How Generative AI Changes (Most) Everything
I recently listened to about two-and-half hours of a set of HBR podcasts titled How Generative AI Changes Everything. It covered strategy, culture, creativity and productivity and had a number of excellent insights, of which I captured a few below. I highly recommend listening to the entire set, as each podcast does a deep dive on a different topic.
1) Generative AI significantly increases access to knowledge, creativity, and productivity and firms need to adapt faster than before.
Generative AI tools such as ChatGPT, Bing Chat and other large language models have driven the cost of obtaining knowledge to near zero. They provide information and insights instantaneously at minimal cost for users and are accessible anywhere. The shift to Google search was a game changer of information access but it frankly pales in significance to having the complete answer and analysis given to you instead of searching through various sites and then developing your own findings.
Yes, from a information-access standpoint, ChatGPT and other generative AI may hallucinate but their output can be easily checked. And many creative tasks I use it for (process steps, analogies, cross-domain thinking) are not prone to hallucination.
We know many professions, such as marketers and real estate agents are already using ChatGPT to significantly increase productivity. Companies like BuzzFeed are changing the way they deliver value using generative AI as well and firms like IBM are eliminating positions because AI eliminates the need for hiring.
Lowering the cost of information access in history has always led to major economic changes. The invention of the printing press accelerated literacy, led to the development of the publishing industry and increased trade. The same was true of the internet, which fundamentally changed the economics of the travel, retail, media and education industries.
2) Every firm needs to rethink their strategy - and more.
The economic shifts created by generative AI dramatically alter the value propositions and business models of many companies and the internal operations of all of them to some degree.
For firms in industries that will be most affected, such as legal, media, and education, a total rethink of strategy, business model, and value delivery are required. This reconsideration of strategy cannot just entail “bolting on” a generative AI strategy given the fundamental changes occurring in those arenas. That will work no better than just adding a website to a retail company helped those firms truly adapt to the economics of the internet. Ergo, a deeper analysis must be done for those companies to prepare for the coming shift. People, processes, organization, culture…all require a relook to adjust to the impact of generative AI.
Firms in other industries such as construction may not have their business models or value propositions affected as significantly, however, they can still reap benefits by adopting generative AI in terms of productivity and creativity. They will need to consider how their internal operations can change to reduce costs and increase customer satisfaction.
3. AI should be considered as another member of the team…and the culture.
Think of AI not as an artificial or alien intelligence but almost as another employee, but one with special skills and personality. We are often cautioned not to anthropomorphize AI but firms and managers will have to integrate AI into their team and their workflow. For example, giving AI a name, one can introduce a new AI tool thusly:
“Sam” is great. Knows so much, really responsive, writes pretty well, is available 24x7, and creative too.
When Sam doesn’t know something, though, Sam will make stuff up and sound really confident about it. And Sam can have some biases. So you need to keep that in mind. Let’s welcome Sam to the team.”
Culturally, this will require changes, including ensuring the AI tools used fit with the existing culture or adapting the culture to accommodate AI. It will also require rethinking staffing, talent, teaming and organizational structure. This will be a challenge for executives and managers throughout the company.
4) In an increasingly dynamic future, organizations must adapt quickly by becoming learning organizations.
Generative AI will make the coming years even more disruptive and dynamic, requiring companies to adapt quickly to survive and thrive. This will only be possible if organizations can respond more quickly to their environment. This will be done by increasing the speed of decision-making and becoming an organization that can unlearn outdated mental models habits, processes, and technologies and acquire new ones.
“The illiterate of the 21st century will not be those who cannot read and write, but those who cannot learn, unlearn and relearn.”
Alvin Toffler - Futurist
5) Getting started
There are three stages a firm goes through, with some overlap between them.
A. Become digitally fluent and ensure your employees do as well.
Your people may actually be ahead of you here - at least some of them. This is the easiest but most crucial stage. Encourage and enable them to be digital leaders and bring the rest of the company along with them. Longer term, consider creating a generative AI center of competency to further train workers and create and deploy new applications.
B. Improve internal workflows to gain productivity.
Next, look at your processes and determine which have the most to gain from generative AI and focus on those. An obvious area is customer support. A recent study performed by Stanford and MIT researchers found that Fortune 500 firm using a generative AI chatbot garnered 14% productivity increases.
If I were an executive again, I would tell my direct reports they have two months to tell me how they will achieve either ~20 productivity increases, either in the form of doing more or reducing headcount. This will lead them to start thinking about moving forward with a goal in mind.
C. Provide new customer experiences.
Finally, find ways to use generative AI to provide new customer experiences. In the health care industry, that could lead to using generative AI applications in support of health care workers to improve diagnoses and prognoses. For law firms, it might mean much faster turn-arounds on their legal work for clients.
The time to get started isn’t now. That time is actually past. But you can still catch up.
AI changes most things…but not everything.
The picture below is of teams of workers in my neighborhood digging holes every few feet to install fiber for an internet provider. It served as a reminder to me that all our high tech still requires a lot of people to perform hard labor to make that give us that technology in our offices and homes.
And as comedian Nate Bargatze reminds us, digging holes is hard work.
Great Reads
Setting time on fire and the temptation of The Button
Great read by Ethan Mollick about how generative AI will dramatically increase our productivity while simultaneously making us question whether our jobs are meaningful. The latter relates to an earlier piece I wrote on “neo-nihilism.”
ChatGPT now lets you create and share links to your chatbot conversations | ZDNET
To share a current or previous conversation, click its entry in the sidebar and then click the Share icon.
A Share Link to Chat window displays the name and contents of the chat so you can preview it before you share it.
Click the ellipsis icon in the preview window and you're able to share your name or keep it anonymous.
Click the Copy Link button to generate the link, which you can then send to someone via email, text, or another method.
What is Social Status by Rob Henderson.
Rob explains why we seek status, gain power via dominance, competence or virtue, and how we track our standing in terms of inclusion and status. Great read on some fundamentals of human nature.