To use AI tools smartly, think like a strategist

Scenario C: AI eliminates the need for you to use one of your capabilities

You no longer look at the data and simply rely on an algorithm to do the crunching and come up with an analysis of past trends as well as predictions about future sales. You then inspect the trends visually and offer your qualitative interpretation (as before). Overall, the algorithm is doing a portion of the work you did before. And you can bet that over time, your skills relating to what you no longer do will decay.  

While the quality of your final report improves in all three scenarios, your personal skills and capabilities remain unchanged (scenario A), increase (scenario B) or decline (scenario C). The question then arises: Should you be indifferent in choosing between these three scenarios?

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Making strategic choices

I could have replaced this example easily with other tasks like hiring, project investment or supplier selection. But its insight also applies to more micro-level tasks, such as creating a PowerPoint presentation, replying to e-mail or drafting a business plan. In each case, you can use AI in ways that will maintain, enhance or devalue your existing capabilities.

Corporate strategists recognise these as decisions very similar to those that companies face when outsourcing or partnering with others. Outsourcing involves reliance on external partners and potentially losing competence in outsourced tasks. However, this can be a deliberate choice, made for strategic reasons, to focus on developing other capabilities with the resources and attention released.  

For example, a bank may decide that processing transactions or developing software is not core to its competitive advantages and choose to hive these tasks off to a vendor. Indeed, few of us lament the loss of navigational skills in the GPS era or manual laundry skills now that we have washing machines. We use that time for doing something else we value. In a work context, that would mean developing new skills that could give us a worthwhile competitive advantage.

But companies also often adopt strategies that involve retaining certain in-house capabilities even while relying on outsourcing. For example, many automakers still manufacture some components in-house, while outsourcing much of the rest. Chip manufacturers do R&D and file patents in technology domains that require chips, even if they’re not themselves making direct sales in these domains. This approach helps them maintain in-house skills, as well as evaluate vendors and partners effectively. It also helps them wield bargaining power while ensuring supply chain resilience.

Think it through

Likewise, individuals may choose to hold on to skills or capabilities for reasons such as resilience, bargaining power or preserving a sense of self-identity and efficacy. In such cases, one might prefer scenario B (boosting existing capability) over scenarios A or C, even if the final performance outcome seems lower in the short term.

Don't be taken in by the language of “augmentation” or “human centricity”. These terms may conceal more than they reveal. For instance, the first two scenarios (neutral effect or boost of existing capability) both plausibly fall under the augmentation category, but the second is superior to the first from the viewpoint of preserving and enhancing human skills. Human centricity is an even more ambiguous label. Presumably, the superior report you would produce in any of the above scenarios is better for at least some humans, namely your bosses! Labels such as augmentation and human centricity encompass a wide spectrum of impacts on your own capabilities, and it's up to you to safeguard them.

The decision to embrace AI and maintain or relinquish certain skills should be a strategic one, aligning with your individual goals and values. In particular, it is always essential to ask what new capabilities this will help you develop – because in the knowledge economy, if you aren’t learning, you aren’t earning.  

This article was first published in INSEAD Knowledge.

By Phanish Puranam, Professor of Strategy and The Roland Berger Chaired Professor of Strategy and Organisation Design at INSEAD. The professor is also the programme director of Transforming Your Business with AI programme.