AI – Capability is not competence

Ade McCormack
Nov 25
3 min read

AiRMs race

Here’s a quick acid-test to establish whether your AI investment to date is likely to yield value for your ecosystem:

Do you have a Chief Information Officer in your leadership team?
Does your CIO focus mainly on eliciting value from data or just on technology management?

The answer to both needs to be ‘yes.’ Many organisations do not have a CIO in the top team, and even where they do, the CIO is often focused on tech matters. This is a problem.

Firstly technology management is important, but thanks to the cloud, less so than when the role of CIO was first created.

So even in the most forward thinking of organisations, AI is seen as a technology purchase. A focus on AI might even paper over a failed digital transformation programme.

So we are witnessing an arms race where the buyers have no idea when and how to use the armaments. The arms dealers are the marketing functions of the big tech players. Consequently on the face of it, we are seeing organisation building their AI capability, but not their AI competence.

Amsterdamned

Unlike the tulips in the Tulip mania period, AI has transformational potential. However speculation about its potential is surpassing its intrinsic value to leaders, investors and other interested parties in the organisation’s ecosystem.

Prefixing everything with AI, from the name of your new startup to the title of your LinkedIn newsletter article, has the power to elevate its perceived value. Social contagion, particularly amongst leaders, is driving irrational behaviour. Buckle up, if it’s your first bubble.

But it is unlikely to be your first, here are some recent ones:

Solar / green tech
Robotics and drones
Edtech
The Metaverse
Meme stock
Housing.

Should I be worried?

Given that approximately one third of the S&P 500 index is index-linked to AI’s fortunes, this is a cause for concern, particularly if you are a:

Big tech player.
A heavy investor in big tech players
- Or you have a ‘diversified’ pension.
An over-inflated startup / scaleup.
You are a leader who has not made provision for an AI reset.

But to put this in perspective, it is unlikely to be as seismic as a housing bubble pop. But seismic enough.

Agentic delusion

As a leader, you need to understand what value AI brings to your organisation and how you unleash that value. Much AI usage today is around cost management, rather than strategic differentiation and adaptiveness engineering.

As I am fond of mentioning, sprinkling your old school model with tech pixie dust is not going to save it. The changes that need to be made are much more profound.

AI has the potential to be a game changer. Generative AI is only one element of the role it can play. Out of the car crash we will likely see steady, undramatic growth in AI’s capability.

But again capability is not competence. The fundamental question to ask is - why do we need AI beyond automating the ‘sausage machine?’.

Here’s the science

We need to zoom out to remind ourselves that the world is becoming increasingly chaotic. And so:

Chaos gives rise to novel situations.
Novel situations require an innovative response.
Innovation is fuelled by cognition.
Cognition comes in two forms – natural (people) and artificial (AI).

QED AI-augmented workers are the way in which to thrive in an increasingly disruptive world.

Chief TAIlent Officer?

So organisational leaders need to revise their operating model to reflect that increasing disruption has put them squarely in the business of cognition management.

So perhaps a further test is to ask: