AI: A Call to Action for Today’s Leaders

Recent technological advancements in Artificial Intelligence (AI) have caused massive waves across the world.

Unlike some of the more gradual advancements in the past (such as the introduction of smartphones or social media platforms), AI has already caused massive changes to how we live and work and promises to continue to do so in the future.

The groundbreaking establishment of OpenAI was a prime example of this. When it launched, it caused a huge stir amongst different communities. Technology professionals celebrated the company's objective to advance AI in a way that positively impacts humanity. Venture capitalists quickly invested in the company, and the media extensively covered its every move. Sam Altman, Open AI’s CEO, is a celebrity today with country heads queuing up to get a meeting with him!

Meanwhile, governments and Wall Street kept a close eye on OpenAI's progress, and the general public, while having a mixed reaction of excitement and fear, largely perceived the company positively due to its mission.

History Repeating Itself

When talking about AI, it's hard not to compare it to when the web became mainstream in the 1990s and early 2000s.

For example, this era dramatically changed advertising, essentially uprooting the print media industry. Giants such as Google and Facebook began to dominate ad spending, siphoning revenue from traditional media outlets.

Retail also underwent a radical transformation; the way we book tickets, plan travel, and even shop for everyday items shifted from physical to digital platforms. This period also gave birth to entirely new business models, such as Uber, Airbnb, and Facebook, that have since become household names.

Furthermore, the widespread adoption of the Internet and digital technology paved the way for hybrid and remote work models, reshaping our perspectives on office spaces and cities and challenging the traditional 9-5 workday confined within office walls.

This evolution highlights the profound impact technological advances can have on industries, societal structures, and lifestyles.

Just as the dotcom era marked the end of an era for many established businesses, current technological change—fueled by AI—promises to rewrite the playbook for success in the next decade. Like the dot-com era, AI has already disrupted the status quo, bringing about new updates and capabilities every week. It's promising to accelerate drug discovery, introduce customized learning at scale, exponentially increase the productivity of doctors, lawyers and programmers, and even provide humanoid companions for people!

For leaders, it's clear that AI has extensive offerings, and you probably want to participate in the AI revolution personally and professionally. There is a bit of FOMO here, and rightly so, but the question is how. How do you decide where to place your bets? How do you know which startups to invest in? How do you learn the skills needed for the future workplace? How do you pick the right companies to work in?

AI's Impact

Suppose we assume that AI will cause shifts of a magnitude equivalent to or greater than those of the dotcom era and the widespread adoption of the internet. In that case, we are on the verge of a revolution that could fundamentally reshape business as we know it.

AI's efficiency and predictive capabilities have the potential to automate numerous processes and reduce the need for human intervention in previously labor-intensive tasks. Klarna's recent announcement serves as an example of this potential.

Klarna has declared its ability to support customers without requiring human agents, disrupting the call center industry. Teleperformance, a renowned call center, has witnessed a considerable decrease in value, primarily due to Klarna's implementation of advanced AI technology.

This has caused Teleperformance shares to plummet by 23%, as concerns about the impact of artificial intelligence on their business model have arisen. Klarna's decision to employ Open AI-powered customer service assistants to manage many customer service calls has been the leading cause of this decline.

This moment highlights the need for enterprises to critically examine their operations through an "AI lens" and adjust their strategies accordingly. Every company’s senior executive must act sooner rather than later to avoid obsolescence in an AI-dominant future, where even well-established industries might find themselves rendered archaic overnight.

On the other hand, a compelling chance exists to harness AI for outstanding operating efficiencies, potentially transforming cost structures, enhancing customer experiences, and opening new avenues for value creation.

The message is clear—adaptation and strategic foresight are not just advisable but essential for survival and success.

Uncertainty and Caution Behind the Need for New Products

Undoubtedly, many companies are at a crossroads, fully aware that their existing products might not suffice in a world dominated by AI. They recognize the urgency to innovate and create new products that align with future trends. However, the uncertainty surrounding what will succeed creates a dilemma.

The technology behemoths, or the “Magnificent Seven,” as they are called, have taken the lead. Apple, Microsoft, Meta, Amazon, Alphabet, Nvidia, and Tesla are actively introducing new AI-based products and services and aggressively hiring and investing in AI talent. They don’t want to follow the same path as IBM, Sun, HP, or Intel.

Many leaders believe that observing and assessing the situation is necessary before making any decisions. They aim to strike a balance between seizing new opportunities and mitigating risks, which has become a central challenge in steering their companies toward future success. This is especially true for traditional industries. Leaders don’t want to do what Time Warner did, jumping to merge with AOL—a cautionary tale in which Time Warner lost its traditional business without getting the new one.

In the meantime, many companies are parting ways with talent and skills that have become irrelevant. These businesses are also strategically using their cash reserves to buy back stock. I call it detoxing and getting ready to change course when you sense the time is right.

Everyone's Watching Startups

Startups, particularly those in their early development stages, have historically been the breeding ground for revolutionary ideas and technologies. It's widely acknowledged that the next breakthrough in AI will likely not originate from today’s tech—leaders but from an agile, innovative startup.

These startups often possess the agility, creativity, and risk appetite that larger corporations may lack, enabling them to explore and experiment with bold new concepts. Meta and Google's stories, founded by young, visionary college graduates, are prime examples of how groundbreaking ideas can transform into industry leaders.

Recognizing this potential, a growing number of established companies and investors are turning their attention to the startup ecosystem, eager to discover and collaborate with the next generation of innovators who may hold the keys to shaping the future of AI.

A Level Playing Field

Companies cannot solely rely on past strategies and models to succeed when faced with new technologies. A prime example is the enormous shift that occurred with the birth of Software as a Service (SaaS).

This innovation majorly disrupted the sales industry, rendering the traditional enterprise sales models of tech giants like Oracle, SAP and Microsoft obsolete for SaaS business models. SaaS demanded a more agile and customer-focused approach, emphasizing ongoing customer engagement and subscription models over one-time, large-scale purchases.

Similarly, as we venture further into the age of artificial intelligence, companies find that the strategies that catapulted them to success in the pre-AI era may not suffice in the current landscape.

The transition from conventional software to AI-infused applications requires an overhaul and a fundamental rethink of business strategies and customer relationships. This creates a level playing field for established companies and startups to compete and innovate.

How Do I Participate?

It's clear that AI presents vast opportunities for participation, whether as an employee, entrepreneur, or investor. At a professional level, you need to transform your business by leveraging the new tools. At a personal level, you need to figure out how to retool and adapt to the changing needs of employers. The third angle could be investing early on to reap the benefits of foresight without dirtying your hands. The initial investors in Google, such as Ram Shriram, set a precedent for the transformative potential of betting on new tech early on.

Many leaders view this challenge as a pivotal moment that can either make or break their career and company. The questions that arise are how quickly you can adapt, what tweaks you can make to your company culture, and how you can ensure that your employees don't perceive AI as a potential threat. Addressing these issues requires more than simply appointing a Chief AI Officer, so what steps do you need to take to find a viable solution?

Final Thoughts

I hope this has been an interesting read, and I would love to hear your thoughts. In a future edition, we'll explore how to figure out the answers to these questions and potential strategies leaders can use to navigate the coming changes.