„Competing in the Age of AI: Strategy and Leadership When Algorithms and Networks Run the World” by Marco Iansiti and Kharim R. Lakhani, a Book Review

Competing in the Age of AI – book essentials from doitinvest.com

AI is making its way into the business world. Even more, machine learning became a discussion topic in most of the he companies boards. It is not anymore about the promises of automating business processes and eliminating redundancies – the new priorities focus on not being left behind as a company, in over-crowded markets.

In their 2020 book “Competing in the Age of AI: Strategy and Leadership When Algorithms and Networks Run the World”, the Harvard faculty professors Marco Iansiti and Karim R. Lakhani turn the AI paradigm around. To paraphrase Kennedy, Iansiti and Lakhani invites you to reflect NOT on what AI can do for your company, but what YOU can do to leverage it. In other words, their starting point looks at how AI centric organizations operate and what the non-centric on AI counterparts should observe.  This is really interesting, since in most strategy books the authors draw a picture on how we can evolve towards AI  -i.e. starting from a current, pre-industrial computing status. @Competing in the Age of AI“ attempts to go around this and starts high – what would you do if you want to leapfrog ahead and go head to head with the best-in-class AI organizations?

According to the authors, AI processes have several advantages which should be leveraged:

* Are vastly more scalable than traditional processes, especially in the service industries,

* Allow massive scope of business increases, allowing better serving the customers,

* Enable companies to straddle industry boundaries (AI-fueled „blue-ocean strategies“),

* Create new strong opportunities for learning, again about customers and own processes and

* Drive ever more accurate, complex, and sophisticated predictions (something well established in our other reviewed title, „Prediction Machines“.

One of my favorite chapter remains “Rearchitecting the Firm”. Within their twentieth-century operating models, firms have evolved, but still not too far from the original mass-production Ford operations. Sure, there came the Total Production System from Toyota (notoriously difficult to imitate), as well as the modern, state of the art production systems for iPhones. Still, the authors argue that these systems are designed in sequential and specialized steps, taking relatively little advantage of the modern AI enabling technologies.

So how should one restructure the design of a firm.stuck in the old mass production paradigm? First of all, as you might have already guessed, break the paradigm: install agile teams and customer-focused processes. Empower your employees to leverage the almost too wide array of tools they have at their disposal. Try to stay humble and close to the market – avoid producing too much, or even pushing your offerings before you really understand what the consumer wants. This change goes far beyond the JIT or Toyota’s TPS – they centre around how you can better leverage the consumer needs by using simple, AI powered insights. And these insights lead naturally to satisfying customer products, thus creating a virtuous customer experience cycle.

Microsoft did it – evolving from a boring MS Office powerhouse to the household brand name it is today.

“Competing in the Age of AI: Strategy and Leadership When Algorithms and Networks Run the World” remains one of the most important titles of 2020. The reason is simple – the authors Iansiti and Lakhani take a really comprehensive view on the strategic changes within the firms, with a very broad theoretical support. I rarely see such books who go far and beyond the classical tech hype surrounding AI – and this is one of them. So… enjoy!

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