Advantage from AI

Finally, a sound reminder that AI, in and of itself, is not creating a NEW, SUSTAINABLE advantage for companies that adopt it.

The article, by Jay Barney and Martin Reeves in the upcoming issue of Harvard Business Review (link), is a timely and more diplomatic version of Nick Carr's "IT Doesn't Matter" from the May 2003 issue of Harvard Business Review. His point was that IT does not provide, in and of itself, a new and sustainable competitive advantage if everyone else has access to it. Of course, Nick's title was provocative and boy did it provoke -Andy Grove was pissed and so was the entire Silicon Valley. It would be counter productive to claim that AI doesn't matter. That's not what Barney and Reeves say at all.

In fact, not leveraging AI for relevant use cases is the surest way to oblivion: if your competitors have access to AI tools and become more productive/efficient/fast/cost-effective, you better catch up. But because AI use cases have been mostly about efficiencies, AI on its own does not produce new and sustainable competitive advantage. Everyone will catch up, eventually.

At the same time, and I think this is the really clever part that needs to be highlighted, AI may have the potential to AMPLIFY your existing advantage(s). I am being careful here by writing "may have the potential": not all advantages are amplifiable by AI. But it should stimulate companies to zero in on the obvious strategic imperative: AI can be a nonlinear multiplier when applied to specific differentiators, where a disproportionate amount of unique value can be created.

So, thank you Jay Barney and Martin Reeves for a refreshing article!