AI Won't Replace Humans—But Humans With AI Will Outshine Humans Without AI

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0:54Hi, and welcome to Harvard Business Reviews, The New World of Work. I'm Adi Ignatius, Editor-in-Chief of HBR. And each week in the show, I interview a CEO, a thought leader, or somebody else interesting who can inspire us and educate us on the changing dynamics of the workplace. whether you're navigating the complexities of a large corporation or the challenges of a small startup, whether you're based in the U.S. or anywhere else in the world, you face your own unique set of issues. So the aim of this podcast is to inspire thought and provide insights as you seek to bolster your business and pave your own path toward career success.

1:30So on today's episode, we have a great guest, Kareem Lakhani of Harvard Business School. I'm going to come back with a proper introduction in just a moment. But first, let's hear from our good friends at KPMG who are sponsoring this season of The New World of Work.

1:48At KPMG, it's our people who make the difference for our clients. Talented teams leveraging the right technology to uncover insights that illuminate opportunity. Ready to make the difference together?

2:07All right, just a couple more things before we start. If you're an HBR subscriber and you're watching this, you can head to hbr.org slash newsletters to sign up for the New World of Work newsletter, where I try to offer an inside look at each of these interviews and talk about some of the ideas that come out of them. And if you like content like this, please subscribe to our magazine and website. The address is hbr.org slash subscriptions. And if you like hearing smart people talk about some of these same issues, be sure to check out our flagship podcast, IdeaCast. available wherever you get your podcasts.

2:40And lastly, remember, you can watch previous episodes of this show on YouTube or right here on LinkedIn and Facebook. So let's get on with it. My guest this week, as I said, is Kareem Lakhani, a professor at Harvard Business School who specializes in workplace technology and particularly AI. He's done pioneering work in identifying how digital transformation has remade the world of business. And he's the co-author of the 2020 book, which HBR published, Competing in the Age of AI. So, Karim, welcome to the show. So glad to be here with you today, Adi. Thank you for the invitation. So there's a lot to talk about, and I definitely want to talk a lot about generative AI, but maybe once we get to it, I don't think we'll get off it.

3:22No, exactly. But so when you co-wrote a piece for us a few years ago, and it's reflected in your book, where you say, you know, machine learning has basically changed the very rules of business. So that's a big statement. Tell us a little bit about what you mean by that. Yeah. So, look, it's been a real pleasure working with HBR and your editors for the last 15 years of my academic career. And the book really was a partnership between Marco E. and Citi and Amy Bernstein, one of the editors at HBR, as we created this book. And what Marco and I noticed in about a decade's worth of research and spending time with companies, both writing cases, as advisors, as consultants, and so forth, was that the nature of the corporation, which really was established, the modern American corporation, which became the blueprint for the modern international corporation, established in the 1920s and 30s, was changing foundationally because of technologies like AI, like machine learning.

4:26And what we observed was that the entire business architecture in many of these AI-first companies at that time, you know, in terms of business model, how you create value, how you capture value, and your operating model, how you deliver. This episode is brought to you by Google Chrome. You think you know a browser, but Gemini and Chrome, that's new. It can help you with practically anything on the web, like restoring a vintage motorcycle from a 50-page restoration block, or finally break down that long article you've had open for weeks. Gemini and Chrome is here for it. Ready to make anything online make sense?

5:00There's no place like Chrome. Check responses set up required, compatibility and availability varies 18+. Propel Fitness Water. With Gatorade electrolytes, zero sugar, and vitamins, Propel hydrates better than water to help you get the most out of your workout and get back to your best self. What propels you? Propel with Gatorade Electrolytes. The value, how you achieve scope, the number of customers you serve, the number of products you have, scale, the number of customers you serve, and learning. These fundamental parts of a business architecture were being rewired because of machine learning and AI and digital technologies.

5:39And so, you know, if you just sort of reflect for a bit on your experience using Google, for example. Much of your Google experience is fully automated from the ads you see to the search you do to if you're using Gmail, how you interact with them. And so it's not people that do those activities. It's the algorithms that make that happen. Similarly, your experiences with all the large e-commerce platforms like Amazon or Alibaba, let's say in China. If you imagine what happens at Netflix, for example. Again, all these examples we've been using, but these companies work in a fundamentally different way than a company like General Electric, where I grew up, right out of college and my first job were set up.

6:31And these companies, the machines and the algorithms at the center, the work is automated. The humans are actually designing the algorithms and testing them and checking them, making sure they're working within bounds. But the actual transactions and activities are being mediated through the machines. So I'm guessing that, first of all, if you're watching this, if you have your own questions for Kareem about digital transformation, about generative AI, which we'll be talking about in a moment, please put them into the chat and I'll try to get to audience questions later. So that was helpful, Karim, but I would guess some of our viewers are listening to you and thinking, yeah, I mean, that's what we've done.

7:11And others are thinking, I'm not sure we're on that journey or we're far enough along on that journey. So my question is, what's your advice to people who are listening to this? You're like, yeah, I get it. I get that there's value here. I'm not quite sure if my company is right for this or I'm not quite sure what the next steps are. Yeah, absolutely. Look, first I would say is that I think most companies will not have a choice but to adopt AI and to adopt digital at the core functions. In many ways, you're personalized as mediated through your transactions, through your smartphone, you know, through, you know, through these devices and how you interact with consumer technology products and so on and so forth.

7:52You're already living in an AI age. and the the thing i would say which is so interesting to me is i learned this from some conversations i had with folks in india you know they said you know we have some some folks who get mad when your uber car or your ola car or your dd car or your grab car doesn't show up in three minutes right like you want this magical taxi experience you put you go on your app you press the thing boom it shows up and if it's gonna be five or seven minutes you get you gotta kind of get mad. And, you know, I'm reflecting on when I first moved to Boston in 1997, and it would take me a week to book a taxi in Boston.

8:29You know, and so now we get mad. And similarly, if there's a transaction dispute on Amazon or Uber, automatically solved, done. But the same people, the same executives in their own companies are completely satisfied if a customer service interaction can take two weeks, if onboarding a new vendor takes six months, you know, and so So we're living in this disconnected world where most people, most consumers are living in this AI-first world in their experiences with many of these platforms. And then they encounter our companies and our organizations, and they're like, what is this? And so my sense is that this is inevitable.

9:08This transition is really inevitable. And for the folks that are behind, the good news is that the cost to...

9:41There's no place like Chrome. Check responses set up required compatibility and availability varies 18 plus. Propel Fitness Water with Gatorade electrolytes, zero sugar and vitamins. Propel hydrates better than water to help you get the most out of your workout and get back to your best self. What propels you? Propel with Gatorade electrolytes. To make the transition keeps getting lower and lower. The playbook for this is now well known. And finally, the real challenge is not a technological challenge. I would say that's like a 30 % challenge. The real challenge is 70%, which is an organizational challenge.

10:21You know, my great colleague Sadal Neely talked about the digital mindset. Every executive, every worker needs to have a digital mindset, which means understanding how these technologies work, but also understand the deployment of them. And then the change processes you need to do in terms of your organization to make use of them. It's really interesting because we think about this. I mean, we're a relatively small publisher compared to some of the giants out there. but when people come to our site and are searching for articles by Kareem Lakhani I mean they're used to a Google sort of search experience when they want to buy a product from us they're used to an Amazon and anything short of that it's like your Uber example there's a frustration and expectation so we have to find ways to lift our game without the resources whether it's through partnership or other things because it's table stakes people just expect the best experience in every experience they have A hundred percent.

11:18And, you know, like if I look at my teenage daughter, you know, she's like, she has no patience for old lion companies. She just gets mad and just is like, what is this? You know? And so, absolutely. So anyway, so the next big wave, again, we're going to talk about it. I keep teasing it, but it's generative AI, but that won't be the last wave. And quantum will hit us at some point and things we can't even anticipate will hit us. So how do you prepare for that? I mean, how do you create a kind of, I don't know, culture or mindset or organization that knows that there will be unexpected waves of technology.

11:57They'll come. We'll have to figure out if they're relevant to us or not. And if they are, we need to adapt quickly. Is there a general way to think about that? Yeah. Yeah. Yeah. Thank you for that question. And in fact, I've been pondering this quite a bit. I think there are two imperatives for most executives. for most managers, for most leaders. One is a learning imperative. This is again, Sadal's work on digital mindset, my work. There's lots of learning you need to do and the learning has to be continuous. And the idea is that not that we want you to become AI engineers or data scientists, or get a PhD from Stanford or Harvard or MIT or Xinhua University or Oxford University, you know, from the IITs in machine learning.

12:43but as executives, this is now table stakes. You know, and the way I think about this for, you know, at the MBA program for us, you know, people come to the Harvard MBA program and, you know, we have a first year as a required curriculum. There's 10 courses and one of them is accounting. Okay. Now I can tell you accounting is a very important profession, but most MBAs that join HBS don't want to be accountants, but they need to learn accounting because that's the language of business. That's the ways in which you think about our value is kept track of, our expenses are being tracked of, and so on and so forth.

13:19Super important. And you don't take the accounting course to become an accountant, but you need to understand accounting so you can be a good business person. Same thing now with digital technologies and machine learning. Like you need to understand the machine learning stuff and the AI stuff, not because you're going to become an AI engineer or an AI scientist, but because that is now going to be a critical table stakes for you to understand how business works. So there's a learning imperative. And I don't think we can take away the learning imperative anymore. Now, look, I'm self-centered about this.

13:49I'm self-interested. I'm in the learning profession. That's what I do. So I want to sort of caveat that. But I want to just insist that I think the learning journey does not stop. And you have to invest in your own personal learning. And I think companies need to invest in the learning for their own employees. This episode is brought to you by Google Chrome. You think you know a browser, but Gemini and Chrome, that's new. It can help you with practically anything on the web, like restoring a vintage motorcycle from a 50-page restoration block, or finally break down that long article you've had open for weeks.

14:19Gemini and Chrome is here for it. Ready to make anything online make sense? There's no place like Chrome. Check responses set up required, compatibility and availability varies 18+. Propel Fitness Water. With Gatorade electrolytes, zero sugar, and vitamins, Propel hydrates better than water to help you get the most out of your workout and get back to your best self. What propels you? Propel with Gatorade Electrolytes. It's a two-phased conversation. Companies have to embrace this and so do individuals. But the second bit, I think, Adi, is equally important, which I think is completely underrated, which is change and change management and change becomes a skill for managers and for leaders and for executives.

15:07How you change, how you continue to change, how you build the DNA for changing becomes very important. At a time, I was in Asia a month ago and had a chance to spend some time with Mickey McAtani at Rakuten. And, you know, one of the things that's amazing is what he has thought about as change as a core competency for all workers and for all employees. Right now, most change programs are viewed as skepticism, flair of the month, blah, blah, blah. And people resist. People resist. I think the best companies would be the ones that can understand how change becomes a skill. And if you think about change as a skill, what does that mean?

15:48Skills require acquisition of the skills. You've got to invest in learning. What does it mean to change? It requires practice. You've got to keep changing as well. And it requires adjustment. Once you've learned how to change, how do you provide that to everybody else? So those elements, I think, will become a key, key part of the ways in which leaders need to adapt to this world. Yeah, I think that's great. You know, it can be generational and it should not be generational. I mean, I always think that, you know, when you come of age, when you join the workforce, there's a certain suite of technology that is just you grew up with it and you're comfortable with it and you are part of figuring out how to use it.

16:28And then subsequent ways, you know, a lot of us hit a point where, yeah, that one seems stupid. And, you know, for my father, who's still alive at 102, that was email, right? So, you know, you can't, you just, you got to keep trying. You got to keep experimenting. You have to keep trying. You know, Adi, such a good point. And I have to tell you, around COVID, I had this experience with my mother, who lived in Toronto, and my in-laws were also living in Toronto. So, you know, when the things sort of eased up a bit and in November of 2022, when Thanksgiving was on, we were able to fly them back to have a reunion with them.

17:10And, you know, in 2020, sorry, November 2020, when things eased up a bit with the vaccines and so on and so forth, we were able to, you know, bring them over. and our reason the dates but around that time one thanksgiving and covid and if you recall traveling even just crossing the border from canada the u.s was very difficult because you had qr codes and apps galore canada needed all this stuff to exit u.s needed these stuff to enter and the same thing for entry as well um and i looked at how sadly how helpless my in-laws my parents were with these technologies. They were just like lost. And my wife and my daughter and I had to spend a ton of time with them, holding their hands to go through these things.

18:00Now, of course, the UX was terrible and all that kind of stuff. But we figured out how to do it ourselves. But they were stuck. They couldn't adjust. And then as I reflected on that experience, I said, oh, this is what's happening to most executives. This is what's happening to most companies. It's like they're like the senior citizens, the elderly who have resisted the technology, have not really embraced it, and now have no choice but to deal with it, and are frozen and need a ton of help. And that's what the thing that we have to get over as we think about this. Yeah, that's great. I think we can throw out our QCats, but otherwise...

18:36Yes, yeah. I remember that. I'm a QCat still. Old joke for those in publishing. Yeah, I know. This dates us.

18:50That's new. It can help you with practically anything on the web, like restoring a vintage motorcycle from a 50-page restoration block, or finally break down that long article you've had open for weeks. Gemini and Chrome is here for it. Ready to make anything online make sense? There's no place like Chrome. Check responses set up required compatibility and availability varies 18+. Propel Fitness Water. With Gatorade electrolytes, zero sugar, and vitamins, Propel hydrates better than water to help you get the most out of your workout and get back to your best self. What propels you? Propel with Gatorade Electrolytes.

19:26So let's talk about gender and AI. So people who, you know, that sounds jargon. Oh, by the way, you referred to earlier to Sadal, and I just want to fill out that's Sadal Neely, who is another great guy. Professor Sadal Neely, you know, senior assistant dean of the Harvard Business School, my good friend, and author of another great HBR book called The Digital Mindset. Absolutely. So, all right, gender and AI, you know, for people who aren't, you know, conversant, and probably most of you are now, But but this is this is, you know, large language model learning predictive, you know, chat GPT BARD being all these things and You know, I I like to say that there were sort of three waves The first was we we played with this technology, you know when it came out and whatever it was November of last year Yes, and we tried to break it by you know, that's chat GPT.

20:11Are you in love with me? And then and now we're trying to figure out, you know, how to use it and and and and the use cases are happening So first question for you, like, where are you in the hype cycle? Because technology has come and go. And there was a sense with this one that everyone, everyone basically said, okay, this is different. This is important. This is transformational in ways that few technological innovations are. But where are you on that? I'm on the, like, holy crap, this is transformational. Yeah. Yeah. So look, the way I think about this is it's actually worth to sort of pause and look at history a bit.

20:49And since I studied technology and business, something transformational happened 30 years ago, approximately as well, which was the browser. The browser got invented. And if you sort of think about the browser, there was 30 years of the Internet. The browser gets invented and people were like, oh, my goodness, look at this. And I remember I could still see as clear as day when I first found the browser. And I was working at General Electric. I was at a conference for radiology. And one of my clients, a radiologist at St. Paul's Hospital in Vancouver, showed me the browser. And the thing he showed me was the Oxford coffee pot.

21:27I'm like, huh, interesting. Like, all of a sudden, the Oxford coffee pot has global distribution. Anybody that has a web browser and internet connection can use it. So there's 30 years of internet in the basement in the bowels of companies. We didn't understand it. We saw what was coming. It was coming. It was Usenet. There was Gopher. There was Telnet. There was FTP, all these kinds of things. The browser showed what the world would look like. And the initial applications were queued applications. And people were like, ah, this is nothing. This is whatever. But fundamentally, from an economics point of view, what the browser did is that it lowered the cost of information transmission dramatically.

22:07And then last 30 years, we've been living through the build out of the internet and waves and waves of the internet changing more and more and more industries over and over again. We've all lived through that. Just imagine this right now, right? We are broadcasting live to, I don't know, thousands of people and more people will sort of be looking at this broadcast at relatively zero marginal cost to us to do this. It seems unbelievable compared to 1993. where you need a massive TV studio, massive broadcast studio, satellite dishes to be able to do what we're doing right now. And so the cost of information transmission went to zero, and the new companies formed Google, Amazon, Facebook, you name it, e-commerce got invented, and so on and so forth.

22:56And so that is the world that we are coming out of, the internet era is what we're coming out of. And the same things happen with generative AI. There's been 20 years of AI being deployed at scale inside of many tech companies, the ones we've used in our examples in our book. And that was in the basement. So your Netflix movie recommendations, your Google search results, your Amazon recommendations, your Spotify music results, your car access, all that was being your ways access, your directions. all that was being empowered by by ai tools even your spam killers remember how bad spam used to be in for a while and then overnight it went away because people deployed machine learning systems to those things early machine learning systems to those things now now now how do we think about generative ai so my view is generative ai is a drop in the power in the cost of cognition and how we think.

23:56So if the internet was one of cost of information dropping to zero, my sense is that the cost of cognition, how we think, who we think with, is dropping to zero with or lowering significantly with this. And that has, you know, significant ramifications for this. And I have to tell you, I had to like sort of do a major pivot, even in my research side, on what to do with this. I was doing a lot of stuff around AI adoption and so on and so forth, a lot of research, a lot of nerdy research. Only like three people I will read. But we have gone, my whole institute and my labs have gone big time into figuring out what this means for knowledge workers, for managers with generative AI.

24:42Yeah, well, let's talk about that. Because I think, again, for our viewers, probably some of you are well conversant or using it, whether it's for fun or to try to figure out work applications. There are, you know, products available that are that are using this, you know, they're rolled out pretty quickly. How to think, you know, is there a way to think about this generically? You know, what is, you know, for a generic company, if there is such a thing, what how do they think? How how should they think about using generative AI? I mean, we've seen the amazing things it can do. We've seen the hallucinations that that they can create that that provide the confidently provide.

25:18Yes. Errors. Yes. So how does the business think about, is there a generative AI application that is significant for my company and how do I figure that out? Yeah. So first of all, I think we're at the super early stages of this hike, of this cycle. And if you think about it, the first web browser was like Mosaic and then Netscape and then Explorer and Mozilla and so on and so forth came about. So I think you should just think, and then all the applications are top. So I think we are at the early stages. The rate of innovation and the rate of improvement is increasing rapidly and it keeps increasing.