Competing In The Age Of AI: A remarkable book that sets the ground work for how to become a AI-First Company.
Reading books about business might seem like a dull and dreary task but doing so is vital for our success as entrepreneurs. Industry experts tend to be highly regarded researchers who are passionate about their field. This is certainly true of Professor Marco Iansiti and Professor Karim R. Lakhani, who together wrote Competing In The Age Of AI. Books about business extend much further than the simple “Tricks To Getting Customers” and “How To Start A Business” types which can be found in popular bookstores. You need not look far to find books about strategy, insight, technological developments, and development planning. Business books which focus on technology tend to incorporate all these themes, as well as the more traditional ones. Such is the case for Competing In The Age Of AI. Books like this one can be a source of inspiration for new business owners or people who are already in the industry. By providing insight as well as knowledge, these books can create a new way of thinking which can help the world of business grow and develop.
As cold as it might sound, human-centered business and enterprise is becoming a less operational model than an AI-driven one. The business world runs on algorithms. Software is at the very center of enterprise. Traditional operating constraints quickly cease to become an issue and businesses can scale up rapidly. This makes the opportunities for growth innumerable and ultimately quite powerful. Both authors are aware of the power that lies in the software that makes up artificial intelligence and at the heart of it is transformation. They stress that “[…]this transformation is about more than technology; it’s about the need to become a different kind of company.” And that is exactly what the authors provide within this book. In addition to their joint expertise in technology and innovation, they provide a practical framework. The “different kind of company” they envision is something that all small business owners can strive to become.
Who Are The Authors?
Professor Marco Iansiti is a David Sarnoff Professor at Harvard Business School. Much of his research is related to digital ecosystems, including AI and AI-centric operation models. His work examines the effect of AI and its implications in business models and strategies. In the business world, Professor Iansiti is best known for his work in innovation, business ecosystems and digital transformation. His work has been widely cited and recognized across the world. In the last four years, as his research into digital ecosystems and subsequent transformations grew, his work made it onto top ten lists in several widely regarded publications such as HBR. Competing In The Age Of AI is not the first work he has co-authored. He’s co-authored several works, including The Keystone Advantage and One Strategy.
Karim R. Lakhani is the second author. He’s currently the Dorothy & Michael Hintze Professor of Business Administration, also at Harvard Business School. Like his co-author, he specializes in innovation and AI. This, along with the management of technology, are key areas of interest to him. Throughout his career, he has partnered with numerous institutions, including NASA, TopCoder, and the Linux Foundation, to resolve challenges while pioneering the integration of field experiments. This research, which primarily tackles the role of analytics and AI, has helped to reshape operation models across the world of business. While he has books to his name, he is best known for the 150 research papers he has published in business periodicals.
What is the message and themes that make this book so powerful foe me.
Competing In The Age Of AI examines the implications of AI-centric organization in business. These implications are specific to the value delivered by businesses. To use a well-known industry as an example, delivery companies such as Amazon are reliant on AI processes to provide their services. Amazon Web Services (AWS) comes with built-in AI tools to streamline workflow for a variety of situations. Contact centers, for example, might use an AI designed to increase customer security. On the delivery side of things, AIs might be used to assign delivery routes, print packaging labels, and track estimated delivery times. Although these are just two examples in a broad industry, AI is a larger part of our world than we believe it to be. Both authors, Marco Iansiti and Karim R. Lakhani, understand this and use the book to illustrate how AI has revolutionized competition.
The authors use a wide scope of research to serve their purpose. Iansiti specializes in technology and operations strategy. This becomes something of a motif in the blend of theory utilized in some of the middle chapters. However, for these portions of the book, the language used is not condescending. While some AI-specific terminology is used, it is either explained or easy to glean the meaning from the context used. This is helped by the examples Iansiti and Lakhani use (Amazon, Uber, Ant Financial, among others). As a result, it is clear that the authors do not fall for the hype of AI. While AI is central to most processes which are necessary to function in modern society, a profound lack of understanding surrounds the hype. For this reason, the authors take the time to explain fully what AI is, never fanning the flames of hype, instead spelling out the real-world applications. This almost feels mundane, having it be explained so simply, but it serves to help the reader appreciate the scope of AI.
Iansiti and Lakhani also set out to identify and provide a framework for reinventing current operational models. For example, the “collisions” between digital and traditional firms are at the very center of competition. This gives them the space needed to explore the implications—positive, negative, practical, and impractical—which come as a result of AI integration. All small business owners struggle with the challenges that come with owning their own establishment. Marketing strategies, for example, can be difficult to handle manually, so an AI can be integrated into a functional marketing strategy. This is often in the form of email or viral marketing, something which is also explored by Iansiti and Lakhani.
Competing In The Age Of AI also makes it clear that we now have more responsibility than ever before when it comes to technology. Issues of security have arisen as a result of the pandemic. Since AI systems can be programmed to learn from past experiences, this presents the conundrum of requiring a security breach for high-level AI security to be attained. However, this is not something which business owners need to concern themselves with, since modern AIs make it possible to reduce response times when security is compromised.
Who Is This Book For ?
Competing In The Age Of AI has a strikingly wide target audience. Everyone from new students in the first semester of a business degree to CEOs of major corporations could benefit from reading this book. However, it is also directed toward small business owners who want to better understand how AI works, and whether they should use it. Even though the authors go into detail and often get technical with their terminology, the average person (who may not be familiar with machine learning or AI in general) will be able to understand what is being given to them. The information is presented almost like a timeline following traditional operating models and leading into the conversion to new digital models. The examples provided, in the form of case studies, are incredibly mind-opening.
This book is something of an intense read. It covers business strategy and discusses models which might work “when algorithms and networks run the world.” That day is far off yet but reading this book will help to prepare anyone for when that day arrives. Competing In The Age Of AI is the book to read if you want to understand what current companies are doing. Unless you are already well within the world of business, it is difficult to learn the tricks of the trade, so to speak. New business owners, or those thinking about entering the world of business, should read this book to understand what the top companies did right and how they succeeded, and where some companies might have made mistakes and how to learn from those failures. The solution, ultimately, is to learn how to use evolving technologies and integrate them into infrastructure.
Readers might also be interested in this book if they want a “real world” view of AI. This book offers some great insight which is not only intellectual, but practical. The authors might be experts in their field, but you can tell that there is a grassroots approach to the narrative. A comparison would be something like Carl Sagan’s book Cosmos. While dated, that book brought astronomy down to a more readable level and helped a generation of new scientists understand the structure and material of the universe. Competing In The Age Of AI is very much the Cosmos of the business world.
What Does The Book Cover?
In the authors’ own words, this book is about a “[…] much deeper and more general challenge: rearchitecting how the firm works and changing the way it gathers and uses data, reacts to information, makes operating decisions, and executes operating tasks.” The world of business and enterprise is forever evolving. As technology grows, so does the economy and so do the businesses that contribute to it. Embracing a system which incorporates AI is the next logical step for any business owner.
“The fundamental idea behind the AI factory is to industrialize the company’s approach to data, analytics, and artificial intelligence. Moderna’s AI factory does for analytics what industrialization did for manufacturing more than a hundred years ago.” Marco Iansiti,
The scope of this book might seem quite narrow, but it covers the subject matter in such detail and with such care that there is barely room for anything else. Competing In The Age Of AI is a case where less is more. Most obviously, Competing In The Age Of AI covers artificial intelligence and its use in business. The authors begin by looking at various operational models which adopt AI and how datasets use algorithms to inform business decisions. This then leads into the ever-evolving landscape of the business world. What is covered next is almost unexpected, as one might not expect to read about value in a book about AI. However, both Iansiti and Lakhani take the time to explain how AI adds value to the firm. The authors then start to explain how traditional business models experience diminishing returns and compare it to AI-integrated business models which are more efficient, cost-effective, and even yield greater profits than we might anticipate. While many examples are given to demonstrate this, some of the more interesting anecdotes come from the famous companies: Amazon, Netflix, and Microsoft, three companies that everyone in the world is familiar with and can relate to on some level.
Iansiti and Lakhani break down the various strategic decisions involved when these companies met with operating challenges, decisions which ultimately saw them become household names. Most notably, one strategy they choose to look at is the evolution from traditional operating models to models which rely on the storage of customer data. This opens up some interesting questions, the answers to which have some very interesting implications. What changes need to occur to integrate these models? Does infrastructure need to be completely overhauled? Are digital business models encroaching on traditional firms? The authors make an excellent effort to answer these questions and suggest solutions, as well as provide a framework for AI integration.
In addition to AI, Iansiti and Lakhani also delve into the world of business. One could say that this is where the real focus is. Even though AI is a core theme of the book, the majority of the text considers strategies relating to business and competition, hence the title Competing In The Age Of AI. This leaves the reader questioning the functionality of AI. Although it is not currently necessary to understand the nature of artificial intelligence and how it functions, the authors make the case that this knowledge should be adopted and become a standard for business.
What It Does really Well,.. ( for me )
Lakhani and Iansiti have created a well-organized narrative which is easy to understand if the reader is already well-versed in business and technology. One of the downsides is that the long-term effects of the current pandemic are not covered, although this is due to the time of publication (early 2020, before the pandemic was declared). However, these implications are addressed in the new prologue.
The examples used by Iansiti and Lakhani are pulled from real-world experiences, from well-known companies, and the data is analyzed, explained and presented uniformly. This makes the reading experience easy to follow and the arguments understandable. One of the factors that contributes to this is that AI is treated as a real-world, physical idea which can be easily understood. While AI might seem like magic or something out of a science fiction film, at its most basic AI is the intelligence demonstrated by machines such as computers or phones. There are many different varieties of AI which would take too long to list, and this brings us to the message of the book:
AI should be embraced and integrated into the way we work and run business.
The artificial intelligence programs with which we are currently familiar are much weaker than the average person might expect. However, we are seeing something of a revolution in terms of technology. Current AI models might be considered “weak” now but depending on the function they serve the effects can be powerful. The authors discuss this at length, though they never tire of it, and view this as a process which scales with cost and complexity. As well, they bring the contrast in the form of traditional business firms, again in the examples they provide. They seem to suggest that this is something like evolution, where a new digital world will define the global economic system.
Something that Iansiti and Lakhani have shown, and clearly have a strong understanding of, is the bigger picture of AI. The framework they provide is more than satisfactory, although with the current pandemic it may require some reworking. On a related note, the current pandemic has also left something of a fog around the world of business as it becomes more focused on technology. As technology becomes more integrated within business, and more prevalent across the world, it is difficult to ignore the impact it has on everyday life. One unfortunate result of this is that we tend to “exaggerate” or “inflate” our own perspective of how things are. For one person, ordering a package on Amazon is a literal click of a button on their phone; to another, that click of a button is a series of algorithms processing a lot of information over a short span of time. The authors have done an incredible job of bringing it into balance.
Iansiti and Lakhani are also very aware of the obstacles which can inhibit the growth of the technological revolution they anticipate. At present, the global economic system is still in its infancy; at best it is quite juvenile. With the onset of the technological revolution and the improvements made to AI in coming years, this system will rapidly mature. Both authors seem to suggest that this will take place over the next 20 to 30 years, while admitting to the uncertainties we have yet to face. Overall, this realism is what helps the book make its point so effectively. There are too many books which propose a utopian future of technology or a dystopian view where we have to be careful of the “AI Overlords.” Competing In The Age Of AI is a refreshing glass of realism.
My curiosity takes me,..
One thing they touch on which could be focused on in a later book or through courses such as Harvard Analytics Program, is business monopolization. AI has the potential to monopolize the world of business and provide a variety of pathways to profitability. For example, the COVID-19 pandemic saw an increase in the use of AI and the resultant boost in profits across various industries seems to be related. Of course, the benefits of AI use extend to more than just profits. It also streamlines various processes, which comes with its own set of problems, such as bias. Although Iansiti and Lakhani’s discussion ends with the effect of bias and outside influences, I keep thinking about how to solution the opportunities that present themselves.
Although this book delves deeply into AI and how it can be used in business, something that could be covered in a future book is quantum computing. AI is incredibly powerful on classical computers and often provides a basis on which applications can run. In short, quantum computers do not use the traditional 1s and 0s, which makes them infinitely more powerful than classical computers. For this reason, current AI models could (and probably will) be completely rewritten in the future. Iansiti and Lakhani clearly understand the potential of AI and how it works at present. It would be interesting to see what they expect from the next revolution in computer technology. For example, many of the examples they give the reader are from the book of “big business,” so it would be interesting to read about the effects on smaller businesses ( as a small business owner – GTA Equipment Rentals ) and of course the gig economy.
Continuing along this thought, it would be interesting to see how Iansiti and Lakhani think AI could influence everyday life. Not the economic or strategic applications, but how the average person might be affected by it. Will AI and quantum computing be the norm? IBM’s 2019 unveiling of their quantum computer was a landmark in the history—and future—of technology. At present, quantum computers are not commercially (here defined as affordable) available to the public. Assuming AI becomes more sophisticated and present in everyday life, the possibilities are endless. Facial recognition AIs are continually tested and monitored for accuracy and functionality. What if these AIs became so well-tuned, they were the standard at airports? What if home security systems could integrate automatically without being voice-activated? Although strides are being made in these directions, there are still many places they could go, and it would be interesting to see what the experts think of the future of everyday AI.
What Can I Learn From This Book?
“a company’s approach to value creation requires consciously choosing the precise problem it is solving for the customer and its positioning in the marketplace.”
In a sentence: how to be a more conscious business owner. Your business might not be at the heights of companies like Google, Ant Financial, or Amazon right now, but it could be in the future. Every company uses AI. Even the smallest hometown bakery uses AI to take card payments and make orders. As the authors say, “a company’s approach to value creation requires consciously choosing the precise problem it is solving for the customer and its positioning in the marketplace.” Competing In The Age Of AI is not a book about customer service and how to succeed at it. Rather, it is a book about how to become a better strategist. Feedback from customers and employees is important, but if you do not think strategically, there is every chance that your business could fail.
If you are a small business owner, reading this book will help you understand how to think like a business strategist. You and your business will face all sorts of challenges. Not just in the early stages but later on, as your business becomes more established. The business world is dominated by algorithms, and that’s not a bad thing. If anything, it’s advantageous as it can cut out unnecessary expenditure and streamline certain processes. Learning how to embrace this use of algorithms sooner rather than later will only serve to help your business flourish.
Rating
10/10 – It is truly inspirational and confirms as a society we are in early days.
It’s impossible to cover a broad range of topics in one book without it becoming a doorstop. The concise range of topics covered in Competing In The Age Of AI is what gives the book its strength. By keeping the scope of the book narrow, the authors give themselves the opportunity to focus on the key elements of their argument. Even in this narrow range, there is still a lot of information to take in. This book really is not meant for someone who knows nothing about business, strategy, or artificial intelligence due to its use of technical terminology as well as the case studies used. However, that does not mean that there is nothing to learn from it. Even if the reader knows nothing about business or the use of AI going into the book, they will come out with an appreciation of how deep it runs in our everyday lives.
For the target audience, this book provides in-depth knowledge and will change the way they think about AI. Many new businesses open every day, and many will close due to improper or outdated strategy. Despite the unfortunate timing of its publication, Competing In The Age Of AI is already changing the way business owners and business students think about their approaches to strategy and machine learning. By breaking down the strategic decisions of several major companies, Iansiti and Lakhani have made the content more digestible for the reader. The combined years of experience and research shared by the authors not only lends authority to the narrative they present, but also keeps the reader engaged.
When reading this book, you should go into it with the expectation that your entire worldview will be reshaped. It is easy to forget how far technology has come in the last decade, and it’s still considerably juvenile compared to what will come in the future. As technology continues to evolve, businesses must be ready to embrace it. Although business owners can become comfortable in their marketing or their overall business strategy, this is a pattern that needs breaking. The realistic take on artificial intelligence, as provided by Iansiti and Lakhani, is not only refreshing, but practical. By embracing this technology as it becomes widely implemented and better developed, businesses can and will thrive as the economy evolves.
Final Thoughts
Competing In The Age Of AI is a book about business, strategy, and artificial intelligence. Although it is tempting to view this as science fiction, the fact is that artificial intelligence is a very real part of our everyday lives. We use it when we order gifts for our loved ones on Amazon; we use it when booking an Airbnb for our next vacation; we use it when we book an Uber to take us home after a night out. We can store our credit card information in virtual wallets and keep track of our spending through apps. Businesses can even use apps and specialty credit cards to keep track of business expenses instead of saving receipts. Twenty years ago, this was unimaginable. Today, it’s just another card.
The human element is still a vital part of running a successful business, but enterprise requires a steady stream of algorithms to keep running. That much will likely not change in the near future, although this book will be something of an eye-opener to those who might still be in doubt.
Markets in the age of AI and the technological revolution are being completely reshaped and retooled to fit with modernity. Professors Iansiti and Lakhani have both done a great job of explaining this. They do not hold the reader by the hand by any means, but the reader will still understand what is written. Traditional models requiring human labor for data processing, inventory management, and the like become outpaced as demands grow and technology rises to the occasion. The framework presented is workable, although it may be waylaid by the current pandemic.
What the reader is left with is this: algorithms run the show. Google, Facebook, Amazon, Alibaba, Uber… all companies we use on a daily basis. While they have human employees to do the heavy lifting and file the paperwork, it is the software that takes the throne.
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