Just as the internet has drastically lowered the cost of information transmission, AI will lower the cost of cognition. That’s according to Harvard Business School professor Karim Lakhani, who has been studying AI and machine learning in the workplace for years. As the public comes to expect companies that deliver seamless, AI-enhanced experiences and transactions, leaders need to embrace the technology, learn to harness its potential, and develop use cases for their businesses. “The places where you can apply it?” he says. “Well, where do you apply thinking?”

For this episode of our video series “The New World of Work”, HBR editor in chief Adi Ignatius sat down with Lakhani, author of Competing in the Age of AI: Strategy and Leadership When Algorithms and Networks Run the World, to discuss:

  • How executives and regular employees can (and must) develop a digital mindset
  • Change management as a critical skill that must be in the DNA of any successful organization
  • The shapes AI may take in the near and far future

The New World of Work” explores how top-tier executives see the future and how their companies are trying to set themselves up for success. Each week, Ignatius talks to a top leader on LinkedIn Live — previous interviews included Microsoft CEO Satya Nadella and former PepsiCo CEO Indra Nooyi. He also shares an inside look at these conversations —and solicits questions for future discussions — in a newsletter just for HBR subscribers. If you’re a subscriber, you can sign up here.


ADI IGNATIUS:
Karim, welcome to the show.

Karim Lakhani:
So glad to be here with you today, Adi.

ADI IGNATIUS:
You co-wrote a piece for us a few years ago, and it’s reflected in your book, where you say machine learning has basically changed the very rules of business. That’s a big statement. What do you mean by that?

Karim Lakhani:
The book really was a partnership between Marco Iansiti and Amy Bernstein, one of the editors at HBR. And what Marco and I noticed in about a decade’s worth of research and spending time with companies, both writing cases as advisors, as consultants, and so forth, was that the nature of the corporation (which really was established as the modern American corporation, which became the blueprint for the modern international corporation, established in the 1920s and 30s) was changing foundationally because of technologies like AI, like machine learning.

What we observed was that the entire business architecture in many of these AI-first companies at that time, in terms of business model, how you create value, how you capture value, and your operating model, how you deliver value, how you achieve scope, the number of customers you serve, the number of products you have, scale, the number of customers you serve, and learning these fundamental parts of a business architecture, were being rewired because of machine learning, AI, and digital technologies.

If you just reflect for a bit on your experience using Google, for example, much of your Google experience is fully automated, from the ads you see to the search you do to, if you’re using Gmail, how you interact with them. It’s not people that do those activities, it’s the algorithms that make that happen. Similarly with all the large e-commerce platforms like an Amazon or Alibaba or Netflix. But these companies work in a fundamentally different way than a company like General Electric, where I grew up right out of college in my first job.

These companies, the machines and the algorithms are at the center. The work is automated. The humans are actually designing the algorithms and testing them and checking them, making sure they’re working within bounds, but the actual transactions and activities are being mediated through the machines....

....MUCH MORE

If interested see yesterday's "Amazon to cough $75B on capex in 2024, more next year" (AMZN)" including: 

"Elon Musk says any company that isn’t spending $10 billion on AI this year like Tesla won’t be able to compete" (TSLA)
    This.
    This is such an important concept to grasp. It's the advantage flywheels, the rich get richer, winner-take-all reality of business in 2024.... 

Also Nov. 4:

Andreessen Partner On Where The AI Opportunities Are For Investors

....WSJ: What type of AI startups are interesting now, and not too expensive or too late?

MARTIN CASADO: It’s good to draw a comparison to the internet. Periodically in the history of the industry, we’ve seen the marginal cost of things go to zero. With compute, the marginal cost of computation went to zero. We had people calculating logarithm tables by hand, then we had a computer do it. That created the compute revolution. Then the internet, the marginal cost of distribution went to zero. When it comes to AI, it really feels like the marginal cost of language, reasoning and creation are going to zero. And if that’s the case, this is a supercycle. And if that’s the case, we’ve got decades. So there’s no “too late.” In that sense, we’re still very, very early....