Survival of the Fittest
ESSAY
Thinking
Dewald Pieterse 6 November 2026
Survival of the Fittest
Most public argument and uncertainty about artificial intelligence (AI) still concerns its future, and in particular whether the models will continue to improve and how quickly they will do so. For the purposes of this essay, however, I propose to set that argument aside and to assume that all progress in AI capability stops today. That assumption would, to be clear, be ridiculous, and I make it only for the sake of argument. My contention is that even on that assumption, the existing models are already capable of performing most of the tasks of which knowledge work on a computer consists. Disruption does not depend on some unproven hypothesis about what AI may one day become, but is already latent due to the capabilities of publicly available AI models today. And if disruption follows on the most conservative assumption about capability, it follows all the more on any realistic one.
In ‘Transcending the Loop’, I argued that the transformative value of AI lies in automating business functions rather than in helping people to perform parts of them faster, and in ‘The Roads of Reinvention’, I considered how a company might go about reinventing itself around that fact. This essay concerns the phenomenon that will make such reinvention necessary, namely competitive selection, and why I expect it to act sooner than the history of earlier technological revolutions would suggest.
Tasks and Work
My first premise concerns what the models can already do. Most knowledge work on a computer consists of discrete tasks, such as reading a document, extracting what matters, drafting, analysing, and checking the result against a rule or a standard. Each task takes text or data as its input and produces text or data as its output, which is precisely the medium in which the models work. On benchmarks of well-specified professional tasks, the leading models already beat or tie industry professionals in most comparisons, and anyone who uses the latest models for doing real work will understand mighty well what I am talking about.
What the models cannot yet do reliably is most professional work as it is presently organised. A benchmark task arrives packaged, in that someone has already framed the question, assembled the relevant material and stated the standard that a good answer must meet. Professional work arrives in a firm without that packaging. The client’s request is usually underspecified, the facts sit in emails, files and systems to which the model has no access, what distinguishes a good outcome from a bad one has not been specified in a form that the model can take into account, and the request is seldom a single task but a sequence of them, each building on the last.
Firms largely left their work ‘unpackaged’ for a good reason, which is that their people never needed the packaging. An experienced professional carries the context of a matter, knows where its documents are kept, asks a colleague when something is unclear and recognises when an answer is good enough. Because people supplied all of this implicitly, no firm has had cause to make it explicit, and every process in the firm was designed on the assumption that a person would perform each step. A model given the same context, access and standard can perform most of those steps. What it lacks is not the intelligence to use them but the packaging that would deliver them. The gap between performing tasks and performing professional work is therefore a failure of packaging rather than of capability, and packaging, being a matter of organisation, is precisely what a firm can supply.
It follows that the use of AI will lag behind its capability, and that the lag will be shortest for individuals and longest for firms. An individual can take up AI in an afternoon, because the only way of working that must change is the individual’s own. A firm cannot, because its work is distributed across roles, handovers and controls that were built around people. Where work is already divided into discrete tasks, as in freelance writing and coding, there is little to redesign, and substitution follows quickly. Elsewhere, the capability is present, and what remains outstanding is the redesign of the organisations within which most knowledge work is done. This, in my view, is why the disruption is inevitable, and already latent in the capability itself. Packaging is a problem that firms can solve, and it is only a matter of time before they do.
The Lag
My second premise is historical. A general-purpose technology yields its value only once the processes and organisations around it have been redesigned, and redesign takes time. Electric power was commercially available from the early 1880s, yet as late as 1899 electric motors supplied less than 5% of the mechanical drive in American factories, and manufacturing productivity rose markedly only in the early 1920s. The economic historian Paul David attributed the delay in large part to ‘the unprofitability of replacing still serviceable manufacturing plants’. A factory built around a steam engine and its line shafts could not simply be rewired, and was rebuilt only once the old building had served its time.
Most people seem still to think that something similar will be true of AI. Arvind Narayanan and Sayash Kapoor have argued, in ‘AI as Normal Technology’, that its diffusion will take decades, because ‘the speed of diffusion is inherently limited by the speed at which not only individuals, but also organizations and institutions, can adapt’. This contention must be taken seriously, and as a description of how most organisations will behave, it is probably largely correct.
The principal cause of the delay in electrification, however, has no real counterpart in AI. At the point of consumption, AI requires no new factories. It arrives over infrastructure that already connects the world and sits on every desk, and what it renders obsolete are intangible processes and habits rather than expensive buildings and machinery. Moreover, knowledge work has already been conducted on computers for a generation, so that its inputs and outputs, such as documents, correspondence, spreadsheets and records, exist in digital form and in the formats that the models read and write. Very little needs to be digitised, wired or installed before a firm can begin reinventing itself around AI. The models are reached over the internet and paid for as they are used, so that a firm need commit no capital in advance. An improved model reaches every user on the day of its release, without the replacement of any equipment. And the interface is ordinary language, which every professional already speaks. Of the conditions that held electricity back, only one remains, and it is the one that no provider can supply, namely the reorganisation of the firm around the new technology.
Narayanan and Kapoor may well be right that most organisations will take their time to adapt, but it does not follow that the disruption will be slow. It requires only one firm in a given market to reinvent itself around AI for every other firm in that market to face extraordinary competitive pressure, and from that point the pace of change is no longer theirs to choose. In other words, many firms may well take their time, but will soon find that they are no longer able to compete, and will either join the race or die.
Natural Selection
My third premise therefore concerns the logic by which a free market determines which firms survive and which fail. It is often assumed that the forces which shape biological evolution are confined to the biological realm, which is manifestly not the case. Wherever entities vary, compete for scarce resources and pass on what succeeds, selection operates, and an economy of competing firms is no exception. Herbert Spencer’s phrase ‘survival of the fittest’ is, moreover, commonly misread. The fittest are those best adapted to their environment, which is not the same as the strongest, and when the environment itself changes, those who were the fittest before may swiftly find that they are maladapted to the new conditions.
In 1950, the economist Armen Alchian, one of the first to apply evolutionary reasoning to economics, argued that markets select firms in much the same way, so that firms which fail to make profits disappear, whatever their intentions. Later evolutionary economists explained why firms so seldom adapt by design. Richard Nelson and Sidney Winter treated a firm’s routines as the counterpart of genes, the stable patterns of behaviour through which a firm reproduces its work from one year to the next. Michael Hannan and John Freeman went further. In their account, markets reward established organisations for reliability and accountability, both of which depend on routines that can be reproduced faithfully, so that the very quality which made a firm successful also makes it resistant to change. They predicted, moreover, that reorganisation is itself so disruptive that it raises the risk of failure, which may explain why incumbents hesitate even when they see the need to change. It follows that industries change chiefly by replacement, as new firms with new routines displace old firms that cannot acquire them.
The implications of this logic for AI follow directly. A firm that has redesigned itself around abundant intelligence is able to produce work of the same or better quality at a fraction of the cost and in a fraction of the time. An advantage of that magnitude cannot be offset by working harder or charging less. Firms that do not redesign themselves will lose clients and margin to those that have, and many will in time be driven out of the market altogether. A firm that waits to see how matters unfold is therefore leaving its fate to the market, and the market is unlikely to decide in its favour. To paraphrase Dostoyevsky, nature does not ask for our permission and is indifferent to our wishes, and so we must accept her laws whether we like them or not. The same is true for the free market.
The same mechanism of selection operates not only among firms that offer the same service but also among entirely different ways of solving the same problem, and it sometimes acts on a whole category of service at once. Some tutoring businesses, to take but one example, have already begun to close, telling parents, in effect, that AI models now offer their children a far cheaper way to learn. No AI-native tutoring competitor was needed to bring this about. A cheaper and more accessible solution to the same problem comes along, and the market moves to adopt it.
Zero to One
Selection among firms has a feature that the debate about the pace of AI adoption tends to overlook. In any given market, the step from zero to one matters far more than the step from one to two. The incumbents in a market come under pressure as soon as one firm in it adopts AI, long before the rest of the market has followed.
Consider a market for professional services in which a dozen firms of broadly similar nature compete for the same clients. Suppose that a participant in that market, whether a new entrant, one of the incumbents or a client’s own in-house team, rebuilds its operations around AI, so that it can deliver work of the same or better quality in a day rather than a fortnight, and at a fraction of the fee. It does not matter which of them it is; from that moment, every other firm in the market is suddenly uncompetitive.
The selective pressure then travels through two channels. The first is market share, as clients move their work to the firm that is faster and cheaper. The second is overall price pressure, and it operates even if no client moves at all, because every client of every other firm now knows what the same service can cost. A client need not move its work in order to use that knowledge, but need only cite the lower price in negotiation, and its present adviser must then either match it or lose the client. A firm whose costs have not fallen can match the price only by surrendering its margin, so that the pressure reaches every firm in the market, whether or not any of its clients has left yet.
In the past, an incumbent that lost ground to a more efficient rival had time on its side. A professional services firm can grow only as fast as it can recruit and train qualified people, so that even the most efficient rival could take on new clients only gradually, and the incumbent had years in which to respond. An AI-native firm faces no such limit. Once its AI system is in proper operation, its capacity grows with the computing power it buys rather than the people it hires, so that it can take on new clients almost as quickly as they arrive, and the incumbent may have months, rather than years, in which to respond.
The resulting position is a trap from which no firm can escape. Collectively, the incumbents might well prefer that none of them adopted AI, so that fees and margins stayed where they were. Once one firm has adopted AI, however, abstaining is no longer a viable choice for any of the others, and any understanding among them to hold the line would be game-theoretically unstable, because each would gain by being the first to break it. The protections peculiar to the professions, such as licensing, regulation and long relationships of trust, delay this process but do not prevent it.
The pace at which a market is disrupted is set not by its average firm, but by whoever first brings the capabilities of the technological frontier to bear on it.
A Red Queen’s Race
The competition that follows resembles the race in Lewis Carroll’s Through the Looking-Glass, in which the Red Queen explains to Alice that ‘it takes all the running you can do, to keep in the same place’. Firms that run after the first mover will not necessarily grow richer, but firms that stand still will fall behind. Much of the gain will ultimately pass instead to consumers, who will receive better professional services at lower prices.
At this point the analogy with biology reaches its limit. An organism cannot choose its genes, but a firm can choose its routines, and so need not wait for the environment to adopt or reject it. It can deliberately acquire the routines that the new environment rewards, reorganising one function at a time, as I suggested in ‘The Roads of Reinvention’, so that the risks of reorganisation are taken in measured steps. It can also choose to move its people above the loop rather than remove them from it. The firms that survive will be those best adapted to an environment in which intelligence is abundant, and for a firm, unlike an organism, adaptation is a matter of choice.
It remains to lift the assumption with which I began. Capability has not stopped improving, and there is little reason to think that it will. Every step of the argument above holds on the most conservative assumption about what AI can do, and holds with greater force on any realistic one, since each improvement in the models further compounds the advantage of the firm that has adapted.
None of this is a counsel of despair. The same pressure that will dismantle firms built around scarce intelligence will reward those that rebuild around its abundance, and their clients will be better served for it. I would nevertheless expect the change to come more swiftly and more radically than most firms now anticipate, and in each market to begin with the first firm that decides to adapt.
Reach Out
Back to Thinking