Last week HBR Press invited me to the launch of a new book ‘Competing in the Age of AI’ by Marco Iansiti.
Summary: It’s a worthwhile book with valuable insight, albeit only really covering the basics. It’s useful as a persuasive tool to give to the leaders of large companies who need a layperson’s introduction to AI and digital transformation – it will get them excited. There are also some good frameworks for practitioners to adopt, especially around the notion of generating an ‘AI Factory’ — a scalable decision engine that powers the digital operating model of the twenty-first-century firm.
As someone who is currently helping lead a team of scientists, engineers and designers in building AI-first products for asset management — I was intrigued to hear what the authors had to say.
A lot of people enjoy writing about AI — but do so with no practical experience. I wanted to see if this book passed the ST Fluffometer Test (and yes, I did just make that up).
Also, I couldn’t help but scope out the competition — I’m currently putting the finishing touches on my own book — 10 Minute Guide to Building AI Products. Jump over and pre-order now to get a few extras when it goes live.
Now, back to the book…Contents (click to expand)
Chapter 1 – The Age of AI: Artificial intelligence is transforming the way firms function and is restructuring the economy.
Chapter 2 – Rethinking the Firm: Software, networks and AI are changing the fundamental nature of companies — the way they operate and compete.
Chapter 3 – The AI Factory: The core of the new firm is a scalable decision factory, powered by software, data, and algorithms.
Chapter 4 – Rearchitecting the Firm: To use the full power of digital networks and AI, firms need a fundamentally different operating architecture.
Chapter 5 – Becoming an AI Company: AI-enabled firms will transform and rearchitect to leverage the power of data, networks and AI.
Chapter 6 – Strategy for a New Age: Digital firms enable and require a new approach to strategy.
Chapter 7 – Strategic Collisions: What happens when digital firms compete and collide with traditional firms.
Chapter 8 – The Ethics of Digital Scale, Scope and Learning: Ethical challenges are generated by the transformation of the nature of the firms.
Chapter 9 – The New Meta: The age of AI is changing the rules of the game, with fundamental implications for all of us.
Chapter 10 – A Leadership Mandate: The age of AI is defining a new set of challenges for leaders of digital firms, traditional organisations, startups, regulatory institutions and communities.
As your can see from the contents, the authors take us on a journey from AI newbie through to understanding the ethics of AI delivery — and everything in between.
True to Harvard style, they focus on case based learning. And the core of the book is really about this notion of an ‘AI Factory’, but we’ll get to that later…
They open it up by saying AI can provide opportunities to any organisation, on the condition that makes the required commitments and investments.
Yes, startups may naturally have had an easier path forward than legacy companies, but the authors have also seen decades old companies adapt and thrive.
Their ambition is to give readers the insight to prepare for the collisions that will inevitably affect their businesses — to deal with the threats and to identify the opportunity, and to capitalise upon them.
One interesting case study they bring to light is Ant Financial. They employ fewer than 10,000 people to serve more than 700 million customers. By comparison, Bank of America, employs 209,000 people to serve 67 million customers.
They make this point to highlight just how digital operating models leave complacent incumbents as sitting ducks — those with an ‘AI Factory’ are a different breed. They then go onto provide a further two examples in other industries Ocado (in grocery delivery) and Peloton (in fitness).
The AI factory…
The age of AI is manifested by companies driving another fundamental transformation. This one involves industrialising data gathering, analytics, and decision making to reinvent the core of the modern firm in what the authors call ‘The AI Factory’. The AI Factory is the scalable decision engine that powers the digital operating model of the twenty-first century firm.
Processes are digitised and enabled by an AI factory that treats decision making as an industrial process.
There are three critical components to the factory:
- AI algorithms that make predictions and influence decisions
- The data pipeline that feeds them
- And, the software, connectivity, and infrastructure that powers them
AI is becoming the universal engine of execution. As digital technology increasingly shapes ‘all of what we do’ and enables a rapidly growing number of tasks and processes, AI is becoming the new operational foundation of business — the core of a company’s operating model, defining how the company drives the execution of tasks. AI is not only displacing human activity, it is challenging the very concept of the firm.
I won’t go through every chapter in this post as you’ll just use it as a substitute to buying and reading. I will say the book does stand out because it challenges you to rethink the core of your business strategy.
Many leaders are struggling with how to leverage artificial intelligence because of the hype and technical jargon, etc. If you want to make meaningful progress within your organisation; I’d recommend you buy your leaders & decision makers this book. It can do a lot of the leg work required in laying out the facts, as well as a playbook on how to start to make meaningful progress.
They make it clear that engineering feats alone are not enough. Culture and ethics are critical to break the traditional constraints on thinking and capturing and delivering values.