Here is an excerpt from an article written by David Wingate, Barclay L. Burns and Jay B. Barney for MIT Sloan Management Review. To read the complete article, check out others, sign up for email alerts, and obtain subscription information, please click here.
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AI will transform economies and lift markets as a whole, but lasting differentiation will be built on human creativity and passion.
There is no question that artificial intelligence will transform the competitive business landscape. AI will streamline business processes, increase worker productivity, redefine premium skill sets, and unlock the potential of data. There is also no question that AI will make relentless progress and become more capable at a dizzying pace.
But AI will also become more ubiquitous. Algorithms and training data are being commoditized; hardware competition is fierce; talent is plentiful; open-source models reliably erode corporate offerings. AI will become increasingly economical to deploy, and competition will demand that companies do so. While it is impossible to predict exactly how AI will transform our economy, one thing is clear: Every company will want it, and there is essentially no reason why they will not be able to get it.
It is tempting for a company to believe that it will somehow benefit from AI while others will not, but history teaches a different lesson: Every serious technical advance ultimately becomes equally accessible to every company. Personal computers, the internet, semiconductor fabs, blockchain technology, genetic sequencing — these technologies are no longer competitive advantages for any organization.
AI is similar, and its increasing ubiquity should cause us to rethink our assumptions about how it will — and will not — change competitive dynamics. It is easy to paint a picture of a glistening, AI-driven future and the untold riches it harbors, ripe for the taking; it is just as easy to believe that companies that invest heavily in AI technology or move first will reap the lion’s share of potential profits.
But all such narratives obscure a critical point: While there will doubtless be transitory competitive advantages in embracing AI, AI does not change the fundamentals of what makes for a sustainable competitive advantage.
How can AI be the centerpiece of a sustained competitive advantage when everyone has it? We argue that it simply cannot. The value that AI unlocks will be unlocked for all. The advantages AI confers will be conferred on all. By definition, if everyone has access to the same technology — even if it is new and valuable — it may move the market as a whole but will not uniquely advantage anyone.
Far from being a source of differentiation, artificial intelligence will be a source of homogenization.
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David Wingate is an associate professor of machine learning and AI in the Department of Computer Science at Brigham Young University. Barclay L. Burns is assistant dean for applied AI in the Smith School of Engineering and Technology at Utah Valley University and a fellow at the University of Cambridge Judge Business School. Jay B. Barney is a presidential professor of strategic management and the Pierre Lassonde Chair of Social Entrepreneurship in the Eccles School of Business at the University of Utah.