Karim Lakhani, a Professor at Harvard Business School and a leading technology management and innovation scholar, revisits competition in an era when artificial intelligence and the cloud have transformed how companies operate and compete – and how we live our lives.
Lakhani, together with Marco Iansiti, have just published Competing in the age of AI, a book that examines the role of strategy and leadership when algorithms and networks run the world.
In this podcast, Lakhani and Esade Professor Esteve Almirall discuss the macro and micro level of this new phenomenon: how market competition has changed and how companies compete using AI.
Competition has changed because companies in which AI is central have tools for achieving near zero marginal cost in value creation. At the same time, they enjoy total scalability because digital companies do not suffer diminishing returns on scale (in contrast to traditional companies).
Organisations built around AI enjoy clear competitive advantages
Organisations built around AI enjoy clear competitive advantages at both micro and macro levels. The consequences of these advantages go beyond the companies themselves. They are changing markets and the rules of competition. In Lakhani's words: "we must rethink strategy – and networks are increasingly important in the age of AI."
Lakhani also examines the specificities of digital transformation, describing bottlenecks (such as the mirroring hypothesis and architectural inertia) and growth – which he says is based on network and learning effects.
A central part of this podcast is devoted to AI factories and how even if companies differ, the AI factories that power them are the same. AI factories form the basis of how new companies compete. It is a new organisational structure that demands attention because it is the new engine of competitive advantage.
The podcast concludes with advice for companies that aim to compete using AI, particularly small organisations.
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