Building Competitive Edge in a Changing World – Bettering Your Operations

Academic Reading Recommendations from Dr. Kjell Nordström, Prof. Morten Olsen, Dr. Leena Mörttinen & Prof. Matti Mäntymäki

Chat GPT’s rapid development has brought discussions of AI to almost every dinner table, leading us to a reality where we can no longer avoid facing the impact and implications of automation technologies. From a business perspective, AI and automation are being used to transform how organizations operate fundamentally.

Recently, we had the pleasure of hosting several seminars with exceptional academic speakers, including Dr Kjell Nordström, Prof. Morten Olsen, Dr Leena Mörttinen, and Prof. Matti Mäntymäki. Among these keynotes, there were a few repeated perspectives on why automation quickly evolves from a fragmentally used tactical tool to a top-down-led strategic competence.

Market-led reasons for rapid change, according to our speakers, included:

• Reshoring for better control over operations and to mitigate risks
• Political instability and rapid changes in laws and regulations
• Demographics and labor shortages
• Customer expectations and service demands
• Higher interest rates: Increased financial pressures

At the same time, the development rate of automation technologies is incredibly fast, and the technologies we have today can already be used to automate, on average, 50% of all work done in organizations (McKinsey). The possibilities are endless, and there is much more to uncover in the near future.

The challenge is that these automation opportunities are dispersed across the organization, fragmented as small tasks throughout all work processes. According to McKinsey, less than 5% of complete jobs can be automated, and that difference between 50% and 5% makes things complicated. This is why it’s imperative that organizations connect automation directly to their strategy and work out an approach where they identify their core business processes or parts of operations where they want to transform the way of working and improve results. Focusing efforts on these areas and developing solutions that may be much more complex – but also more impactful – than the earlier tackled low-hanging fruit is key to building a competitive edge with automation.

An excellent term used by one of our speakers, Dr Kjell Nordström, was ‘bettering operations.’ He explained that in the future, it will be increasingly rare that a product or a service produces a sustainable competitive edge. Instead, in the world of technology, he predicts that the way of doing things will be the competitive edge.

Finally, our speakers pointed out that AI can be considered a future commodity – something available to everyone, like the internet or electricity. Having this perspective should further drive organizations to act fast and take advantage of the opportunities now.

Below, we have summarized some reading recommendations from our speakers. These papers and books provide great insights and an opportunity to immerse yourself in the future built right in front of our eyes.

Reading Recommendations

Books:

Andrew McAffee, “More from less”

Papers:

Defining organizational AI governance

Continuous Auditing of Artificial Intelligence

Eloundou et. al. “GPTs are GPTs: An early look at the labor market impact potential of large language models”, Working Paper, 2023

Davenport and Ronanki, “Artificial intelligence for the real world”, Harvard Business Review, 2018

Jovanovic and Rousseau, “General purpose technologies”, Handbook of Economic Growth, 2005

McKinsey & Company, “The state of AI in 2022 – and a half decade in review”, The state of AI in 2022—and a half decade in review | McKinsey, 2022

Noy and Zhang, “Experimental evidence on the productivity effects of generative artificial intelligence”, Working paper, 2023

Hsieh and Rossi-Hansberg, “The industrial revolution in services”, Working Paper, 2020

Podcast:

Kjell Nordström, “Momentum” currently in Swedish but soon available also in English