GenAI Won’t Give Businesses a Sustainable Advantage

Businesses are scrambling to leverage AI in the hopes of gaining a competitive edge to leapfrog the competition. But would that truly give them a sustained advantage?

A new HBR report takes a contrarian view and notes that while technological innovation can profoundly change how business is conducted, relatively few went on to become direct sources of sustained competitive advantage for the companies that deployed them.

The reason? Their effects were so profound and widespread that virtually every business was compelled to adopt them. This meant that the advantages it offered early adopters were nullified in short order, and in fact allowed new competitors to enter previously stable markets.

It’s the Same AI

Another aspect of the argument is that organizations are not developing or applying a customized version of GenAI technology, but the same version used by their competitors. And it seems improbable that the typical enterprise can outdo market leaders such as OpenAI and Midjourney.

One often-mentioned strategy is to apply GenAI to the organization’s proprietary datasets. However, the authors were dismissive of this, arguing that businesses in similar industries are likely to have databases that contain similar data.

This means similar patterns are likely embedded within both small and large databases alike, and GenAI would likely generate similar recommendations and outputs that eliminate any source of competitor advantage, they wrote.

And even businesses with access to proprietary data where competitors have no functional equivalents would only gain a temporary advantage, as increasingly sophisticated GenAI models could eventually fill in the gap—even without access to the primary data.

Amplify Existing Advantages

What GenAI can do is allow businesses to entrench and even amplify advantages they already have, say the authors. This is especially the case for organizations with “valuable capabilities” and “unique resources” that cannot be replicated.

Fortunately, businesses with such a combination of unique capabilities and the resources required to deploy GenAI are few and far between. But do expect the largest firms that leverage GenAI to pull even further ahead.

Ultimately, GenAI is here to stay. And just like we can no longer imagine conducting business without personal computers or the Internet, the time may come soon when doing business without AI is unfathomable.

“[The] very nature of a general technological innovation will make it an equal-opportunity disrupter. Businesses that try to deny the power of GenAI will certainly fail. Those that adopt it will stay in the fight.”

“But at this stage, it looks likely that the only ones that will actually win with it will be those that can apply it to amplify the advantages they already have,” the authors concluded.

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