The last decade has been filled with fanfare and buzz — no news there. However, there’s now a distinct shift in various industries (at least from an AI consultant’s perspective) about how the general interest and uptake of new ML technologies and approaches went from esoteric to exotic to fear of obsolescence.
Industries and clients are more ready than ever to partake in prototype and scale-up efforts using relatively new (even unproven) approaches to data manipulation and insights extraction. But as most consultants find out, a simple application of machine learning does not a successful solution make. There needs to be an underlying problem being solved, with some measurable outcomes and returns at least an order of magnitude above the implementation costs.
So how is value usually created, and how does AI contribute towards that value creation? And is there a pattern that can explain why AI is so valuable?
There are many definitions of “value”, but for our purposes, we’ll define it as “the modern economic measure of importance, worth, or usefulness of something” (from Oxford Languages). From this, the idea of value creation in an economic system is directly related to the ability to generate wealth, reduce operating costs, or accelerate and alleviate the work burden of individuals.
(Now, measuring the societal impact of AI is an entirely separate conversation that I won’t even pretend to broach here. Also, I’m fully aware that I’ll be butchering Econ 101 concepts, but I’m generalizing towards the point and main message of this article.)
Beyond the Three-Sector Model of (Old) Industry
A popular model for economic value creation was the Three-Sector Model, where the 20th-century view of economic value was separated into three main areas:
- the primary sector focuses on the extraction and manipulation of resources, such as iron, lumber, and mining;
- the secondary sector focuses on manufacturing, transformation, up to the point of delivering consumer goods;
- the tertiary sector, which is usually described as the services sector, includes all matters of government, consulting, and knowledge workers.
This particular model focused extensively on an extractive basis for value creation, both towards the environment and towards people. There is also an idea of finite resources: there can only be so many skilled workers, or so many trees to cut down. A participant in this economic model was primarily viewed as a laborer: a lumberjack, a smelter, a…
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