Sebastian Mallaby explains why AI coding tools can double an individual programmer's output without doubling a company's overall productivity. Approvals, sign-offs, and other slow steps downstream of the code cap the gain the whole organization actually captures.
…good side about the US story is that when you have a big technological shift, you have to do radical things within the organization in order to kind of reap the productivity gains. And trying to kind of band-aid the whole thing just may slow you down and you wouldn't get the productivity benefits.
…been a couple courts that have presented guidelines, and there have also been a few government statements suggesting companies have to balance any automation with protecting jobs. So they're clearly aware of it, but I'm not sure where they fall in that spectrum kind of between the US and Europe.
…describe the way that individuals within companies, like a coder, for example, has probably increased productivity thanks to AI a lot because you have a coding assistant and now one coder produces twice as much code. So that's a 2X on that individual. But organizations don't increase their productivity anything like 2X. It's more like, for the sake of argument, 1.1. Why is that? It's because in an organization, there are bottlenecks and the whole organization moves forward at the speed of the slowest piece of it. So let's say you have lots of coders and they're producing twice as much code and it's really great. It's really fast. But in order to actually ship the code, turn that into a product, let's say it's a bank and it's some kind of consumer-facing thing on the website of the bank, which the retail customers will use, then you're going to have a few managers, a few product managers, a few sort of…
Yeah, I agree with you 100%. And I'm hearing that anecdotally from different industries. And in addition to all the points you made, I would add the risk management layer, right? Even if your coders are twice as productive, churning out great things that could revolutionize your company and…
Yeah, yeah. And there are some companies which literally their role in life is to sort of be in a liability sponge, right? If you're a law firm advising the investment bank and doing kind of the detail of the contract on some IPO or something, you have to diligence every sentence in the document…
Yeah.