Organizations that move from a traditional business model to one driven by artificial intelligence (AI) often become dominating forces in their industry. Harvard Business School (HBS) Professor Karim Lakhani reveals why and how in his critically acclaimed book “Competing in the Age of AI: Strategy and Leadership When Algorithms and Networks Run the World” (2020), co-authored with HBS colleague Marco Iansiti. The book was named Best Business Book of 2020 for strategy by Strategy+Business for its clarity in showing how firms with an AI-first business model are uniquely positioned to thrive long into the future.
While researching and conducting case studies with major firms, including Microsoft, Amazon, Ant Financial, Peloton and Airbnb, Lakhani and his team saw how AI-centric companies were able to break from the constraints of traditional business models to massively increase scope, straddle industry boundaries, and drive more accurate, complex and sophisticated predictions.
During the early stages of the Covid-19 pandemic, Lakhani and Iansiti studied the fast-track development of Moderna’s vaccine. With the help of an AI-first model, the company was able to produce a vaccine candidate in only 41 days — a record 90% reduction compared to the time it took to develop vaccines for SARS and MERS.
“What we’ve seen in the top firms in the world is that AI, analytics and networks are the core of the firm and what they do in terms of their business model and operating model comes from this core,” says Lakhani, who advises organizations on how to transition to an AI-first model. “Our book is not just about platforms or digital transformation, but about a wholesale change in how you define and build or rebuild a company. It’s about how artificial intelligence is changing the landscape of business and the nature of companies.”
Co-founder and co-director of the Laboratory for Innovation Science at Harvard (LISH), Lakhani goes beyond teaching firms how to transition for success to showing workers at every level of an organization – from the C-suite to the front lines – how to think about AI and strategy and what it means for their careers and for the future. He has also played a pioneering role in online executive education by designing the first-ever university-wide program (involving the Business and Engineering Schools and the Faculty of Arts and Sciences), that educates leaders on how to leverage data, analytics and platforms to transform their organizations through the Harvard Business Analytics Program. He also specializes in the management of technological innovation in firms and communities, distributed innovation systems, and the movement of innovative activity to the edges of organizations and into communities.
“Some organizations think machine learning is about superhuman powers that are the exclusive domain of companies like Facebook, Google and Microsoft,” says Lakhani. “The fact is, the AI-first business model is easily accessible to any company. Once they rethink their processes and organize differently, they will see that superpower is available to them too.”