The paradox at the core of the AI revolution: The faster we innovate, the slower we grow
Source: Fortune ·
Fifty years of digital innovation delivered spectacular adoption and declining productivity. Will AI repeat that pattern?
From the source
To hear Silicon Valley tell it, artificial intelligence will usher in a glorious new era of abundance. But ask the chief financial officers of the world’s largest companies how AI is transforming their bottom line and, per McKinsey’s 2026 State of AI survey, the answer for 88% of them is: “Not so much.” We have been here before. When the iPhone launched in 2007, pundits predicted a mobile-first transformation of everything. When broadband went mass-market, Businessweek heralded a “New Economy.” When the PC colonized every desk, Robert Solow quipped that you could see the computer age everywhere but in the productivity statistics. Over five decades, waves of digital innovation have delivered spectacular consumer adoption yet continuously declining productivity growth. I call this the Innovation Paradox: the faster we innovate, the slower we grow. Two K-shapes, one problem Technology diffusion in the digital age follows what I call a double K-shaped pattern. The first K-shape is…