The shared economic logic of these technologies rests on two key principles: their ability to dramatically increase the capacity for performing knowledge work, and their ability to simplify the coordination of such work towards greater, better, and more novel output.

Two factors contribute to how AI enhances both the capacity and coordination required for knowledge work. First, AI reduces the cost of task execution. Tasks that once required expensive experts can now be performed more efficiently, at a lower price, and at scale.

What makes AI truly transformative is not its performance on benchmarks of intelligence but rather its ability to model, mediate, and move fragmented systems toward alignment. The real promise and potential of AI lies in whether it can extend coordination into thus-far uncoordinated segments of the economy. In this sense, AI’s real power lies not

AI’s ability to model a domain and align intent and action reliably with that model makes it particularly well-suited for coordination.

This is precisely why artificial intelligence (AI) matters - not so much as a tool for improving productivity through automation, but as a mechanism for coordinating what has so far remained uncoordinated.

However, this growing fragmentation also brought a new opportunity: coordination. The more fragmented the system and the more diverse the incentives of the players, the greater the value in aligning them to work together. Coordination, once a deadbeat managerial function, is now the most valuable function in the modern economy.

Coordination is the central driver of value in today’s economy, but this wasn’t always the case. Economic power was historically tied to ownership. Ownership of land in the agrarian era, of factories in the industrial age, and of patents or brands in the 20th century. Today, it increasingly comes from orchestrating what you don’t own: aligning a

The real leverage in connected systems doesn’t come from optimizing individual components, but from coordinating them. A system is defined by how well its components interact and work together to create value.

This wasn’t software eating the world - it was coordination eating complexity. Airbnb won by standardizing trust, Stripe by simplifying financial complexity, and Tesla by eliminating charging uncertainty. The most transformative companies don’t just build better tools; they solve coordination problems that unlock new forms of economic activity.