Generative AI and the Great Reboot: How the Entrepreneurial State and Business Will Shape the Next Wave

Every industrial revolution begins with a breakthrough technology — steam engines, electricity, mass production, digital computing. Each required decades of risk-taking investment, often led by governments, before businesses could scale them into transformative industries.

Today, Generative AI (GenAI) is emerging as the spark of the next great wave. It promises to reshape knowledge work as electricity reshaped factories, creating a cognitive infrastructure for the economy. But technology alone is not destiny. Just as Mariana Mazzucato’s work on the Entrepreneurial State reminds us, the winners of this wave will be determined by how governments and businesses harness GenAI together.

GenAI as a General-Purpose Technology

Generative AI is not just another app or automation tool; it is a general-purpose technology (GPT). Like electricity or the internet, it can be embedded across sectors, enabling new applications and altering entire business models:

• Productivity gains: Automating repetitive knowledge work — summarizing documents, writing code, analyzing contracts — freeing humans for higher-value tasks.

• Business model reinvention: Embedding AI into customer experience, supply chains, and design, allowing companies to rethink what services they offer and how they deliver them.

• Sectoral transformation: In healthcare (AI-driven diagnostics, drug discovery), finance (real-time risk modeling), and education (personalized learning), GenAI is not incremental; it is structural.

But just as the internet emerged from DARPA-funded research and Tesla survived through U.S. government loans, GenAI’s roots lie in decades of state-funded innovation: from neural networks to GPUs, from cloud infrastructure to natural language research supported by DARPA, NSF, and European programs.

Why GenAI Arrives at a Critical Juncture

Unlike past GPTs, GenAI arrives in an era of geopolitical fragmentation and deglobalization. The world is shifting from frictionless global supply chains to an age of tariffs, industrial subsidies, and sovereignty-driven industrial policy.

• The U.S. CHIPS Act and Inflation Reduction Act are channeling billions into semiconductors and clean energy — with AI at their core.

• Europe’s AI Act and Green Deal reflect a mission-driven approach, aiming for digital sovereignty and climate neutrality.

• China’s AI ecosystem is deeply state-backed, integrated into its Made in China 2025 strategy.

GenAI is therefore not just a productivity tool; it is a strategic technology, caught in the crossfire of industrial policy and geopolitical rivalry. Governments are not stepping back — they are stepping in.

The Entrepreneurial State in the AI Era

Mazzucato’s thesis — that the state is a risk-taker and market creator — is being replayed with GenAI.

• Risk-Taking: Public institutions funded the basic science behind transformers, GPUs, and cloud infrastructure long before commercial success was visible.

• Market Creation: Governments are now shaping AI markets through procurement, standards, and subsidies.

• Reward Distribution: Without deliberate mechanisms, the risk is that public investment generates private monopolies — the very dynamic Mazzucato warns against.

If governments embrace mission-oriented AI strategies — curing disease, achieving climate neutrality, closing the digital divide — GenAI could enable breakthroughs that markets alone would not deliver.

The Enterprise Reboot: How Businesses Must Respond

For businesses, GenAI is more than an efficiency tool; it is a catalyst for rebooting entire business models. The firms that thrive in the next decade will be those that align with state-driven missions while reimagining their value chains.

• Industrial Leaders: Siemens is embedding GenAI into digital twin technologies, supporting Europe’s green and digital missions.

• Platform Giants: Microsoft, Salesforce, and Google are positioning AI copilots as platforms that rewire enterprise workflows.

• Healthcare Firms: Pfizer and Novartis are leveraging AI for drug discovery, in public-private partnerships with NIH and EU programs.

• Financial Institutions: Banks are using GenAI for compliance and personalization — while regulators frame the mission of responsible AI.

The playbook is clear: companies must synchronize with state missions, invest in AI-enabled reinvention, and build local ecosystems that strengthen sovereignty and resilience.

The Next Big Wave: From Automation to Transformation

We may be at the threshold of a fifth industrial wave, where AI augments and automates cognition the way electricity powered machinery. If harnessed effectively, this wave could drive:

• A productivity supercycle, as AI transforms white-collar work much as mechanization transformed blue-collar labor.

• Industry reconfiguration, with new players emerging in consulting, legal services, education, and logistics.

• Mission economies, where governments set bold goals and corporations co-create markets around them.

• Geopolitical differentiation, as blocs (U.S., EU, China, India) pursue divergent AI strategies and standards.

But this wave will not be smooth. Without careful governance, AI could deepen inequality, entrench monopolies, and inflame geopolitical rivalries.

Risks and Guardrails

The risks echo Mazzucato’s critiques:

• Hype and waste: Overinvestment in moonshot AI projects with little return.

• Corporate capture: Big Tech dominating standards and infrastructure, privatizing public investment.

• Social inequality: Productivity gains flowing disproportionately to capital, not labor.

• Fragmentation: Competing AI regimes reinforcing blocs and stifling global collaboration.

The solution is not retreat but competent entrepreneurial states that set direction, build capacity, and ensure public investment delivers public returns.

Recommendations

For Governments:

1. Mission-Oriented AI: Frame AI as enabler of bold missions — net zero, healthcare breakthroughs, digital inclusion.

2. Fair Risk-Reward: Capture public returns via sovereign AI funds, equity stakes, or innovation royalties.

3. State Capacity: Invest in technical expertise and reduce dependency on consultants.

4. Guardrails: Enforce open standards and prevent monopolistic capture.

For Businesses:

1. Align with Missions: Embed AI strategy into state-led agendas (climate, digital sovereignty, health).

2. Reboot Models: Treat GenAI as an engine for reinventing value creation, not just cost-cutting.

3. Localize Ecosystems: Build AI clusters with local suppliers and universities to strengthen resilience.

4. Share Value: Structure partnerships so communities and governments share in the benefits.

Conclusion: The Reboot Is Here

Generative AI is not just another productivity tool — it is the enabler of a new industrial wave. Arriving amid deglobalization and strategic competition, it is accelerating the return of the entrepreneurial state and forcing businesses into a full-scale reboot.

The challenge now is to ensure that this reboot creates inclusive prosperity rather than concentrated power. Governments must act boldly but wisely, businesses must reinvent and align with missions, and societies must demand that public risk-taking yields public reward.

The spark has been lit. Generative AI is the catalyst, deglobalization the accelerant, and mission-oriented states the architects. Together, they will determine whether this great reboot becomes the next big wave of shared progress — or a missed opportunity in an age of disruption.

Labels: Full Scale Reboot, GenAI