A law you may not of heard of may be the best thing you learn today

Introduction

Artificial Intelligence (AI). I am told, is going to replace blogs like this where I just type in some vague ideas and Chat GPT 8.2 will produce an article of the required length containing some earth shattering revelation and serious content infused with sprinklings of levity and a healthy degree of scepticism. In the meantime, you’re stuck with me.

I’ve developed a more restrained view towards technology, not because of a Luddite attitude or a lack of interest, quite the opposite. It’s because of a law I came across some time ago called Amara’s Law.

Amara’s Law

Roy Amara (1925–2007) was an American futurist and co-founder of the Institute for the Future. He coined the following phrase -

"We tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run."

It doesn’t look much but thinking about it can be enormously helpful in strategy and investment decisions for a number of reasons.

Amara's Law helps in tempering over-enthusiasm surrounding new technologies in the short term. Often the theoretical possibilities are undermined by the actual technical limitations, which may currently exist and which may exist for some time into the future.

AI has, only recently, hit the public consciousness because of language learning models e.g. Chat GPT but in terms of an idea, it’s an old age pensioner. Born in the mid-20th century (Turing. Minskey, McCarthy etc), it lacked, until the 2000s, the computing capability to perform machine learning with large datasets. Even on that timescale, it’s a mature concept but the promise of that technology is finally starting to be realised.

Considering Amara’s Law enables us to avoid making rash investment decisions based on immediate hype and to approach new technologies with a more balanced perspective. We can create more sustainable and well-thought-out strategies by

Identifying the uncertainties and risks associated with the impact of a technology and thinking about the timing of those risks. Is the threat immediate or is it in, say, five years when the technology and the infrastructure required to support it has matured? The answer determines different strategic moves.

Mitigating the risks that account for the potential gap between short-term expectations and long-term outcomes. Companies can rush to implement solutions based on the promise of a technology only to find that it creates new problems both internally and with consumers.

Considering the ethical challenges to new technology to avoid longer term issues around legislation and litigation. Legislation typically lags technology because it struggles to understand the capabilities of new technology. However, it can be a graveyard for companies that have bet on the wrong business model that harms either consumers or, more often, other business interests. Think Napster.

Planning for investment in new technology avoiding short-term market fluctuations due to hype. Apple is rarely first to market with new technology. Their key strength is breaking into large consumer markets at the right time with products that will meet the customer needs beyond early adopters.

Consider how humans will react to new technologies. An AI chatbot may be a good solution to resolving low level and repetitive queries vs a call centre but, if customers don’t get the answers they want, then it impacts on brand loyalty and propensity to switch.

An Example of Amara’s Law: The Mobile Phone

The first proper mobile phone dates back to Motorola in 1973. The potential for a mobile phone was huge but the two obvious limitations were size and network coverage. Even in the 1980s they were like bricks and coverage was terrible.

The 1990s saw their widespread introduction aided by the transition from analog to digital technology, which improved call quality and increased capacity on networks. The introduction of Short Message Service (SMS) - text messaging - and increasing functionality of handsets.

So from the first glimpse of the future of mobile communication to the realisation of a widely adopted consumer mobile product offering high utility to consumers actually took around 20 years to fulfil.

However, fifty years down the road, mobiles have far exceeded that promise and mobile phone manufacturers like Motorola and Nokia failed to get to grips with the new technology that was emerging around the concept of a mobile device as opposed to just a phone.

Through the introduction of smartphones, GSM technology enabling global roaming and increasingly fast mobile internet, we now have devices which enable us to perform a huge range of tasks. They are cameras, measuring devices, health monitors, payment methods, verification devices, keys, maps etc. We are getting near, or maybe even have surpassed, the point where it will be impossible to exist without one. And although we still call them phones, no one really considers the phone aspect when they’re buying one.

Nor are we finished. 5G and 6G combined with the Internet of Things, AI and VR will create the capability for a truly mobile-first society. This is way beyond the original vision of a mobile phone.

Final Thoughts

Technology revolution can be characterised by periods of enthusiasm, setbacks and then explosion. Remember blockchain? Everything was going to be about blockchain. Not so much now. Has blockchain failed? No, it hasn’t. However, the froth has disappeared.

Blockchain technology at the time could not have replaced Visa for everyday payments. Systems like Bitcoin could fry the planet over time with their energy consumption. People are still working on blockchain and it will come back into public consciousness with more sensible use cases and genuine value to consumers and businesses.

From a business perspective, predicting that a technology will be transformative is not in itself of much value, except to impress people on LinkedIn (some people seem easily impressed). It’s about critically evaluating that technology, the limitations and opportunities, and predicting the roadmap the development will take. Most people grasped the potential of the Internet, but many of those who rushed to invest first lost their shirt in the aftermath of the Dotcom Bubble.

If you want a prediction on AI, I would predict with great confidence that I’ll be writing the next article and not Chat GPT.

Until Next Time

Pete

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I’m Peter Domican. I use my strategy and change consulting skills together with extensive cross functional and cross industry experience to help businesses plan and manage change.

You can book a call with me here if you’d like to know more or discuss a problem you might have.