Henrik von Scheel and Paul Lalovich on DeepSeek’s rise and the future of AI

28 January 2025 Consultancy-me.com

For years, the prevailing narrative in AI hinged on the notion that AI leadership demands absolute scale and financial muscle. But this week, that paradigm has seen its foundation rocked by the launch of DeepSeek, which seemingly turned the laws of the AI arena upside down. What is the impact on the sector? And how does the future of AI look like?

To find out more about these topics, we sat down with two leading voices in the world of AI: Henrik von Scheel, AI expert and Managing Director for Strategic Intelligence at the World Economic Forum, and Paul Lalovich, Managing Partner at Agile Dynamics and a thought leader in emerging technologies.

Let’s start with the breaking news. How do you see the rise of companies like DeepSeek challenging the traditional compute-centric approach?

Henrik: The narrative of AI dominance is shifting eastward, and at the epicenter is DeepSeek, a Chinese AI startup that has redefined the landscape. While Western giants like OpenAI and Google have long dominated headlines, DeepSeek’s disruptive innovations – open-source models, radical cost efficiency, and a research-first philosophy – are challenging Silicon Valley’s hegemony.

What DeepSeek has done is remarkable. Instead of following the Western approach of pouring billions into hardware, they’ve focused on software-driven resource optimization. By embracing open-source methods and fostering collaboration, they’ve sidestepped resource constraints and accelerated technological progress.

This strategy has ignited an industry-wide price war, forcing even tech titans like ByteDance and Alibaba to recalibrate their strategies. The lesson here is clear: human capital – not teraflops – is the ultimate bottleneck.

Paul: indeed, for years, the prevailing narrative in AI hinged on a single, seemingly unassailable truth: scale demanded compute. Industry leaders and policymakers alike operated under the assumption that AI progress would require astronomical investments in hardware, energy, and data centers.

Yet, this fixation on compute obscured a critical reality: human ingenuity, not silicon, drives breakthrough innovation. That is what DeepSeek has demonstrated to the market.

Could you expand on how DeepSeek positioned human capital at the forefront of its innovation?

Henrik: At DeepSeek, 95% of researchers are under 30. This youth-driven approach, combined with a culture of autonomy and collaboration, has unlocked incredible innovation.

Organizations must prioritize curiosity and exploration over rigid hierarchies. At DeepSeek, roles are not predefined but emerge organically as the team collaborates. This flexibility allows individuals to contribute ideas based on their unique experiences and passions. When promising ideas emerge, resources are allocated top-down, ensuring that potential innovations are supported. This open structure encourages cross-team collaboration, as there are no separate departments, and individuals can work together based on shared interests and mutual goals.

Henrik von Scheel and Paul Lalovich on DeepSeek's rise and the future of AI

The case of DeepSeek, which is still in its early stages with many details and exciting developments yet to unfold, emphasizes that the future of AI belongs to nations and organizations that invest in people, not just processors.

What are key AI trends that will impact the market in 2025?

Henrik: In the perspective of Strategic Intelligence, AI can enable three types of improvements:

1) Productivity Enablers

  • AIOT-Smart Automation: Companies must embrace automation that spans end-to-end workflows, integrating AI-driven operations to enhance scalability, efficiency, and cost optimization. This trend reshapes operational processes into intelligent architectures.
  • Polyfunctional Robotics: These robots tackle multiple tasks with minimal human intervention, driving increased productivity and innovation, particularly in manufacturing and logistics.
  • Collaborative Intelligence: Combining human and AI expertise enables smarter, faster decision-making, which is critical for companies operating in high-stakes or rapidly evolving environments.

2) Experience Enablers

  • Agentic AI: By integrating proactive, goal-oriented AI systems, businesses can elevate customer service, optimize processes, and improve task automation without constant human oversight.
  • Human-Centric AI: Delivering hyper-personalized user experiences – whether in healthcare, retail, or education—empowers businesses to create stronger customer engagement and loyalty.
  • AI Watermarking: As digital trust becomes vital, watermarking ensures intellectual property protection and transparency in AI-generated content, a must-have for companies relying on AI for creative outputs.

3) Growth Enablers

  • Scalable Oversight: Managing AI deployments at scale with transparency and alignment with ethical frameworks will drive competitive advantage while addressing regulatory challenges.
  • Invisible Intelligence: Companies can integrate seamless, low-cost AI systems into operations, reducing resource constraints and enabling sustainability efforts.
  • Bio Revolution: This represents transformative opportunities for biotech, healthcare, and sustainability industries by integrating AI in fields like gene editing, biocomputing, and new materials.

Paul: These developments will have a profound impact on governments and businesses. In my view, there are three strategic takeaways that organisations should consider:

  • Shift from Hardware-Centric to Human-Centric AI: Companies need to focus on developing talent and fostering collaboration. Human ingenuity and a youth-driven workforce will be pivotal in driving innovation.
  • Adopt Open-Source and Decentralized Models: Blockchain and open-source platforms can significantly reduce costs and democratize access to cutting-edge technology, helping companies remain competitive even with limited resources.
  • Leverage Proactive AI Governance: Organizations must align with emerging ethical, regulatory, and risk management frameworks like AI watermarking and tech convergence, ensuring compliance and avoiding operational disruptions.

For governments, trends like Scalable Oversight and Risk & Safeguards highlight the importance of ethical AI regulation, while Bio Revolution requires public-private partnerships to accelerate breakthroughs in life sciences and sustainability.

What’s your current take on the future of AI?

Henrik: The future of AI is increasingly shaped by a paradigm that emphasizes human ingenuity, open-source collaboration, and efficient resource utilization over traditional hardware-centric approaches. Central to this evolution is the recognition that human capital – through continuous learning, curiosity, and collaborative culture – is the ultimate driver of innovation.

Paul: I couldn’t agree more. The true disruptors will be those who recognize that innovation is not just about technology but about people. Blockchain and AI are converging in ways that will redefine industries, and the organizations that prioritize agility, collaboration, and sustainability will lead the charge.

Henrik von Scheel and Paul Lalovich on DeepSeek's rise and the future of AI

Research from Agile Dynamics has highlighted the synergies that can be unlocked at the intersection of blockchain and AI. How will blockchain influence the future of AI development?

Paul: Our 2023 blockchain research foreshadowed the current paradigm shift we’re seeing with DeepSeek – one where human capital, open-source ecosystems, and decentralized architectures unlock innovation at scale, even under resource constraints.

Take energy consumption, for example. Training GPT-4 consumed approximately 50 GWh of energy, equivalent to powering 40,000 homes for a year. In contrast, blockchain’s proof-of-stake models use 99% less energy, making them more sustainable and scalable.

Blockchain’s decentralized architecture eliminates single points of failure and reduces reliance on centralized hardware. With low-cost infrastructure (e.g., $0.02 per million tokens), blockchain has democratized access to cutting-edge technology, enabling growth markets to leapfrog traditional developmental hurdles.

Blockchain’s permissionless models empower nations to bypass centralized gatekeepers, fostering homegrown innovation without hardware dependency. Open-source blockchain projects cost 1/10th the price of AI initiatives, making them accessible to resource-constrained markets. This has enabled innovations like tamper-proof land registries and secure healthcare records, which deliver tangible ROI without hardware dependency.

About the experts

Henrik Von Scheel, widely recognized as the originator of the ‘4th Industrial Revolution’, is a global expert in digital strategies. He played a key role in developing the ‘Digital Agendas’ of the German government and the European Union.

Paul Lalovich is an organizational strategist, tech entrepreneur and well-known expert in the world of blockchain and Web3 technologies. He is a partner at Agile Dynamics, and co-founded ventures like SyntheticEquity.io and AstroArmadillos.io.

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