Not all AI is good enough to increase productivity

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Turns out there’s good AI and bad AI. The traditional view of automation and labor is that automation increases the value of labor by increasing the productivity of a chain of tasks. Now that more machine learning-based AI has been deployed in more places, what’s really happening is more nuanced. Human skills are being replaced in finer slices with new automation technologies. What is being observed is that not all AI is good enough to increase the value of the output.

Here’s the subtlety: if the automation is “so-so” (just good enough to be adopted but not so much more productive than the labor being replaced), labor demand declines. This is a huge deal for AI and companies. AI has to be great. If it’s not, productivity will not increase, the cost of the product or service at the end of the chain will not decline (so no demand increase) and the incentive is then to remove more human labor.

Productivity increases can happen over time. Research on productivity and automation highlights that this comes from learning-by-doing. Workers on the frontlines identify, share, and solve problems and improve techniques across time and space. Power looms are a particularly good example. Their introduction improved productivity by a factor of 2.5, but with a further factor of 20 provided by subsequent learning-by-doing.

The solution is to make great AI. Employers need to aim for a step change in performance or value. Designers need to include AI as part of a system with the aim being to increase the intelligence of humans. Don’t slice human work into smaller tasks, rather look at the system as a whole and apply AI in processes where it serves the greatest unmet needs.

Designing AI that works with our psychology and cognitive biases will be vital to the success of everything from self-driving cars to product design. Employee productivity and AI-led productivity gains need to start with understanding what humans are good at, what machines are good at and to be creative about how AI can make humans better, rather than simply be used to replace people.


At Sonder Scheme, we help companies make better AI, faster. We offer offer services, training and tools to help you lead in the age of AI using the best human-centered design techniques combined with the unique requirements of AI.

At Sonder Scheme, we help humans win in the age of AI, with practical services, training and tools. We combine deep expertise in AI with decades of experience working with leading organizations including Adobe, Apple, Cisco, Fonterra, Google, Morgan Stanley, National Headstart Association, the New York Times, Quartz, Transpower NZ, US Department of Energy and the World Green Building Council.

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