In his book ‘Capitalism, Socialism, and Democracy’, Joseph Schumpeter argues that capitalism is ever-changing as new innovations create new markets and rendering existing ones obsolete over time, thus ‘destructing’ them . This process was described by Schumpeter as ‘creative destruction’.
Here are a few examples of creative destruction:
- Smartphones replacing MP3 players which replaced CD players
- Digital (phone) cameras replacing traditional camera devices
- E-mail replacing traditional written mails
- Electric vehicles replacing traditional cars (e.g. in Norway)
- Digital music / streaming platforms replacing physical CDs
- Online news / sources replacing newspapers
Most of these innovations that replaced traditional technologies emerged over the past 25 years.
Recent developments in AI, more specifically generative AI (or genAI) is a case in point. Although genAI has not reached the point of replacing existing markets, remarkable progress has been made over the past few years towards achieving this goal. Since 2020, the release of several genAI tools such as language model-based chatbots (GPT-3/4, BARD, Anthropic), image generation applications (DALL-E, you.com) and speech synthesis applications (Synthesia, Altered AI) has led to increased awareness and adoption by enterprises as well as consumers. GenAI is also being adopted in more scientifically and technologically demanding spaces such as Life Sciences (drug discovery, clinical trials) and Manufacturing / production (e.g. robotic automation).
The graph below shows the expected adoption level with time for three applications and the spaces it may ‘destruct’:
- Chatbots: there are signs that adoption levels may plateau in the near future. Some argue that the ‘ChatGPT hype’ is already over.
- Life Sciences: genAI is already applied for drug discovery and other clinical trial applications. The accelerating adoption of genAI in Life Sciences is expected to continue given the huge need by the industry to reduce costs and optimize drug discovery and development.
- Speech synthesis: genAI has already been used in a number of cases while the adoption speed is expected to be slow. As with the case of chatbots, it is difficult to ‘trust’ AI-generated voice content or to get excited by watching Star Wars with an AI-generated Darth Vader voice.
According to Gartner, we have already reached the peak of inflated expectations for genAI as shown below.
If that is the case, the question is: will these inflated expectations be met? And if they are, which industries will be disrupted the most?