AI Adoption Lessons from Electricitys Transformational Journey

Despite widespread excitement about AI agents and automation, many executives report their investments aren’t delivering the revolutionary changes they expected. Current applications—like faster chatbots or automated data processing—offer incremental improvements rather than transformational shifts. This mirrors the 40-year gap between electricity’s invention and its widespread industrial adoption, as detailed in the book Power and Prediction.

The Three Phases of Technological Adoption

1. Point Solutions (Today’s AI):

   • Replacing manual tasks with AI (e.g., ChatGPT for emails, automated data entry).
   • Benefits are real but incremental, akin to early factories swapping steam engines for electric motors without redesigning workflows.

2. Application Solutions (Emerging):

   • Smarter AI agents working in bounded systems (e.g., Morgan Stanley’s market analysis agents).
   • Still constrained by traditional organizational structures.

3. System-Level Transformation (Future):

   • Complete redesign of processes around AI’s strengths, like Ford’s assembly line for electricity.
   • Example: Financial firms using multiagent systems to flatten hierarchies and automate complex decision-making.

Key Lessons from Electricity’s Adoption

• Vanishing Constraints:
  Just as electricity removed proximity-to-power limitations, AI eliminates human-speed information processing bottlenecks. Monthly planning cycles, approval chains, and departmental silos may become obsolete.

• New Bottlenecks Emerge:
  With AI, data quality, objective alignment, and governance frameworks become critical. Bad data or misaligned goals can scale disasters.

• Redesign Everything:
  Organizations must ask: If information were instant and free, why would we structure work this way? Startups like CrewAI are building companies around agent-first designs.

Practical Steps for Organizations

• Map Information Flows: Identify steps that exist only to compensate for human limitations.
• Pilot Multiagent Systems: Start with low-risk processes where agents can collaborate (e.g., customer service, logistics).
• Anticipate New Risks: Prepare for data quality and governance challenges.

The Urgency of Unlearning

Mental models rooted in information scarcity hinder progress. The winners will be those who question every structural assumption now. As with electricity, the gap between early adoption and system-level transformation could be decades—but the clock is ticking.

"Will you be the factory that installed better motors, or the one that reimagined what a factory could be?"