{"id":236,"date":"2025-07-15T06:26:02","date_gmt":"2025-07-15T06:26:02","guid":{"rendered":"https:\/\/blogs.isb.edu\/sritnetechtalks\/?p=236"},"modified":"2025-12-31T09:46:18","modified_gmt":"2025-12-31T09:46:18","slug":"is-ai-the-next-electricity-or-are-we-expecting-too-much-too-early","status":"publish","type":"post","link":"https:\/\/blogs.isb.edu\/sritnetechtalks\/2025\/07\/15\/is-ai-the-next-electricity-or-are-we-expecting-too-much-too-early\/","title":{"rendered":"Is AI the Next Electricity or are We Expecting Too Much Too Early?"},"content":{"rendered":"\n<p>Every once in a while, a new technology shows up and promises to change everything. Think steam engines, electricity, the internet\u2026 and now &#8211; Artificial Intelligence.<\/p>\n\n\n\n<p>From boardrooms to policy circles, AI is being called the next General-Purpose Technology (GPT) &#8211; a class of innovations so powerful, they transform every industry. But here\u2019s the twist: while we see incredible demos and headlines, the real-world productivity impact of AI still feels underwhelming. So, is AI really the new electricity? Or just another overhyped gadget in the tech toolkit?<\/p>\n\n\n\n<p>In this blog, we explore the difference between hype and historical patterns, and why understanding AI&#8217;s trajectory through the lens of past GPTs could be the key to unlocking its long- term value.<\/p>\n\n\n\n<h5>First, What Makes a Technology \u201cGeneral-Purpose\u201d?<\/h5>\n\n\n\n<p>A GPT isn\u2019t just a great idea &#8211; it\u2019s a foundational shift. GPTs spark other innovations, cut across<br>industries, and boost productivity at scale.<\/p>\n\n\n\n<p>Electricity, for example, didn\u2019t just light up homes. It restructured factories, birthed new workflows, and powered decades of growth. Same with Information and Communication Technology (ICT), which eventually led to everything from CRMs to cloud computing. GPTs don\u2019t explode overnight. They evolve, scale, and then dominate.<\/p>\n\n\n\n<h5>Why People Believe AI is the Next Big Thing<\/h5>\n\n\n\n<p>AI\u2019s rise has been staggering.<\/p>\n\n\n\n<ul>\n<li>AI patent filings saw two major surges &#8211; around <a href=\"https:\/\/www.isb.edu\/faculty-and-research\/srini-raju-centre-for-it-and-the-networked-economy\/sorting-hype-from-reality-advancing-ai-as-a-general-purpose-technology\" target=\"_blank\" rel=\"noreferrer noopener\">2007 and 2014<\/a>, tracking breakthroughs in machine learning. During this period, AI expanded its influence across an array of fields, including healthcare, finance, manufacturing, retail, and so much more.<\/li>\n\n\n\n<li>Venture capital bets on AI startups spiked after 2016, especially with deep learning in the spotlight.<\/li>\n\n\n\n<li>By <a href=\"https:\/\/www.isb.edu\/faculty-and-research\/srini-raju-centre-for-it-and-the-networked-economy\/sorting-hype-from-reality-advancing-ai-as-a-general-purpose-technology\" target=\"_blank\" rel=\"noreferrer noopener\">2021<\/a>, the number of AI unicorns had surged impressively, reflecting the high hopes people have for AI-driven businesses.<\/li>\n<\/ul>\n\n\n\n<p>These numbers are strong signals that AI is being taken seriously as a game-changer. And let\u2019s not forget: AI isn\u2019t just producing outputs\u2014it\u2019s redefining how outputs are created, from drug discovery to content generation. It\u2019s a method of invention. That\u2019s classic GPT behavior.<\/p>\n\n\n\n<h5>But, Where are the Productivity Gains?<\/h5>\n\n\n\n<p>Here\u2019s the catch: for all the hype, global productivity hasn\u2019t skyrocketed.<\/p>\n\n\n\n<p>A 2023 McKinsey survey revealed that AI adoption actually plateaued. The Stanford AI Index showed a 26.7% drop in private AI investment in 2022. AI job postings slowed down in several regions. And economists like Larry Summers and Robert Gordon have pointed out that productivity growth stayed sluggish throughout the 2010s\u2014even as AI boomed.<\/p>\n\n\n\n<p>Sound familiar? It should. In the early years of electricity and computers, productivity barely budged. It took decades\u2014and many failed attempts\u2014before the real gains arrived.<\/p>\n\n\n\n<h5>Why the AI Boom Feels Slow (But Isn\u2019t)<\/h5>\n\n\n\n<p>Think of AI like electricity in the 1890s. The potential is real, but the supporting systems aren\u2019t fully in place. Factories back then had to redesign layouts to use electric motors. Today, businesses need to redesign workflows, upskill teams, and invest in data infrastructure to use AI effectively.<\/p>\n\n\n\n<p>We\u2019re still in the transition phase &#8211; the awkward, expensive, slow-moving middle. That doesn\u2019t mean AI won\u2019t deliver. It just means we\u2019re not there yet.<\/p>\n\n\n\n<h5>What Smart Leaders Should Do Right Now?<\/h5>\n\n\n\n<p>If you&#8217;re a decision-maker wondering whether to pull back or press forward on AI\u2014here\u2019s the takeaway:<\/p>\n\n\n\n<p>Don\u2019t get distracted by the current slowdown. Focus on building the complementary capabilities that unlock AI\u2019s power. That means:<\/p>\n\n\n\n<ul>\n<li>Rethinking business models<\/li>\n\n\n\n<li>Training teams<\/li>\n\n\n\n<li>Upgrading systems<\/li>\n\n\n\n<li>Embedding AI into core strategy<\/li>\n<\/ul>\n\n\n\n<p>The companies that succeed won\u2019t be the ones that simply \u201cuse AI.\u201d They\u2019ll be the ones that reinvent themselves around it.<\/p>\n\n\n\n<h5>Wrapping Up<\/h5>\n\n\n\n<p>AI may not be changing the world overnight. But neither did electricity or the internet. The path to transformation is rarely a straight line.<\/p>\n\n\n\n<p>So, is AI a passing fad? Definitely not.<\/p>\n\n\n\n<p>But is it guaranteed to change your business? Only if you put in the work to make it happen. The real winners in the AI era won\u2019t just adopt new tools, they\u2019ll build the future around them.<\/p>\n\n\n\n<p>Curious to explore the full research-backed take on this? Read the original article by ISB: <em><a href=\"https:\/\/www.isb.edu\/faculty-and-research\/srini-raju-centre-for-it-and-the-networked-economy\/sorting-hype-from-reality-advancing-ai-as-a-general-purpose-technology\" target=\"_blank\" rel=\"noreferrer noopener\">Sorting Hype from Reality: Advancing AI as a General-Purpose Technology<\/a><\/em><\/p>\n\n\n\n<div class=\"is-layout-flex wp-container-3 wp-block-columns\">\n<div class=\"is-layout-flow wp-block-column\">\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" loading=\"lazy\" width=\"762\" height=\"1024\" src=\"https:\/\/blogs.isb.edu\/sritnetechtalks\/wp-content\/blogs.dir\/8\/files\/sites\/8\/2025\/07\/professor-anand-nandkumar-762x1024.jpg\" alt=\"\" class=\"wp-image-239\" srcset=\"https:\/\/blogs.isb.edu\/sritnetechtalks\/wp-content\/blogs.dir\/8\/files\/sites\/8\/2025\/07\/professor-anand-nandkumar-762x1024.jpg 762w, https:\/\/blogs.isb.edu\/sritnetechtalks\/wp-content\/blogs.dir\/8\/files\/sites\/8\/2025\/07\/professor-anand-nandkumar-223x300.jpg 223w, https:\/\/blogs.isb.edu\/sritnetechtalks\/wp-content\/blogs.dir\/8\/files\/sites\/8\/2025\/07\/professor-anand-nandkumar-768x1032.jpg 768w, https:\/\/blogs.isb.edu\/sritnetechtalks\/wp-content\/blogs.dir\/8\/files\/sites\/8\/2025\/07\/professor-anand-nandkumar.jpg 893w\" sizes=\"(max-width: 762px) 100vw, 762px\" \/><\/figure>\n<\/div>\n\n\n\n<div class=\"is-layout-flow wp-block-column\">\n<h5><strong>Author\u2019s Bio<\/strong>:<\/h5>\n\n\n\n<p><strong>Anand Nandkumar<\/strong><br>Associate Professor, Strategy Executive Director &#8211; SRITNE<\/p>\n\n\n\n<p>He explores industry and firm level phenomena that influence innovation \u2013 the generation of new ideas and entrepreneurship \u2013 distribution and commercialization of new ideas. His research focuses on high technology industries such as pharmaceuticals, bio-technology and software, and it falls in between industrial organisation (IO), economics of technological change and strategy. Professor Anand current work in the innovation stream examines the effect of stronger IPR on different aspects of innovation such as the influence of stronger patents on long run incentives for innovation or the influence of stronger patents on the functioning of Markets for Technology (MFT). In the entrepreneurship stream, his current work examines the influence of venture capitalists on entrepreneurial performance.<\/p>\n\n\n\n<p>Professor Anand graduated with a PhD in Public Policy and Management, with a focus in strategy and entrepreneurship from Carnegie Mellon University in 2008. Prior to his PhD, he worked for about 3 years with a start-up in the Silicon Valley and prior to that in New York City with one of the world\u2019s largest financial services firm. True to his expertise, at the ISB, Professor Anand teaches Strategic Innovation Management and Strategic Challenges for Innovation based start-up\u2019s.<\/p>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Every once in a while, a new technology shows up and promises to change everything. Think steam engines, electricity, the internet\u2026 and now &#8211; Artificial Intelligence. From boardrooms to policy circles, AI is being called the next General-Purpose Technology (GPT) &#8211; a class of innovations so powerful, they transform every industry. But here\u2019s the twist: [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":250,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"_uf_show_specific_survey":0,"_uf_disable_surveys":false},"categories":[3],"tags":[27],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v20.5 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Is AI the Next Electricity or are We Expecting Too Much Too Early? - Srini Raju Centre for IT and the Networked Economy (SRITNE)<\/title>\n<meta name=\"description\" content=\"Every once in a while, a new technology shows up and promises to change everything. 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Or just another overhyped gadget in the tech toolkit?\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/blogs.isb.edu\/sritnetechtalks\/2025\/07\/15\/is-ai-the-next-electricity-or-are-we-expecting-too-much-too-early\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Is AI the Next Electricity or are We Expecting Too Much Too Early? - Srini Raju Centre for IT and the Networked Economy (SRITNE)\" \/>\n<meta property=\"og:description\" content=\"Every once in a while, a new technology shows up and promises to change everything. Think steam engines, electricity, the internet\u2026 and now \u2013 Artificial Intelligence.From boardrooms to policy circles, AI is being called the next General-Purpose Technology (GPT) \u2013 a class of innovations so powerful, they transform every industry. But here\u2019s the twist: while we see incredible demos and headlines, the real-world productivity impact of AI still feels underwhelming. So, is AI really the new electricity? 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