The narrative around Artificial Intelligence has shifted perceptibly in late 2025. After years of exponential hype, a sense of disillusionment has begun to settle over the industry. Commentators and analysts, most notably podcaster and writer Dwarkesh Patel, have recently highlighted what is being called the “Output Gap.” This is the uncomfortable discrepancy between our models’ skyrocketing performance on benchmarks and the relatively stagnant growth in macroeconomic productivity. We have reached “superhuman” capability on tests, yet global GDP hasn’t skyrocketed, and the promised revolution feels curiously delayed.
This frustration stems from a fundamental misunderstanding of where we are in the technology cycle. The industry is currently fixated on “Day 0” capabilities—the raw intelligence of the models, the scaling laws, and the saturation of academic benchmarks. However, the bottleneck has shifted. We are no longer limited by the intelligence of the model, but by the inertia of the enterprise. The “Output Gap” is not a failure of technology; it is a lag in organizational digestion. We have invented a powerful jet engine, but we are essentially frustrated that it hasn’t revolutionized travel before we’ve even built the airframe to mount it on.
The primary fallacy driving this disappointment is the expectation of the “drop-in remote worker.” Many observers equate Artificial General Intelligence (AGI) with a digital human that can be onboarded, culturally assimilated, and left to run autonomously with minimal supervision. Because current agents cannot seamlessly replace a human employee in this one-to-one fashion, the conclusion is often that the technology has stalled. This view misses the forest for the trees. Disruptive technologies rarely act as direct replacements; instead, they require a complete restructuring of how work is done.
In reality, the barrier to adoption is what IT professionals call “Day 2 Operations.” Day 0 is the exciting launch; Day 2 is the boring, messy reality of governance, security, and maintenance. For an enterprise to deploy an autonomous agent, it isn’t enough for the model to be smart. The organization must solve for Role-Based Access Control (RBAC), SOC 2 compliance, liability frameworks, and data sovereignty. Right now, most organizations lack the infrastructure to handle “non-human” identities that have access to sensitive corporate data.
Consider the security implications. A human employee has physical limitations and a single identity. An AI agent is an “always-on” entity that, if given improper permissions, could theoretically read every email in a company server to “optimize workflow.” Security teams (CISOs) are rightly terrified of this prospect. Until we develop granular access controls specifically designed for agents—effectively an “RBAC for AI”—the widespread deployment of autonomous agents will remain blocked by the “Departments of No”: Legal, HR, and Security.
This operational friction explains why we are seeing a massive divergence between individual and enterprise adoption. Individually, adoption is rampant; we are in the “Shadow IT” era of AI, where employees secretly use tools like ChatGPT to boost their personal productivity. However, at the organizational level, adoption is glacial because the institution’s primary mandate is risk management, not speed. The C-suite is asking questions about ROI, liability, and data leakage that the current software ecosystem cannot yet answer satisfactorily.
History offers a comforting precedent for this timeline. We are currently effectively in the “2002 era” of virtualization. In the early 2000s, virtualization technology (like VMware) was technically viable, but it took nearly a decade to become the default enterprise standard. It required years of maturing management software, security protocols, and cultural shifts before “The Cloud” became a reality. AI is undergoing the same digestion period. The technology is ready, but the enterprise “rails” required to run it are still being laid.
This leads us to the “Mechanical Horse” fallacy. When the automobile was invented, people didn’t need a mechanical horse that walked on four legs; they needed a car. But the car required asphalt roads, not dirt paths. Similarly, we are currently trying to force AI into human-shaped workflows (”jobs”) rather than rebuilding the workflows to suit the AI. We are waiting for the mechanical horse, failing to realize that the true disruption comes from unbundling the work entirely.
A “job” is essentially a bundle of tasks, context, and responsibilities aggregated for a single human. AI does not replace jobs; it unbundles tasks. The transition we are navigating involves breaking down these bundles and determining which specific value streams can be automated by agents. This requires task decomposition and new management frameworks—a “Council of AIs” approach—rather than a single omnipotent bot. This restructuring is an organizational physics problem, not a computer science problem.
The disconnect is further exacerbated by the differing timelines of developers versus executives. Developers and researchers live in a world of root access and rapid iteration, often blinded to the molasses-like speed of corporate change management. A CFO, conversely, thinks in fiscal quarters and compliance audits. They require proven ROI and standardized best practices before signing off on widespread automation. Currently, there are no industry standards for deploying autonomous agents, which halts most conversations at the boardroom door.
Therefore, the “stalling” progress is an illusion caused by looking at the wrong metrics. If you look at model cards and benchmarks, progress is linear and fast. If you look at widespread economic integration, the curve is flat. This S-curve of adoption is always significantly behind the S-curve of capability. We are in the flat part of the adoption curve, characterized by high hype, high friction, and frantic infrastructure building behind the scenes.
The next three to five years will likely be dominated not by flashy new model capabilities, but by the “boring” work of integration. We will see the rise of startups and consultancies dedicated solely to “AI Governance,” “Agent Identity Management,” and “Context Orchestration.” These are the boring rails that will eventually allow the high-speed train of AI to actually run.
The output gap is a temporary, necessary phase. It is the silence before the orchestra starts playing. The potential energy is building up in the form of capability, but it cannot convert into kinetic economic energy until the friction is reduced. The “stalled” revolution is simply a revolution that is currently under construction.
We are not witnessing the ceiling of AI intelligence; we are witnessing the floor of AI adoption. The technology has done its part; now, the organizations must do theirs. The future isn’t late—it’s just waiting for legal to sign off.
