Hello from Hamburg,
In early February, I spent a week attending classes at Harvard Business School (HBS). There, 180 entrepreneurs and female managers from all over the world—after intensive preparation—were put through their paces by select HBS professors. I’ll never forget what Frances Frei, a professor of leadership, said after patiently listening to a long-winded answer from a dominant participant: “That was a brilliant answer! To a question I didn’t even ask.”
This year’s focus was on business models centered around generative artificial intelligence (GAI). One hundred million users two months after launch—that’s a record. Never before has a technological innovation achieved market penetration as quickly as ChatGPT did after OpenAI made it available in November 2022. I found it insightful when a professor compared the current hype to the Gold Rush in the American West in the mid-19th century: It was the shovel manufacturers who created the myth of gold in order to sell their equipment. What is the analogy to the GAI business model?
In both cases, the greatest value creation does not lie in the product itself, for two reasons: GKI’s direct operating costs and energy costs alone—which, according to Chat GPT estimates, range from $150,000 to $700,000 per day—are, along with the company’s other expenses, disproportionate to the revenue that can be generated from access fees. Furthermore, competition among large language models (LLMs) has long been in full swing among the major technology companies. Microsoft, with its current 49 percent stake in ChatGPT and Prometheus; Google, with Claude from Anthropic and Gemini; or Meta’s Blenderbot—it remains completely unclear who will win the race. The prospects look much better, however, in the processing of “gold” or the creation of application programming interfaces (APIs), for example, for developers building chatbots for end customers. Chip manufacturers like Nvidia have the best chance of capitalizing on this “new gold.” Or Amazon’s AWS, which provides the cloud infrastructure that everyone relies on. Or those who embed GKI into their service offerings, such as Microsoft with its intelligent co-pilot in its market-dominating work environment, MS 365.
GKI enables two key value drivers for existing companies. It can help drastically reduce the costs of operational processes and create additional value for our customers. For example, through chatbots that improve the quality of predictive maintenance, or by giving market analyses new insight through direct, ongoing customer dialogue. One thing is certain: GKI will lower barriers to market entry for new competitors encroaching on our traditional business model. This increasingly forces us to make counterintuitive decisions in which we dismantle our own business model and take risks without allowing them to become existential threats. We must now rethink the future of our business model and initiate a strategic transformation. To ensure long-term profitability, we must create more value from GKI than our competitors—who we may not even know yet.
Much remains unclear; everything is up in the air. Companies are currently asking themselves:
- What data do we have?
- Which of these can we use, and how?
- How can we structure the organization so that it is able to deal with uncertainty, quickly seize opportunities, test and validate them, move forward, and backtrack when necessary?
During the week at HBS, everything revolved around dealing with uncertainty. For example, when all the information regarding an upcoming corporate acquisition is available and two camps form on the supervisory board: those for and those against the takeover. One strategy for addressing uncertainty and making more well-considered decisions involves new forms of employee participation in the company to increase transparency, incorporate their knowledge, and make decisions more transparent. It can also be helpful to set not only measurable but also ambitious goals—ones that, while unattainable, provide a direction, even though the path can be adjusted along the way. More than ever, leaders will be challenged to think outside the box, place greater importance on bonds with employees, while at the same time being even clearer and more consistent with themselves and their employees—and, to borrow a metaphor, to act like a Chinese chef who must be able to cook both sweet and sour dishes. Exemplify courage and curiosity rather than relying on experience. As a behavioral scientist in the course put it succinctly: We tend to misuse experience as evidence for predictions about the future.
I graduated from college in Boston with the conviction that our time offers a rare and very special opportunity to shape the future.
