In December 2015, the famous Chairman of the World Economic Forum, Klaus Schwab wrote in Foreign Affairs Magazine that: “We stand on the brink of a technological revolution that will fundamentally alter the way we live, work, and relate to one another. In its scale, scope, and complexity, the transformation will be unlike anything humankind has experienced before.”[1]
Just six weeks prior to his article, management consultancy firm McKinsey had published a quarterly titled ‘Four fundamentals of workplace automation’ where they heralded IBM’s Watson, Rethink Robotics’ Baxter and Google’s driverless cars as ‘spectacular demonstrations’ of ‘advanced robotics’ and asked, ‘Should we fear threats to jobs, disruptions to organisations, and strains on the social fabric?’[2].
Investors who are long in the teeth are likely feeling a sense of ‘déjà vu’ as similar predictions are now being made and questions being asked on Artificial Intelligence.
Amara’s law cautions that ‘we tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run’[3].
This law has been nicely encapsulated in visual form thanks to Gartner’s yearly Hype Cycle which shows that new technologies often experience a ‘peak of inflated expectations’ and then a ‘trough of disillusionment’ on the way to real productivity[4].
Indeed, McKinsey’s chosen examples of ‘advance robotics’ are a case in point. Watson failed to live up to the grand vision IBM had for the technology, leading the New York Times to write an article titled ‘What ever happened to IBM’s Watson’ in the summer of 2021[5]. Rethink Robotics’ industrial robot Baxter that aimed to ‘revolutionise manufacturing’ was ultimately discontinued in 2018 following underwhelming sales[6].
And while Google’s driverless car has racked up double-digit millions of autonomous miles, it still only operates in two US cities nearly a decade on[7]. What does nearly a decade of experience in the area of robotics and automation tell us about what might be in store for the field of Artificial Intelligence?
Three observations come to mind:
- The initial hype may subside before adoption really starts to take hold
- The most exciting breakthroughs sometimes come from the least obvious of applications
- While big tech incumbents are expected to drive innovation in the short-term, this shall pave the way for small company success stories in the medium-term.
Over the next few weeks, we’ll be exploring each one of these observations in more detail. But for the meantime, why not whet your appetite and take a look at our primer article on AGI – artificial general intelligence.
Find out Why Everyone’s Talking About AGI >>>
Karen Kharmandarian and Alexandre Zilliox are portfolio managers at Thematics AM, an affiliate of Natixis Investment Managers
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[1] Source: https://www.foreignaffairs.com/world/fourth-industrial-revolution
[2] Source: https://www.mckinsey.com/capabilities/mckinsey-digital/our-insights/four-fundamentals-of-workplace-automation
[3] Source: https://thevirtulab.com/what-is-amaras-law/
[4] Source: https://www.gartner.com/en/research/methodologies/gartner-hype-cycle
[5] Source: https://www.nytimes.com/2021/07/16/technology/what-happened-ibm-watson.html
[6] Source: https://www.engineering.com/story/rethink-robotics-shuts-down
[7] Source: https://waymo.com/faq/
