Almost Timely News: The Intelligence Revolution

(2024-03-10)

Mar 10, 2024

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What's On My Mind: The Intelligence Revolution

This week, let's talk about the future of work and AI, something I call the Intelligence Revolution - so named because it's as big a deal as the Industrial Revolution. Here's why: the Intelligence Revolution fundamentally changes the nature of work. AI is to knowledge work what industrial machinery is to manual labor. The machines do the majority of the work, and we supervise the machines. We don't need a thousand people in a corn field, manually removing ears of corn. We have one machine driven by a guy who's listening to his favorite podcasts as the GPS guides the machine down the crop field.

Let’s take a brief walk down memory lane at the various revolutions through history. You had things like the Stone Age, the Iron Age, the Bronze Age, each of which lasted thousands of years. Then the Dark Ages, the Renaissance, or more or less the modern era. What’s worth pointing out in this big picture view of history is that the time between ages gets progressively shorter. We took thousands of years to figure out stuff like wheels, iron, and bronze. Our farms gradually got more efficient, but over the span of generations.

Here in the USA, we started as an agrarian nation. In 1790, more than 90% of the population worked in agriculture. By 1900, that was only 50%, which is a big shift over the span of a century. By 1990, 200 years later, the percentage of the population that worked in agriculture was a mere 2%.

Think about the modern digital age. The first modern computer was built in 1943, the ENIAC. 33 years later, the Apple computer was invented, kicking off the personal computing revolution. 20 years after that, the Internet really started to become prevalent with the invention of the World Wide Web (email a few years before that), starting the Internet Revolution. A decade later, social networks emerged en masse. Less than a decade after that came smartphones and the Mobile Revolution.

And today, we're firmly in the early years of the Intelligence Revolution. You and I have been talking about machine learning and AI in some capacity since 2013. You've perhaps even been to some of my AI talks at conferences like INBOUND and Social Media Marketing World as early as 2015/2016. But with the advent of generative AI in 2017 and its explosion in popularity in 2022 with Stable Diffusion and ChatGPT, we've had less than a decade since the last major revolution.

This timing, this pacing is really important. In general, we humans aren't great with rapid change. We're good at slow change. When the spinning jenny came out in 1764, it started to change textiles, but it wasn't even patented until 1770. When the typewriter emerged in 1829, it was widely panned because it barely worked. 38 years later, the Sholes typewriter actually typed things, but it wasn't for another 6 years until they fixed the keyboard layout that it became usable.

Think about that. The typewriter took as much time to get a usable keyboard layout as we had between the mobile revolution and the Intelligence Revolution. That's how fast things are moving right now.

When change is slow, we adapt. We leverage Schumpeter's principle of creative destruction, in which new innovations destroy the economy that gave rise to them, replacing them with a new economy. Industrialization took on all the agrarian workers who were no longer needed in the fields, putting them to work in factories and later assembly lines. What's critical is that it took over a century, at least in America, to really make that full transition. America in 1790 was farming, and America in 1890 was making stuff. America in 1990 and today? It's the service sector, providing services from call centers to flipping burgers to Google Analytics consulting. Again, this was a century-long transition. Manufacturing peaked in the USA in 1944, while the service sector went from 31% of the workforce in 1900 to 78% of the workforce by 1999. As of today it's well over 81% of the workforce.

Again, look at the timing. Service jobs took over from the Industrial Revolution over the span of a century.

The problem that AI poses isn't that it's going to destroy jobs or create new jobs. That would happen with any technology as radical and transformative. The problem with AI is the speed at which it will do so.

We're starting to see a transition into a different kind of service economy, one that's intangible. Look at the enormous number of people in the media space now, making a living - in some cases a very good living - being professional YouTubers, for example, or running an OnlyFans account. They're not making anything tangible, but they are creating value for their audiences, and their audiences compensate them appropriately. As climate change, a swelling global population, and a fixed amount of natural resources all impose pressure on physical goods, it's logical that the intangible service economy would be the next step.

But it's not happening fast enough, not fast enough compared to what AI will do to the knowledge work sector. Already, companies like Klarna are touting just how fast their services will eliminate call center jobs entirely, saving companies enormous amounts of money. Klarna boasted that their AI call center systems reduce call times, improve customer satisfaction, and cost a fraction of what human workers cost. No CFO or COO is going to look at those metrics and stick with the more expensive, less efficient, less satisfying option of humans.

What that will create is a structural employment problem. Structural unemployment is when unemployment increases for jobs that never come back. Once a job vanishes, it's gone and that person has to find different work. Horse and buggy drivers are gone. Ice salesmen are gone. (yes there are asterisk exceptions for all of this, like the horse-drawn carriage rides you can take around downtown Boston) Telephone operators are gone. Elevator operators are gone. Those jobs are gone and never coming back at the same scale.

The challenge for humans is again, we don't change fast. If your trade vanishes, it's surprisingly difficult to change to something else radically different. Programs in the mid 2010s promised to retrain coal miners as coders, but those programs were largely ineffective, in part because the skillsets of the two professions are wildly different. (another major contributing factor was that the programs were poorly run) Yes, a person can change over time, but it takes much longer than we'd expect.

So when AI sweeps in and starts eliminating jobs left and right in rapid fashion - and that's the key, rapid fashion - you'll have a significant economic dislocation for a while. Companies who optimize for profits first will wholly embrace AI and reduce headcount as fast as possible, and the new generation of jobs that will be created by the technology won't ramp up as fast. You can see that in past revolutions, old jobs stuck around for quite a while as new sectors ramped up:

Pop quiz: what do the French Revolution, Coxey's Army, the October Revolution, the Bonus Army March, Tienanmen Square, Argentinazo, Arab Spring, and Occupy Wall Street all have in common? They are all civil unrest responses to dire economic conditions, many of which were about rapid changes in employment.

This is the greatest short-term risk we face right now. Already, income inequality is sky-high around the world, compounding existing polarization. The nature of AI - software that does human work but without human wages - means that income concentration becomes more problematic. A company that employs a hundred people but can deploy software that can do the work of millions of people is going to concentrate a lot of income in a very small group. Those hundred people will do well, but the millions of folks replaced will not. If that happens rapidly - say, over the period of a few years - and structural unemployment rises by 5-10%, civil unrest is more likely. And the faster it goes up and stays high, the more likely civil unrest becomes.

And in an already polarized environment, as we see in many nations around the world, that civil unrest is likely to be violent.

So, what's the solution? It's fine to lay out the problem, but how do we solve for this before it becomes a crisis that we can't prevent? I see three avenues we need to pursue - at the individual level, at the organizational level, and the societal level. How well we pursue these will dictate the outcomes we get.

Let's look at the solution that's easiest, the personal one. This is what you can do to prepare.

First, evaluate how much risk you're at. I said almost a decade ago that if you do your work with a template today, a machine does your work without you tomorrow. That is more true than ever. If your work is highly repetitive and templated, your job is in peril. There's no polite way to sugar coat that. So what do you do?

If it's an option for you, get skilled up with AI so that you're the one managing the machines. If you can do your work 10x faster with AI, and you're very skilled with it, your individual job may be safe even as your compatriots' positions aren't.

If it's not an option to learn AI, then look at the jobs that are difficult to automate, work that is not templated. Trade jobs, for example, like the folks who come out twice a year to tune up my heating system, are extremely difficult to automate and just aren't worth building robots to do. Those jobs will likely remain human for quite some time.

Personal services jobs where you have a real relationship with your customers will be difficult to automate because the human interaction is part of the core value proposition. You go to your hair dresser or fitness coach or therapist partly because they do good work, but partly because you value that specific human relationship.

And intangible jobs like YouTubers, OnlyFans, etc. are also difficult to automate for specific personal brands, because people are invested in the person themselves. You follow Morgan Eckroth specifically because you want to learn from her. You wouldn't follow a synthetic version because it's that uniqueness of her humanity that makes her worth watching. Along those same lines, devote a lot of time and effort to your personal brand.

Finally, on the personal level, treat AI like (hopefully) you treated COVID. Remember four years ago? (even if you prefer not to) We prepared. We stocked up. We battened down the hatches, conserved our resources, saved money, deferred luxuries, and bunkered down to weather the storm. This isn't any different. If you think your current job and overall employability is at risk from AI, behave accordingly. Make the most of your employment now while you pivot, and conserve your resources as you do.

Next, let's talk organizations. AI will hit the hardest at companies where leadership prioritizes profits over people. If you work for such an organization, your job is in peril, period. A company run by people whose only priority is net profits will see every non-C Suite person as expendable and replaceable. To the best of your ability, try not to work for companies like that.

If you are in the C Suite or a business owner, take a look at your books. One of the things I admire most about my business partner and CEO Katie Robbert is how financially conservative she is. We run lean and we don't pay ourselves any more than we have to so that we have reserves to weather stormy times. That philosophy served us incredibly well during the pandemic; had we not done so under her leadership, Trust Insights might not be in existence today. That same fiscal conservatism also allows us to employ the people we employ at sustained levels, rather than the boom and bust cycles that a lot of bigger companies go through all the time, hiring and firing like a binge drinker.

If you're a business owner or manager that prioritizes people over profits (with the understanding that you still have to run a business), can you commit to retraining and upskilling employees who are most at risk from AI? Can you help them learn how to scale their own work with AI? It might be more costly in the short term, but if those people become good at what they do, they can then take on more work without losing their jobs - and deliver more, better results for your company.

From a marketing perspective, everything that can be AI, will be AI. As a marketer who wants to differentiate, double down on things that don't scale. Experiential marketing, where you create real world experiences, will grow in importance because it'll be unique, different, and compelling. Influencer marketing will continue to grow because personal brands and individual personalities will differentiate from more generic AI content. If you're not growing your own influencers inside your company, inside your marketing department, you're missing the boat.

Finally, let's talk societal changes. These probably will not happen globally, so look for societies where these do happen and if it's within your power to relocate, relocate to places that do these things.

First, a big short-term fix for AI's impact will be universal basic income, likely and sensibly funded from corporate taxes. Corporations will be vacuuming up most of the money generated by AI, so they'll have even more money to spare (they already have quite a lot - corporate profits after taxes have increased by a trillion dollars per year in the USA alone).

Second, universal basics will go a long way towards alleviating societal pressures, reducing unrest. These are things like basic housing, even basic food provisions. If people have a place to live - even if it's not super nice - and food to keep them alive, they're less likely to resort to violence to meet basic survival needs. Hell, you can buy a portable pre-fab house on Alibaba for $5,000 made from a shipping container. Is it nice? Not really, but it'll keep you alive. A government could invest in hundreds of thousands of these for the price of other, less effective social programs if the will of the people compelled it to.

And to be clear, I'm not saying everyone HAS to living in basic housing. What I'm saying is that should be a bare minimum we offer to each other as human beings. If you have the means to afford more, you absolutely should enjoy the lifestyle you can afford. But for a whole bunch of people, the basic would be a luxury unto itself.

This was a long piece, but it's the foundation of what we can do in the early years of the Intelligence Revolution to make AI our partner, not our enemy, to reduce the impacts of AI long enough for the rest of society to catch up, and to make the most of the technology for ourselves. You can for sure take action on the personal initiatives today. Your company may or may not take action on the organizational initiatives, and if your nation takes action on the societal initiatives in a meaningful way, count your blessings and keep electing the people who are making that happen. AI is the most profound change to the future of work since the Industrial Revolution, and I want to see you succeed in it.

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DJ Butler

I want to commend you on a very (not almost) timely thought piece. I’ve been ruminating around the implications of this “Intelligence Revolution”, but have lacked the thinking time, commitment, and skill to synthesize it in such a thoughtful and compelling away. This belongs alongside Ted Gioia’s State of the Culture 2024 as a must-read for anyone who believes that technology is not inherently bad, but could fuel a bad future outcome for all of us when technology is concentrated in the hands of a small number of actors who don’t prioritize human and societal progress over profit. Similar to climate change and democracy—with AI—we have to act individually and collectively with thoughtful intentionality quickly before we reach a tipping point that leads to violent responses and great(er) suffering. Thanks Chris for thinking these big thoughts and sharing them with us.

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Ed Y.

Mar 11, 2024

Is it sad that one of my first thoughts while reading this article was: damn, I wish I bought NVIDA stock years ago?

On a serious note, this article addresses what has the makings of a cataclysmic change the likes of which we have never experienced before in such a short period of time.

Appreciate you not only highlighting the problems, but suggesting some solutions, even if I don't agree with all of them.

As it relates to tradesmen, we need to continue pivoting away from bloated expensive 4 year college degrees into shorter 2 year degrees, or apprenticeship programs. The days of some looking down their noses at tradesmen will come to an end as they are the ones with steady jobs while their white collar customers are out of a job.

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