Right Here, Right Now

I just read something from Ericsson Telecommunications Inc. front page on the web, ‘The four ways GenAI will transform the Telecom Industry.’ I am on a United flight to Japan, then Singapore to see my incredible daughter and attend her wedding. We will be staying in an IHG Hotels & Resorts hotel room, one of 750,000 they have. My daughter leaves behind her Subaru . When I return, I will chat with an old pal, ex BT Group , an architectural genius. Before I left, I grabbed a few things from Walgreens, which is part of Walgreens Boots Alliance with $130B in revenue.

Today the combined market cap of IHG, Ericsson, United Airlines, Subaru, BT Group and Walgreens equals the market cap of OpenAI based on a planned share sale by Thrive Capital. Yes, all six companies - stew on that for a moment.

That's also the same market cap as CVS with $325B in rev and 300k employees. And twice the market cap of profitable Palantir with a near 300 P/E ratio. Just for grins it's 4526% of Peleton's current market cap.

So, yes, another reason this merits attention.

Highspeed Trainwrecks and Wave 2 Innovation

The equity creation capability of this space will fuel change, acceleration, and impact. The real economic impact is part of that. This isn't pet rocks.

There will be wreckage, and as usual, some leading firms falter, new ones emerge, and surprises and a bit of chaos always follow.

Most big tech breakthroughs have a vibrant Wave 1 with real impact. A decade or two later, Wave 2 emerges and generally murders Wave 1. In today's world, especially in the AI space, Wave 2 will emerge within three years.

There have been roughly 30 LLMs with over 10B parameters since this began. ChatGPT and OpenAI have led the pack on drama/press, but it is a pack, and this space will evolve fast and have its Wave 2 moments.

Winners

This will be like the Spanish Christmas lottery - El Gordo. There will be big winners for sure but there will also be many winners. Think about Velcro. There were a few patents for Velcro that made a lot of money. There are hundreds of patents that made money on clever/novel applications of Velcro.

Many companies will also win by being better, and smarter at tech than their competitors. In times of turmoil and change, I do not need to be Einstein or Thomas Edison nor do I need to outrun the bear. I just need to run faster than the other guy (who then gets eaten by the bear). But in the medium term, that will not be just about who is best at adopting Gen AI.

Three Real Risks of GenAI - Two Years into the Future

1. Ignoring and Spectating - dithering about internal legal risks, organizational inertia, or any of a dozen reasons for being on the sidelines won't matter. You will find yourself, in your sector, with a knife and realize competition is now a gunfight. Modern tech is conceptually simple but requires hands-on learning/experience.

2. Bigger Picture Failure - Gen AI is not enough. There are 14 change waves landing in the near term that all need attention, from quantum cyber risk a few years out to the 'here now' of hyperscale/hyperspeed AI, the lego-ization of tech, sea changes in brand building/transparency, and real stakeholder management. That is a lot to digest, but how about starting with Gen AI nested inside what you are doing and where you are going with AI more broadly, nested inside IT/OT as a whole? There is no winning scenario where you are great at Gen AI but awful at IT as a whole. A minor complication is that IT is not a homogenous blob. It is seven different things that are not managed in the same way, yet most function inside a common 'factory' model. The required transformation from bad at IT to good at it is also pretty daunting.

3. The Bigger Bigger Picture - the competitive battlefield is changing. Actually, military battlefields are changing too, but that's for a different audience. There is little chance your existing strategy just happens to be the right one for the next war. Understanding the near future and having a strategy refresh to drive a new viable mission is needed. A new mission requires changes in tasks, talent, behaviors, incentives, comms, partnerships, structure, etc. In the past, at times of big innovation shift, some of the biggest winners intentionally strategized completely different models.

Scarier

Just to make this a bit harder/scarier, how we approach Risk changes. Yes, the Dark Web is pretty much the fastest adopter of new tech on earth, so there's that risk. The bigger, more ignored risk is that the scale and rate of change are accelerating like never before. GenAI is one case in point. The risk of inaction now becomes huge. That is really about outside-in thinking, sensing-and-responding cycles, the internal clock speed of your firm, and how good you are at being a partner of choice. That latter one is because much competition will be ecosystem-based. Being good at ecosystem competition is, in large part, about being good at partnering. Large incumbents usually are not agile nor great at real partnering.

The Board, CEO, and a creative CFO

This has to start with the board and a CEO pulling in the same direction with urgency. The key partner to them will be a creative, innovative, pragmatic CFO. One that gets cost structure versus cost, short-medium-long term synergies versus trade-offs, the value of intangibles like agility, scale talent, and change model mastery. Just because you can't find something explicitly in a chart of accounts doesn't mean it isn't real and of consequence.

As Dickens wrote at the start of the Third Industrial Revolution:

“It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of light, it was the season of darkness, it was the spring of hope, it was the winter of despair.”