Three Waves, One Model: A Simple Framework for Understanding PC, Internet, and AI Revolutions in Business
Three Waves, One Model: A Simple Framework for Understanding PC, Internet, and AI Revolutions in Business
Tracing technological evolution through a cost-reduction lens: from duplicating documents to distributing information to delegating knowledge work.
In 1999, Andy Grove, the visionary leader of Intel, made a bold prediction: within five years, all companies would be internet companies, or they wouldn't be companies at all. His words proved prophetic, as the internet rapidly became the backbone of modern business. Now, as we stand on the precipice of another technological revolution, we find ourselves asking a similar question: Could the same be said for AI?
To understand the potential impact of AI on the business landscape, we need to examine how each wave of technology has fundamentally altered the way companies operate. From the personal computer to the internet, and now to artificial intelligence, each era has brought with it a dramatic reduction in costs and an exponential increase in capabilities.
In this article, we'll explore the impact of each technological wave on business operations using a workflow common to every company: creating and delivering customer reports. This process involves gathering data, analyzing it, formatting the information, and presenting it to the client.
We'll use the following mental model:
PCs reduced duplication costs
Internet reduced distribution costs
AI reduces knowledge work costs
The PC Revolution
Before PCs, creating customer reports was an arduous and time-consuming process. Reports were typically created using typewriters, which meant errors required complete rewrites, customization for individual clients meant retyping entire documents, and complex layouts or graphics needed professional typesetting services. As a result, detailed, customized reports were often reserved only for the most strategic accounts and highest-paying customers.
The arrival of PCs and desktop publishing software changed this process dramatically. Suddenly, anyone could create, edit, and duplicate reports with ease. This democratization of report creation led to increased personalization for a broader range of clients, improved accuracy, more up-to-date information, and faster turnaround times. It empowered employees at various levels to contribute directly to report creation.
The PC effectively slashed the cost of duplication, both in terms of time and money. However, while it solved the problem of creation, a significant bottleneck remained: distribution. The next technological wave would address this limitation, further revolutionizing business communications.
The Internet
As the PC era solved the problem of report creation and duplication, the internet emerged to tackle the remaining bottleneck: distribution. In the pre-internet era, even the most meticulously crafted digital reports faced a cumbersome journey to their recipients. Businesses typically resorted to printing out documents and sending them via FedEx or shipping physical media containing digital files.
The advent of the internet changed this landscape dramatically. By slashing distribution costs in terms of both time and money, it changed information sharing. Sending a report became as simple as clicking "send" on an email. This newfound ease of distribution allowed for daily reports and real-time updates, fostering a more dynamic relationship between businesses and clients.
This shift didn't just speed up the process; it altered the nature of business reporting. Frequent updates became the norm, replacing periodic, static reports. Clients expected more current information, and businesses adapted to meet these new expectations.
However, as the internet solved the distribution problem, a new challenge emerged: while information could now be created and shared with unprecedented ease, the task of generating and customizing that information still required significant human input. This set the stage for the next technological revolution: the era of AI.
The AI Revolution
As the internet solved the distribution challenge, businesses found themselves facing a new bottleneck: the human element in report generation and customization. While information could be shared instantly, creating tailored, insightful reports still required significant time and expertise from skilled professionals.
Enter artificial intelligence and, more specifically, large language models (LLMs). These advanced AI systems are poised to revolutionize the entire workflow of business reporting, from data analysis to content creation and customization. This isn't just speculation; it's a prediction many companies and analysts are making. For instance, McKinsey estimates that 60-70% of knowledge work jobs could potentially be automated, signaling a shift in how businesses operate.
With AI, the process of generating reports can be largely automated. LLMs can sift through vast amounts of data, identify relevant trends, and produce coherent, well-structured reports in a fraction of the time it would take a human analyst. More importantly, these AI systems can customize reports for individual clients with relative ease, taking into account their specific needs, preferences, and historical interactions.
Businesses could offer personalized, data-driven insights to a much broader range of clients, at a scale previously impossible. Reports could be updated in real-time as new data becomes available, ensuring that clients always have access to the most current information.
However, it's important to note that we're still in the early stages of this AI revolution. While the potential is exciting, time will tell how well these systems work in practice. Questions remain about data privacy, algorithmic bias, and the need for human oversight. There's also the challenge of maintaining the personal touch in client relationships when much of the communication is AI-generated.
As we stand on the brink of this new era, it's appears that AI and LLMs have the potential to transform business communications just as profoundly as PCs and the internet did in their time. The businesses that can effectively harness this technology while navigating its challenges and limitations will likely find themselves at a significant cost advantage in the years to come.
AI Interns as Your New Workforce
As we've seen, examining each technological wave through the lens of our simple mental model—PCs reducing duplication costs, the internet reducing distribution costs, and AI reducing knowledge work costs—provides a powerful framework for understanding the transformative impact of these innovations. This model can serve as a valuable tool for business leaders seeking to anticipate and leverage future technological shifts.
The potential of AI to transform knowledge work is immense, but it also requires a shift in how we think about and implement these technologies. To help conceptualize this shift, let's explore another mental model that can provide valuable insights into how businesses might harness the power of AI effectively.
Think of AI as an intern—one that needs supervision and isn't ready for direct customer interaction, but can work tirelessly for extended periods. Like interns, AI excels at tasks that are arduous to do but easy to check. This perspective prompts important questions: What could you accomplish with an army of tireless, free interns? What problems would you tackle? How many AI "interns" could you manage before supervision costs become prohibitive? Do you have analysis tasks that are time-consuming to perform but easy to verify?
By applying these mental models to your specific business context, you can begin to identify areas where AI could have the most significant impact. If you're interested in exploring these concepts further and discovering how AI could transform your business, reach out.