As the buzz around generative AI begins to wane, industry experts and stakeholders are coming to terms with the reality that this technology has entered the Trough of Disillusionment—a phase we foresaw nearly a year ago. In her recent article, Sharon Goldman of Fortune highlights the growing skepticism around generative AI, citing concerns from major players like Goldman Sachs and Sequoia Capital. While the shift from exuberant optimism to cautious realism may be unsettling, it is a necessary step in the evolution of any technology.

At the GoTo Conference in Copenhagen in October 2023, the team at Praxi predicted this very moment. We anticipated that the sky-high expectations surrounding generative AI would eventually collide with the harsh realities of implementation, leading to a trough of disillusionment. This prediction wasn't based on speculation but on a deep understanding of the Gartner Hype Cycle, which we explored in our eBook, Beyond the Hype: Practical Generative AI for the Modern Enterprise. As we now find ourselves in the midst of this phase, it's crucial to understand why this moment is both inevitable and beneficial for the long-term success of generative AI.

We Saw It Coming: Our Prediction at GoTo Conference 2023

1. Recognizing the Warning Signs Early

During our presentation at the GoTo Conference in Copenhagen, Denmark last October, we highlighted several indicators that generative AI was on a path toward the Trough of Disillusionment:

Unsustainable Hype: The excitement surrounding generative AI was reaching unsustainable levels. With every new announcement, expectations grew, but the technology struggled to keep pace with the lofty promises.
Limited Production Use Cases: Despite the buzz, few organizations had successfully implemented generative AI in a way that delivered tangible, bottom-line benefits. Concerns about accuracy, liability, and security were preventing widespread adoption.
Growing Resource Demands: The most sophisticated generative AI models require vast amounts of data and computing power, leading to escalating costs that many startups and enterprises found difficult to justify.

2. Why the Trough of Disillusionment Was Inevitable

Given these challenges, we predicted that generative AI would soon hit a wall—a moment when reality would catch up with the hype. This phase, known as the Trough of Disillusionment, is a critical juncture in the Gartner Hype Cycle, where inflated expectations give way to a more sober assessment of a technology's capabilities and limitations.

Recalibration: This phase allows the industry to recalibrate expectations and focus on what generative AI can realistically achieve in the short term.
Innovation Opportunity: The Trough of Disillusionment is not just a period of decline but also an opportunity for innovation. As the hype fades, the true potential of generative AI can be explored, leading to more sustainable applications and business models.

3. The Role of Our eBook in Navigating the Trough

To help industry stakeholders better understand and navigate this phase, we developed our second eBook, Beyond the Hype. Practical Generative AI for the Modern Enterprise. This comprehensive eBook provides a deep dive into our view on the innovation cycle and offers specific insights into the evolution of Generative AI.

Key highlights include:

Historical Context: Understanding the technological advancements that have shaped Generative AI, illustrating its rise as a crucial tool for businesses.
Applications Across Industries: Exploring how Generative AI drives innovation and solves complex problems across various sectors.
Strategic Implementation: Offering advice on how companies can implement Generative AI effectively to gain a competitive advantage.
Ethical and Regulatory Considerations: Addressing the ethical and regulatory challenges that must be managed to ensure responsible use.
Future Trends and Challenges: Speculating on future technological trends while balancing the promise and potential threats of Generative AI.

Each of these sections is designed to help enterprises navigate the evolving landscape of digital transformation with confidence.

The Trough of Disillusionment: A Necessary Phase for Growth

The idea that generative AI is currently experiencing a Trough of Disillusionment is not a negative assessment—it’s a natural and necessary part of the technology adoption lifecycle. As Chris Howard, Gartner’s global chief of research, recently noted, this phase is where we “figure out how to make something work—or not.” For generative AI, this means moving beyond the hype and focusing on delivering real, measurable value.

1. Agreeing with the Fortune Article: Why the Trough Is Essential

In her article, Goldman aptly captures the importance of this phase for generative AI. She points out that the massive investment—estimated at over $1 trillion—has yet to pay off, leading to a reality check that many in the industry are now facing.

Realism Over Hype: As we move through the Trough of Disillusionment, the focus will shift from grandiose claims to practical, scalable applications. Companies will need to demonstrate the real-world value of generative AI, which requires moving beyond the initial excitement and into the “down-and-dirty work” of refining and optimizing the technology.
Incremental Progress: This phase will likely be marked by smaller, incremental advances rather than groundbreaking innovations. However, these steps are crucial for building the foundation on which generative AI can mature and evolve.

2. Examples from Other Technologies

To illustrate why this phase is necessary, consider the trajectory of other technologies that have passed through the Trough of Disillusionment:

Cloud Computing: Initially met with skepticism due to security and cost concerns, cloud computing has since become a cornerstone of modern IT infrastructure.
Virtual Reality (VR): After an initial surge of interest, VR faced a period of disillusionment but has since found its niche in gaming, training, and healthcare.

These examples show that while the Trough of Disillusionment can be a challenging period, it is also where the groundwork is laid for future success.

Looking Beyond the Trough: What’s Next for Generative AI?

As we navigate through the Trough of Disillusionment, it’s important to keep an eye on the future. Generative AI is not going away—in fact, it’s just beginning to find its true place in the technology landscape.

1. The Long-Term Perspective

While the hype may be fading, the long-term potential of generative AI remains significant. Here’s what we expect to see in the coming years:

Sustainable Applications: As the focus shifts from hype to practicality, we’ll see the emergence of sustainable applications that deliver real value to businesses and users alike. These could include tools for automating repetitive tasks, enhancing creative processes, and improving decision-making through data-driven insights.
Integration with Other AI Technologies: Generative AI will increasingly be integrated with other AI technologies, such as predictive AI and machine learning. This integration will create a more robust AI ecosystem that can address a broader range of challenges.

2. Opportunities for Innovation

The Trough of Disillusionment is not just a period of refinement; it’s also a time for innovation. Here are a few areas where we see potential for growth:

Agentic AI: AI systems designed to act like autonomous agents, pursuing complex goals and workflows, could push generative AI to new heights by enabling more sophisticated applications.
Multimodal AI: Technologies that combine generative AI with other modalities, such as computer vision and natural language processing, could lead to more powerful and versatile tools.

3. Encouraging Realism

As we look ahead, it’s essential to maintain a realistic perspective. Generative AI holds immense potential, but it’s not a magic bullet. Success will come from incremental progress, careful implementation, and a focus on delivering real value.

Conclusion: Embracing the Trough as a Catalyst for Growth

The Trough of Disillusionment may be a challenging phase, but it is also an essential part of the journey for any emerging technology. As we move through this period, we must embrace the opportunity to innovate, refine, and ultimately build a more sustainable future for generative AI.

To gain a deeper understanding of the Gartner Hype Cycle and what lies ahead for generative AI, we invite you to download our eBook, Beyond the Hype, Practical Generative AI for the Modern Enterprise. This comprehensive guide offers valuable insights into navigating the Trough of Disillusionment and preparing for the next wave of AI innovation.

The best is yet to come, but it will require patience, perseverance, and a commitment to moving beyond the hype.

At Praxi, our mission is to be true to our name, be pragmatic, be practical and enable value at pace. And we have a series of eBooks and our recent Executive Guide to help you on your path to success.

We look forward to the opportunity to work with you in the future!

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Generative AI: Entering the Trough of Disillusionment, Impact and Benefit Ahead