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HBR IdeaCast

How Generative AI Changes Strategy

Thu May 25 2023

Generative AI

00:02 - 18:23

  • Generative AI is a truly transformative technology that will be game-changing for the tech landscape and humanity.
  • Large and small companies alike are making trade-offs in this fast-changing market.
  • There are significant advantages to being a first mover in generative AI.
  • The cycles in and around AI are faster than ever seen before in the tech landscape.
  • Companies need to balance innovation with safe and responsible use of AI.
  • Microsoft is committed to safe and responsible AI, which is a core pillar of everything they do.
  • Regulation will be an important part of shaping the future around AI in our society, and Microsoft welcomes it.
  • There has been an explosion of organizations working on AI, with many SaaS companies pivoting to make it a bigger part of their offer.
  • Generative AI has the potential to reshape organizations and open up new opportunities.

AI and Software Interaction

06:13 - 12:33

  • AI will change the nature of how software and humans interact with one another.
  • It will force us to think differently around what a software experience or a SaaS experience looks like for a company.
  • AI can democratize access to technology, allowing small organizations to create software and build tooling that enables them to achieve their mission more efficiently and effectively.

Getting Started with AI

06:13 - 12:33

  • To get into AI, start using it and get familiar with it. Then think about what you can do to improve productivity across different functions in your organization, apply it to workflows, and create new experiences or business models.
  • Generative AI speeds up strategy cycles, helps frame trade-offs and decisions more efficiently, and allows us to ask ourselves different questions because of what's possible.

AI-powered Workplace

06:13 - 12:33

  • The AI-powered workplace is going to change the nature of work for pretty much everyone by making customer experiences far more efficient and pleasant.
  • Co-pilots that are AI-enabled will make it easier for customers who just want their issue handled quickly so they can move on with their lives.
  • The transformation of the customer experience is going to be completely transformed by co-pilots that are AI-enabled.

Bringing AI into Organizations

12:03 - 23:47

  • There are three levels of increasing sophistication for companies to bring AI into their organization or product: finding the right applications in the market, integrating third-party APIs into workflows or products, and putting together their own model using proprietary data.
  • Custom modifications may be necessary when integrating an API into a workflow or product. For example, different retailers may want different responses for the same input prompt.
  • Companies can fine-tune open source models developed by others for their own use cases.
  • Companies should consider building their own model using an open source model and proprietary data.
  • Building a custom model can cost less than $1 million.
  • Amazon's SageMaker can fine-tune models for companies with their own data.
  • Larger organizations may want to bring more of the process in-house, but AI talent is expensive.
  • When partnering with a company for AI, consider trust, price, and financial viability.
  • Training an AI bot on exclusive content or data requires technical skills and intuition.

Middle Managers and AI

17:53 - 29:08

  • Middle managers will still be needed as prompters of humans.
  • Middle managers will be important in the future because they have the skill set to work with AI.
  • Prompt engineers or people who specialize in interacting with AI are asking good questions and giving detailed instructions, which is similar to what middle managers do.
  • Managers will have to develop the skill set of working with AI as well as managing humans.

Competing in the AI Market

23:18 - 29:08

  • There are many places in the value chain for technology providers to compete in, such as supplying data, helping others build models, and going back to private data centers.
  • Entrepreneurs building AI-first applications will be in a great position.
  • The two areas with the biggest growth opportunity are video gaming and media or social media.
  • AI is a new type of computing platform that allows us to do a much more human-like form of computing.

Leadership and AI

28:51 - 34:36

  • Leaders need to chill out and panic at the same time when leading their organizations into the future with generative AI solutions.
  • Leaders need to invest in AI with a sense of urgency, but also play for the next 10 years.
  • Advancements in computing and AI will continue to be transformative over the next decade.
  • Companies should get their organizations ready now to be prepared for the next transformation.
  • Competitors are likely going through the same exercise, so companies need to take action now.
  • One mistake is being suspicious about technology and restricting employees from experimenting with new AI-based applications.
  • The other mistake is not protecting intellectual property on the open internet, which could lead to loss of data or inability to train models effectively.
  • There is a gray area around copyright laws and training AI on copyrighted data without permission.

Impact of AI on Jobs and Society

34:14 - 36:59

  • The digitization of society has already had a significant impact on productivity and employment, particularly in middle America and manufacturing sectors.
  • Transformation on the consumption side outside of work is where it's most dangerous.
  • Automation has led to job losses in middle America and manufacturing.
  • E-commerce has also cost jobs in local communities.
  • The transformation of consumption is more dangerous than the impact on jobs.
  • Unlimited personalized content could lead to people not wanting to work at all.
  • We need to consider whether we want to live in a world where people don't want to work.