The Cost of Cognition and Creativity is $0.
You read that right. If you think or create for a living then your "value capture" is going away.
I’ve been criticized for being too much of a pessimist… and for being too much of an optimist. Which, likely makes me a realist.
So, i’m gonna give it to you straight.
Now, you’re probably not gonna wanna hear this, and some people “cannot fathom1” the world we currently live in… but you’ve gotta get ready for it.
If you currently think or create for a living then your job is likely going away.
In every class I teach, or presentation that I give, I quote Karim Lakhani from HBS. He said that in the Age of AI, “The marginal cost of cognition and creativity is dropping to $0.” What does this mean exactly?
Well, IMNSHO, here’s one of the most important diagrams that you will ever freakin’ see in your entire life. This diagram explains the fundamental impact of AI:2
Karim explains this concept of “$0 marginal costs” in the context of “information transmission” via the Internet. Before the Internet, it used to be pretty darn expensive to send information across the world. Today it costs us incrementally nothing to send an email, image, audio, video, or… to have a live global zoom conversation. The “incremental” means that there’s a base cost to have access to the technology: you need a laptop or smartphone with Internet access, and then it costs you next to nothing to send or receive information globally.
Now apply that “marginal cost” concept to “cognition” and “creativity”. This means it’s gonna cost next to nothing to understand or create… anything!
Now… are you ready… here comes the hard part for most people to accept.
If you have a job… and you get paid to think or create something… why would your boss pay you to do that job if they can have an AI do it for them instead?
The answer is… eventually… they won’t. If Milton Friedman is right, and maximizing shareholder value is the primary (only?) thing that matters in a Capitalist Economy, then the CEO’s of every company are… by default… incentivized to reduce costs, and increase efficiency. They’re gonna use AI to augment and replace as many “tasks” within the organization as possible.
This means that there there will come a time… in the very near future… where “value capture” for cognition or creativity in the workforce will go away.
What’s the good news?
The good news is that every organization has “performance gaps” and “opportunity gaps”3 #Tushman
Think of this as the “wish list” of the organization4.
With AI, organizations are now going to be able to tackle their wish lists! Y
The good news is that you need to be the human controlling the AI to tackle the wish list… and that’s going to result in one of the greatest productivity booms in human history.
A parting thought about “Access”:
I emphasized the word “access” above because folks often forget what this means. There are over 2 Billion people in the world today who don’t have access to fresh drinking water5… they don’t give a FUCK about ChatGPT. This means that the rich are going to get richer, and the poor are going to stay exactly where they are.
What’s next?
How is this going to affect business, society, the economy, workers, intellectual property, designers and artists? Well… if you wanna find out… then please subscribe and pledge to my substack, take my upcoming course at SVA, share this post, and buy some of my swag!
My uncle said that he “cannot fathom” how AI is able to understand and create. I feel that. It’s complicated… and the best researchers don’t completely understand it either.
Source: Author. Yes, I made this graph. It’s mine. It’s part of my research. ©2024, Todd Brous.
“Lead and Disrupt” is required reading. There’s a quiz on Friday!
A good friend of mine, Nick Petsas, suggested the “wish list” concept. He gets full credit.
https://blogs.worldbank.org/en/opendata/world-water-day-two-billion-people-still-lack-access-safely-managed-water
Interesting that you highlight (correctly I believe) that if you think/create for a living you will soon be out of a job. Then you confusingly make the point that the productivity boom will require people to manage the AI which I assume is your "upside" to this development. Nevertheless, isn't that a job that requires "thinking"? In the short term, there may be a need but I think you fall short of taking this to the logical conclusion, namely; 1) Any new AI-managing jobs will not come close to addressing the loss of 70-80% of the jobs people do today, 2) Any AI-managing that humans might do will become more and more specialized as AI improves (i.e. requiring less human involvement), and 3) There will be no pipeline for new experts to fill the available roles because entry level jobs (where people learn to be experts) will disappear. Unlike previous productivity booms where new technologies made people more productive, this one will drive productivity by eliminating people from the process. It is disconcerting that our academic leaders do not pay more attention to this scenario as being at least as plausible as some grand new paradigm that benefits all of humanity. Thank you for calling out the need to recognize the coming tsunami of change...I'd be curious to understand to where you think this tunnel eventually leads.