Value Capture vs. Value Creation: The Impending Shift with AI
In the last decade, the digital economy has witnessed a significant tilt towards platforms and entities emphasizing value capture rather than genuine value creation. These platforms, which simply act as intermediaries, have flourished by connecting different parties and facilitating interactions. However, as we venture deeper into the era of Intelligent Assistants (IA), there’s an impending shift in this dynamic, with AI’s proficiency in handling vast amounts of data promising to alter the landscape profoundly.
Understanding Value Capture
Value capture involves entities that don’t produce new value but derive their significance by acting as intermediaries. For instance, ride-hailing services aggregate drivers and riders, earning significant revenues by merely facilitating connections between these groups. Such models have proliferated across sectors, from e-commerce to content streaming, marking the dominance of the aggregation strategy.
The Essence of Value Creation
On the other hand, value creation is about introducing something novel or refining existing offerings to provide added value. In the realm of ride-hailing, while the platform aggregates, it’s the driver who delivers tangible value by ensuring passengers reach their destinations safely.
How AI Achieves Value Redistribution
A fundamental divergence between human cognition and AI lies in their information processing capabilities. AI systems thrive on extensive datasets, with tables consisting of billions of rows and columns, allowing them to detect complex patterns. In such vast data terrains, AI can make highly accurate predictions.
Contrarily, humans, limited by their cognitive constructs, struggle with overly intricate datasets. For instance, a table of 100 rows by 100 columns is often overwhelming.
AI’s strength in parsing through these extensive databases efficiently means that, in scenarios like matching a driver with a passenger, AI can achieve this without platforms like Uber. Such platforms become superfluous, as AI, without any interference, directly bridges the gap between service providers and users. This evolution sidelines the traditional role of platforms, emphasizing the significance of direct value creation.
The rise of AI signals a transformation from the prevailing value capture model to a renewed emphasis on genuine value creation. With AI’s capability to process vast data and connect service providers with users directly, traditional aggregation platforms face redundancy. As this technological shift materializes, businesses and entrepreneurs must pivot, understanding that genuine value addition and innovation are more critical than ever.