Generative AI (Gen AI) is transforming the business landscape
—much like the steam engine, the electric motor, and the personal computer once did. But to fully understand its impact, it’s important to recognize both its potential and its limitations.
I recently had dinner with a CFO who was being pitched to invest millions into Gen AI, and that conversation surfaced a common misconception: Gen AI doesn’t create entirely new moats for businesses. Instead, it magnifies what’s already there.
Here’s what leaders need to consider when leveraging Gen AI:
Accelerated Development—If You’re All-In
When approached as a comprehensive shift in how you manage people, processes, and technology, Gen AI can increase development velocity by 30%, all without expanding your team. But if you treat it as just another tech upgrade? You’ll only see a modest 3-5% bump. The difference is in your commitment to holistic change.
Efficiency Gains Across Industries
Industries are seeing real efficiency improvements. At Ally Financial, Gen AI has slashed the cost of summarizing customer interactions. Cisco is generating computer code faster. Dow is cutting down material handling costs and evaluating product patentability with AI. And at Klarna, an AI-driven assistant managed two-thirds of customer service chats in its first month, trimming costs and boosting speed without sacrificing satisfaction.
Gen AI Levels the Playing Field
While Gen AI brings significant value, it doesn’t create an insurmountable competitive edge. Any business can implement AI and unlock similar savings or innovation. Ask your team to use Gen AI to brainstorm new product ideas for a smart home device. You’ll likely get suggestions like energy-efficient thermostats or AI-powered security cameras. Now imagine your competitors doing the same exercise—they’ll likely arrive at similar conclusions. The output is powerful but not unique.
Innovation Surge—Without the Moat
Gen AI is exceptional at generating new ideas and even outperforming experienced professionals. But here’s the catch: competitors using similar tools will likely generate comparable innovations. This makes Gen AI a game-changer, but not a secret weapon. It’s a disruptor for all, but not a guarantee of lasting advantage.
Guarding Against Strategic Information Leaks
Here’s a risk many overlook: using Gen AI for strategic decisions can unintentionally share insights that your competitors could later tap into. The first-mover advantage of adopting Gen AI may be short-lived if others can quickly replicate what you’re doing.
Data is Power, but It’s Vulnerable
You might think proprietary datasets are your ticket to sustained advantage, but they’re harder to protect than they seem. As Gen AI grows more sophisticated, even a well-meaning employee could accidentally expose sensitive data, potentially leaking your competitive advantage.
Build vs. Buy: Know When to Leverage Existing Platforms
Building your own Gen AI platform is costly, complex, and resource-heavy. Most companies are better off using established platforms like OpenAI or MidJourney. And when everyone’s using the same tools, the competitive field levels even more.
The Real Opportunity: Amplifying Existing Strengths
The true power of Gen AI lies in amplifying what makes your organization unique. Take Amazon—its complex, integrated systems and distinctive culture give it an edge that AI can amplify. Companies with similarly unique capabilities can use Gen AI to widen the gap between them and their competitors.
Betting Big on Gen AI—Proceed with Caution
For organizations lacking those unique, inherent advantages, it may seem tempting to build an entire business model around Gen AI. While that could offer a hard-to-replicate edge, it’s untested and risky. The technology is still evolving, and we’re not yet sure whether the rewards will justify the investment.
Keep Time on Your Side
Gen AI is rapidly improving. That’s why it’s essential to focus on strengthening your core competencies rather than chasing temporary AI capabilities. The businesses that thrive in the long run will be those that use Gen AI to amplify their unique strengths—not those who simply adopt it to keep up.
Final Thoughts
Gen AI isn’t a magic bullet for creating new competitive advantages, but it’s an incredibly powerful tool for scaling and enhancing what already makes your company great. As AI becomes as ubiquitous as computers and the internet, the real winners will be the ones who harness it to amplify their existing strengths.
The time is coming when we won’t be able to imagine business without AI. Those who ignore its power will fall behind. Those who embrace it will survive. But the true leaders? They’ll be the ones who use it to supercharge their unique edge.
Ken Gavranovic
CEO, Product Genius Corporation
Helping businesses revolutionize feedback through AI-powered conversations
