Welcome to the AI trough of disillusionment

WHEN the chief executive of a large tech firm based in San Francisco shares a drink with the bosses of his Fortune 500 clients, he often hears a similar message. “They’re frustrated and disappointed. They say: ‘I don’t know why it’s taking so long. I’ve spent money on this. It’s not happening’”.

For many companies, excitement over the promise of generative artificial intelligence (AI) has given way to vexation over the difficulty of making productive use of the technology. According to S&P Global, a data provider, the share of companies abandoning most of their generative-AI pilot projects has risen to 42 per cent, up from 17 per cent last year. The boss of Klarna, a Swedish buy-now, pay-later provider, recently admitted that he went too far in using the technology to slash customer-service jobs, and is now rehiring humans for the roles.

Consumers, for their part, continue to be enthusiastic adopters of generative AI. Sam Altman, the boss of OpenAI, recently said that its ChatGPT bot was being used by some 800 million people a week, twice as many as in February. Many already regularly turn to the technology at work. Yet generative AI’s transformative potential will be realised only if a broad swath of companies systematically embed it into their products and operations. Faced with sluggish progress, many bosses are sliding into the “trough of disillusionment”, says John Lovelock of Gartner, referring to the stage in the consultancy’s famed “hype cycle” that comes after the euphoria generated by a new technology.