their now-familiar gen-AI uplift estimate: $2.6 to $4.4 trillion of “value.”" This ignores the point that many of the financial benefits of AI are likely to be competed away...as is the case with other technologies. Warren Buffett mentioned that when Berkshire-Hathaway was still a textile company, he was told that the business would have a great future because automation in the field was advancing so fast. He observed that the automation could be purchased & implemented by his competitors as well as by himself, and the benefits of automation would likely accrue in the form of lower prices for consumers rather than higher margins for manufacturers.
Thanks for the comment. You make a good point about Berkshire and automation technologies. As for McKinsey’s forecasts of multi-trillion dollar value creation from AI, I would tend to agree with you that it seems overstated. I suspect, but can’t prove, that McKinsey came up with these kinds of estimates as a way of cleansing for Fortune 500 execs the insane claims made by Silicon Valley’s AI accelerationists of 30% GDP growth per year.
I enjoyed this Dave. And so glad that I stumbled upon this in my feed.... not sure if you remember me from the Quora days but I'm happy to see that you've migrated to Substack and looks like you've built quite an audience!
I created an AI agent just for fun a week ago. Can I just say that it's fun, but it only does the work half as good as a human. You can tweak it a bit to be a little better, but the problem is, technology has to get better than this for humans who don't really know how to tweak it to use it effectively. Just my two cents.
Yes, AI agents are very brittle right now. A bunch of things need to change in order for them to become more robust. I actually have a post coming out about this later this week.
I always felt the benefits of AI would accrue to the individual first (think more productive more leisure time) with shadow adoption in firms before they could realise a real edge at the enterprise level. Even then I think AI eats away at diseconomies of scale first (like how do you use this weird system or process) rather than achieve growth.
No one would mistake McKinsey for implementation experts...ever. Ignoring the McKinsey takedown, though, the ability to follow this plan is inversely correlated to the scale-based inertia and weight of the organization. AI presents a tremendous opportunity for smaller, faster businesses to compete in a way not previously possible. Also, right now, the way to future-proof is ROI. I strongly agree with the point regarding disposability. If it does not increase revenue, reduce cost, drive scaling efficiency, or increase CSAT measurably, forget it.
No one would mistake McKinsey for implementation experts...ever. Ignoring the McKinsey takedown, though, the ability to follow this plan is inversely correlated to the scale-based inertia and weight of the organization. AI presents a tremendous opportunity for smaller, faster businesses to compete in a way not previously possible. Also, right now, the way to future-proof is ROI. I strongly agree with the point regarding disposability. If it does not increase revenue, reduce cost, drive scaling efficiency, or increase CSAT measurably, forget it.
Redesigning the entire enterprise from the top down around AI agents is most unlikely to work out well...although it would surely generate large amounts of consulting revenue.
Also: "McKinsey reuses their now-familiar gen-AI uplift estimate: $2.6 to $4.4 trillion of “value.”" This ignores the point that many of the financial benefits of AI are likely to be competed away...as is the case with other technologies. Warren Buffett mentioned that when Berkshire-Hathaway was still a textile company, he was told that the business would have a great future because automation in the field was advancing so fast. He observed that the automation could be purchased & implemented by his competitors as well as by himself, and the benefits of automation would likely accrue in the form of lower prices for consumers rather than higher margins for manufacturers.
Thanks for the comment. You make a good point about Berkshire and automation technologies. As for McKinsey’s forecasts of multi-trillion dollar value creation from AI, I would tend to agree with you that it seems overstated. I suspect, but can’t prove, that McKinsey came up with these kinds of estimates as a way of cleansing for Fortune 500 execs the insane claims made by Silicon Valley’s AI accelerationists of 30% GDP growth per year.
I enjoyed this Dave. And so glad that I stumbled upon this in my feed.... not sure if you remember me from the Quora days but I'm happy to see that you've migrated to Substack and looks like you've built quite an audience!
Hi Patrick, yes I remember you from Quora. Appreciate the comment, and hope you are doing well!
I created an AI agent just for fun a week ago. Can I just say that it's fun, but it only does the work half as good as a human. You can tweak it a bit to be a little better, but the problem is, technology has to get better than this for humans who don't really know how to tweak it to use it effectively. Just my two cents.
Yes, AI agents are very brittle right now. A bunch of things need to change in order for them to become more robust. I actually have a post coming out about this later this week.
I always felt the benefits of AI would accrue to the individual first (think more productive more leisure time) with shadow adoption in firms before they could realise a real edge at the enterprise level. Even then I think AI eats away at diseconomies of scale first (like how do you use this weird system or process) rather than achieve growth.
No one would mistake McKinsey for implementation experts...ever. Ignoring the McKinsey takedown, though, the ability to follow this plan is inversely correlated to the scale-based inertia and weight of the organization. AI presents a tremendous opportunity for smaller, faster businesses to compete in a way not previously possible. Also, right now, the way to future-proof is ROI. I strongly agree with the point regarding disposability. If it does not increase revenue, reduce cost, drive scaling efficiency, or increase CSAT measurably, forget it.
No one would mistake McKinsey for implementation experts...ever. Ignoring the McKinsey takedown, though, the ability to follow this plan is inversely correlated to the scale-based inertia and weight of the organization. AI presents a tremendous opportunity for smaller, faster businesses to compete in a way not previously possible. Also, right now, the way to future-proof is ROI. I strongly agree with the point regarding disposability. If it does not increase revenue, reduce cost, drive scaling efficiency, or increase CSAT measurably, forget it.