Artificial Intelligence (AI) is changing both the availability and affordability of expertise, impacting the competitive landscape for both industry leaders and emerging companies. In their Harvard Business Review article, “Strategy in an Era of Abundant Expertise”, Bobby Yerramilli-Rao, Chief Strategy Officer at Microsoft, John Corwin, General Manager for Corporate Strategy and Development at Microsoft, Yang Li, Director of Corporate Strategy at Microsoft, and Karim R. Lakhani, Dorothy & Michael Hintze Professor of Business Administration at the Harvard Business School and co-founder and chair of The Digital, Data, and Design (D^3) Institute at Harvard, argue that businesses must rethink their strategies to harness AI effectively and maintain competitive advantage.
Key Insight: The Two Forces
“[T]he interplay between these two factors—the increasing amount of expertise required to create value and the decreasing cost of accessing that expertise—shapes companies and affects the scope of their operations” [1]
The research team suggests that businesses face two transformative forces in the modern era. Firstly, global expertise is constantly growing, for example, in the field of biotech, over 45,000 academic biology papers reference AI today, and individual scientists and biotech firms can no longer keep up with the AI advances in drug discovery. Simultaneously, falling costs of expertise access, for example, as enabled in the media landscape by creator tools like Instagram and TikTok, have lowered barriers for new entrants, intensifying competition.
Since the 1980s, technological innovations have increasingly allowed for the outsourcings of business operations, to the point that, today, a small-to-medium sized direct-to-consumer retailer can compete with bigger firms because it can rely on external tools to, for example, build its e-commerce website, advertise online, process payments, manage logistics and fulfillment, while focusing its in-house expertise on driving competitive differentiation. With the advent of AI, the researchers argue that this narrowing of in-house expertise will only accelerate.
Key Insight: The Triple Product: AI’s Potential for Transformation
“Companies that take advantage of AI will benefit from what we call the triple product: more-efficient operations, more productive workforces, and growth with a sharper vision and focus.” [2]
Utilizing AI businesses can transform their business processes and improve efficiency. For instance Moderna has transformed their operations through the use of AI. The company has created over 900 specialized AI assistants to complete tasks, which in turn has enabled them to complete weeks worth of tasks in mere minutes.
AI tools can also be leveraged to improve workforce efficiency. The results of this can be seen in a controlled trial conducted by BCG and the Digital Data Design Institute. AI-augmented consultants completed 12% more tasks on average, and did so 25% faster. After reviewing the work of the consultants, BCG noted that AI led to improvement in the consultants output across the board, especially with lower-skilled consultants.
AI can also enable companies to focus more on processes where they can provide expertise and reallocate resources to deepen their expertise, while helping employees to reduce their focus on non-core processes that can be outsourced to third-party AI enabled platforms. An example of this can be seen with the company FocusFuel. The company was able to set up their entire process in just months by leveraging AI enabled platforms to outsource manufacturing and distribution to third party experts.
Key Insight: How to Get Started
- Start with a small number of business processes
- Make AI safety and governance a cornerstone
- Develop a change management strategy and make sure everyone gets with the program and is trained
- Allocate budget
There are several steps leaders can take to continually increase their chance for competitive success. Companies must start small to begin their transformation. For example, FocusFuel was able to identify the specific processes in their business that would best be served by the deployment of AI enabled platforms. Companies also must ensure they have clearly stated guidelines and principles to safeguard their AI efforts. CEO’s looking to enhance their company’s processes with AI need to ensure everybody at the company learns how to integrate it into their work. For instance, Moderna was able to rapidly deploy AI within their company by mandating all employees take a course on AI. Finally, companies must be willing to allocate budget for their transformation. For example, Coursera was successful in transforming their company by allocating funds to train employees in special coding techniques which allowed them to innovate rapidly and broadly.
Key Insight: Reevaluating Strategy in the AI Era
“We believe that every company will need to reevaluate its strategy in this changing era and will have to ask itself three questions.” [3]
The authors emphasize three strategic questions for businesses:
- Which aspects of the problem we now solve for customers will customers use AI to solve for themselves?
- Which types of expertise that we currently possess will need to evolve most if we are to remain ahead of AI’s capabilities?
- Which assets can we build or augment to enhance our ability to stay competitive as AI advances?
The authors urge companies to assess how AI might shift customer behaviors and expectations, impacting their business models. For example, in the travel industry, AI enables customers to independently plan itineraries—tasks traditionally handled by travel agents. To stay relevant, travel agents could pivot toward curating personalized experiences or exclusive events that AI cannot replicate.
Similarly, companies must evolve to provide unique value beyond AI’s capabilities. In medicine, while AI excels at diagnostic imaging, doctors can differentiate themselves by emphasizing human-centric skills like empathy, personalized caregiving, and collaborative treatment planning—areas that go beyond pure technical expertise.
Lastly, the authors highlight the importance of leveraging assets that complement AI. As AI streamlines processes like prototype design, businesses can gain an edge by enhancing the quality of customer research. Deep, nuanced insights from such research can augment AI’s output, resulting in products more tailored to customer needs. This approach not only boosts innovation but also strengthens brand loyalty and competitive differentiation.
Why This Matters
CEOs must leverage AI to streamline functions that are not core to their business, enabling their organizations to focus on areas of expertise that drive differentiation and competitive advantage. CEOs can begin by reflecting on their company’s unique strengths and identifying the core competencies that set them apart from competitors. By reallocating resources to refine these competencies and leveraging AI to streamline non-core tasks, leaders can focus their organizations on areas that drive differentiation and value. This strategic alignment positions companies to achieve what the authors define as the “triple product” of efficiency, innovation, and growth. For example, integrating AI into workflows, as demonstrated by companies like Moderna, unlocks new levels of productivity by streamlining processes, while freeing up company resources to enable sharper strategic focus.
At the same time, AI’s accessibility lowers barriers for competitors, increasing the urgency for adaptability and proactive strategy. The authors recommend using three key questions to redefine a company’s strategy and maintain relevance in an increasingly competitive market. CEOs must assess which aspects of their business might be disrupted or rendered obsolete by AI and proactively innovate their business models to address these challenges. By focusing on their core elements and driving innovation in these areas, CEOs can ensure their organizations remain competitive and well-positioned for long-term success in an AI-driven future.
References
[1] Bobby Yerramilli-Rao, John Corwin, Yang Li, and Karim R. Lakhani, “Strategy in an Era of Abundant Expertise” Harvard Business Review (March-April 2025).
[2] Yerramilli-Rao, Corwin, Li, and Lakhani, “Strategy in an Era of Abundant Expertise” Harvard Business Review (November 20, 2024).
[3] Yerramilli-Rao, Corwin, Li, and Lakhani, “Strategy in an Era of Abundant Expertise” Harvard Business Review (November 20, 2024).
Meet the Authors
Bobby Yerramilli-Rao is the Chief Strategy Officer at Microsoft, joining the company effective January 2020. He was also elected as a board member of GlobalFoundries in 2022, and serves as the Chair of Strategy and Investment Committee. He holds a Doctorate in Robotics (Electrical Engineering) from the University of Oxford.
John Corwin is the General Manager for Corporate Strategy and Development at Microsoft. His background is in SaaS growth strategy, monetization strategy, sales strategy, and operations in B2B environments. Prior to his time at Microsoft, Corwin worked as the Head of Principle Strategy at LinkedIn.
Yang Li is the Director of Corporate Strategy at Microsoft. Prior to her time at Microsoft, Li worked as a consultant at Houlihan Lokey as well as a Business Analyst at McKinsey & Company.
Karim R. Lakhani is the Dorothy & Michael Hintze Professor of Business Administration at the Harvard Business School. His innovation-related research is centered around his role as the founder and co-director of the Laboratory for Innovation Science at Harvard and as the principal investigator of the NASA Tournament Laboratory. He is also the co-founder and chair of the The Digital, Data, and Design (D^3) Institute at Harvard and the co-founder and co-chair of the Harvard Business Analytics Program, a university-wide online program transforming mid-career executives into data-savvy leaders.