The tale of the shoe-maker

The emergence of AI represents a significant technological development with profound implications for economic competition and market dynamics.

We present a simple tale to show how a single technological innovation transforms an entire economic ecosystem, revealing how seemingly incremental changes can fundamentally disrupt established market structures:

The strength of the transformer model, at the very core of AI, is its ability to generalize from one type of application to another, given a sufficient amount of data.

In the future, this will enable businesses and industries to restructure traditional competitive landscapes through two primary mechanisms: vertical and horizontal competition.

  • Vertical competition occurs when organizations directly challenge or replace existing supply chain intermediaries, by developing capabilities that previously required specialized external services.
  • Horizontal competition occurs when organizations can rapidly enter markets entirely unrelated to their original domain.

This reshaping of the competitive landscape, this sort of « cross-pollination » of economics will be enabled by AI’s ability to simultaneously operate across multiple markets, languages, and regulatory environments.

Small teams or even individual entrepreneurs can now compete with large institutional actors by using AI to generate insights across diverse knowledge domains, for an ever-diminishing cost.

AI represents a fundamental shift in how businesses conceptualize innovation, competition, and value creation. Traditional barriers to entry are dissolving, replaced by a new paradigm where algorithmic capability and adaptive intelligence become primary competitive advantages.

Like the shoemaker of the tale, contemporary organizations must develop adaptive strategies that embrace technological complexity rather than resist it.

Companies that can quickly integrate AI, develop complementary human skills, and rethink their operational models will likely thrive in this emerging landscape.

McLein’s mission is to help companies stay ahead of the curve.

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