We conclude our series of conversations about Artificial Intelligence and how it's changing the world around us. Today’s episode focuses on the use of AI by businesses, specifically as a sustainable competitive advantage, and why AI may not be the magic pill that it seems like at first.Here to help untangle the whole issue is Jay Barney. Jay is the Presidential Professor of Strategic Management at the David Eccles School of Business.Jay addresses common misconceptions about AI's ability to provide a competitive edge, likening its impact to previous technological innovations such as personal computers and the steam engine. He asserts that while AI can drive innovation and efficiency, it cannot by itself offer sustainable competitive advantage as it is widely accessible. Jay emphasizes the importance instead of unique organizational processes and the human element in maintaining a competitive edge, and discusses the potential pitfalls for early AI adopters. Frances and Jay also explore how businesses can leverage AI within the context of strong organizational processes and culture to generate real value.Eccles Business Buzz is a production of the David Eccles School of Business and is produced by University fm.Episode Quotes:Will Gen AI be a source of advantage or disadvantage for firms?[02:51] We're not arguing that Gen AI is not going to have a profound impact on the way we do business. In fact, because the impact is going to be so profound, all firms will have to respond to it. And that's not likely to be a source of advantage by itself for any firm. That's the great irony.What benefits do companies gain in deploying Gen AI? [14:59] Jay Barney: There are millions of things that Gen AI can do. Most of them fall in a couple of big buckets, right? One of them is pulling costs out. And by the way, how are you going to pull costs out? By taking human beings out of the process. Now, that has huge social implications. This started by the way in the sixties with lean manufacturing. We're pulling people out and using automation robots and supply relationships and all those things. And it's a continuation of that long-term trend of reducing human contact in our business, which, by the way, points to how important that residual human contact is. The stuff that's left over, all this other stuff…[15:39] Frances Johnson: Gets even more important.[15:41] Jay Barney: Even more important. Exactly right. And another one is going to be an innovation.Skills students need in the age of Gen AI[17:15] Frances Johnson: As you think about the students you're teaching, the students we have at the Eccles School, our recent graduates and alums who need to make themselves competitive in that leftover 10%, what do you see as the skills or the capabilities that are critical for them to have?[17:35] Jay Barney: Well, this is not specific to this Gen AI conversation, but it's all about building socially complex relationships among individuals so they are willing to share, work together, [and] create ideas that only come out of those kinds of human processes. For example, "Go Gen AI, give us a list of seven toothbrushes." Great! "How do we make those?" Ask Gen AI. It'll give you 15 choices on how to get them made, how to distribute. But at some point, someone is going to have to make creative decisions about, "Is there really demand out there?" Gen AI doesn't know that because it can only analyze what is, not what might be. And so, that's going to require another set of skills that may be even more human in nature. So, I think that the ability to build a team, to generate a sense of commitment to each other, to the organization, its purpose, to inspire are sources of sustained competitive advantage. I have yet to be inspired by a Gen AI experience, amazed, shocked, amused, entertained, uninspired.Show Links:Jay Barney | LinkedInJay Barney | Faculty Profile at the David Eccles School of BusinessJay Barney | jaybarney.orgJay Barney | Amazon Author PageDavid Eccles School of Business (@ubusiness) • InstagramEccles Alumni Network (@ecclesalumni) • Instagram Eccles Experience Magazine
