AI Won’t Give You a New Sustainable Advantage

But using it may amplify the ones you already have.

by

Jay B. Barney

and

Martin Reeves

by

Jay B. Barney

and

Martin Reeves

From the Magazine (September–October 2024) · Long read

Ramin Barzegar

Summary.

Generative artificial intelligence (gen AI) has the potential to radically alter how business is conducted, and there’s no doubt that it will create a lot of value. Companies have used it to identify entirely new product opportunities and business models; to automate routine decisions, freeing humans to focus on decisions that involve ethical trade-offs, empathy, or imagination; to deliver customized professional services formerly available only to the wealthy; and to develop and communicate product and other recommendations to customers faster, more cheaply, and more informatively than was possible with human-driven processes.

But, the authors ask, will companies be able to leverage gen AI to build a competitive advantage? The answer, they argue in this article, is no—unless you already have a competitive advantage that rivals cannot replicate using AI. Then the technology may serve to amplify the value you derive from that advantage.

Idea in Brief

The Belief

Early adopters of gen AI can eclipse rivals by using it to identify entirely new product opportunities, automate routine decisions and processes, deliver customized professional services, and communicate with customers more quickly and cheaply than was possible with human-driven processes.

The Reality

Far from being a source of advantage, even in sectors where its impact will be profound, gen AI will be more likely to erode a competitive advantage than to confer one, because its very nature makes new insights and data patterns almost immediately transparent to anyone using gen AI tools.

The Silver Lining

If you already have a competitive advantage that rivals can’t replicate using gen AI, the technology may amplify the value you derive from that advantage.

History has shown that technological innovation can profoundly change how business is conducted. The steam engine in the 1700s, the electric motor in the 1800s, the personal computer in the 1970s—each transformed many sectors of the economy, unlocking enormous value in the process. But relatively few of these and other technologies went on to become direct sources of sustained competitive advantage for the companies that deployed them, precisely because their effects were so profound and so widespread that virtually every enterprise was compelled to adopt them. Moreover, in many cases they eliminated the advantages that incumbents had enjoyed, allowing new competitors to enter previously stable markets.

A version of this article appeared in the September–October 2024 issue of Harvard Business Review.

JB

Jay B. Barney is a Presidential Professor of Strategic Management and the Lassonde Chair of Social Entrepreneurship at the University of Utah’s David Eccles School of Business. He is a coauthor, with Manoel Amorim and Carlos Júlio, of The Secret of Culture Change.
Martin Reeves is the chairman of Boston Consulting Group’s BCG Henderson Institute. He is a coauthor, with Jack Fuller, of The Imagination Machine (Harvard Business Review Press, 2021) and a coauthor, with Bob Goodson, of Like: The Button That Changed the World (Harvard Business Review Press, April 2025).

AI Won’t Give You a New Sustainable Advantage

Idea in Brief

The Belief

The Reality

The Silver Lining

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