AI won’t just transform the way we work as people; it will also alter the dynamics and organization of industries. The business models of entire fields will be upended. The organizations that come out on top will be those that are best at creating a positive feedback loop between people, data, and AI. Each of these elements will be critical. People will still matter. Employees will need to help create and curate the data that will train AI, which in turn will help people become more efficient and successful. The businesses that can establish this feedback loop and run it fastest will outcompete the rest. The key for most companies will be figuring out how to turn not just knowledge but also experience and wisdom into data, and then that data into insight.
AI depends on three components: algorithms, computing power, and data. But apart from some large technology firms and savvy AI start-ups,companies will not create their own algorithms. They will depend on a handful of algorithms developed and sold by tech firms, or that are avail- able for free through open-source purveyors such as Hugging Face. Computing power won’t be a differentiator either: Most have access to the same kinds of data center servers run by the biggest tech companies. No, for most companies, competitive advantage will come from its unique data.
Access to proprietary data will be increasingly important. Intellectual property falls into this category. Disney has access to its vast catalog of films; The New York Times has more than 150 years of archived articles; Pfizer has its decades of drug R&D and clinical trials. But for most companies, the biggest source of proprietary information is customer data. For much of the 2010s, data that would allow companies to serve people with targeted advertising was commoditized by specialized brokers, who pooled data taken from tracking cookies on internet sites and mobile phone operators and sold it to the highest bidder. But privacy rules introduced since 2021 have made this tracking far more difficult and increased the value of the data that companies collect on their own customers. And, as we will see, AI can also help turn data generated by a company’s own employees into an increasingly important competitive advantage.
For years, the holy grail for many businesses has been mass customization—creating a bespoke product or service for each customer while maintaining a large customer base and the economies of scale that come from serving it. Even businesses that sell a relatively standard product line dream of tailoring their marketing efforts for each customer. Now, AI is rapidly making this possible.
