The Capability-Impact Gap

Writer and Computer Scientist Cal Newport pointed out something interesting in a recent episode of his podcast, Deep Questions:

• On the one hand, AI's capabilities are evolving rapidly and frequently prove wrong the nay-sayers:

  • Oh, it can't do X

  • Two months later, it can indeed do X

• On the other hand, AI's economic impact has been relatively muted so far.

Early on after ChatGPT was released, massive disruptions in every industry related to knowledge work were predicted. With very few exceptions (Chegg, a company that basically lets students cheat on their homework, saw a 99% decline in its stock price) that just hasn't happened.

Why is that? Cal explains that the current dominant paradigm of AI usage, posting questions into a chat box, does not lend itself to such massive disruption, and I agree.

In essence, the capabilities of AI are probably good enough, and what needs to happen now is a painful and slow period of finding that elusive product-market fit for a true killer-app.

One compelling near-term use case is to use AI to augment a user's capabilities. Cal uses the example of Microsoft Excel. Most casual users are not aware of its more powerful features. Lookups, pivot tables, scripting. By conversing with a built-in AI, users can unlock these features more readily than by reading tomes of documentation (especially when they wouldn't even know what to look for or how to translate a feature's plain specs into how it makes their work more manageable).

More generally speaking, thinking beyond the chat box paradigm and focusing on empowerment will be the way to go!