Julian’s got a deep research profile that addresses a wide range of issues, including the strategic agility of incumbent firms faced with disruptive threats.  This has culminated in your new book called Resurgent, which you co-authored with John Fallon, the CEO of Pearson Publishing.  Can you tell us what you have learned about how industry leaders can survive digital transformation at the scale of the industry structure?

The term “Resurgent” means bouncing back from adversity. The core argument of the book is that large incumbents are much more resilient than they are sometimes given credit for.  Most are not like Kodak or Blockbuster.  The general rule is that big established companies are pretty good at taking on change.  The book provides a roadmap for doing that.

You are challenging the idea that the big-tech giants like Microsoft and Amazon and Google are more innovative than companies like Pearson in publishing.   What’s the advantage for a company that’s an established industry leader, and why does it often make a ton of sense to be a fast second rather than a pioneer in the face of industry change?

Big companies have lots of assets:   financial resources, relationships, government connections, manufacturing operations, R&D..    Sometimes these things can become liabilities, but not always.  If you look at the full set of assets available to a company, you can be smart about what will help you through a transition to thrive.  Biotech was a better way of developing many kinds of drugs, but incumbent firms had marketing and sales assets that got them through.

Would this be relevant for AI?   Would you advocate for holding back and studying AI-enabled change at this stage for many companies?  Or do you think it makes sense to begin experimenting at the level of workflows, but hold off on major strategic change?

In cases where you don’t have critical capabilities, you still have options for reinventing yourself.  The New York Times has reconstituted itself by fighting directly as an editorial powerhouse.  You can move away through diversification, as Fuji did when it got into cosmetics and then pharma.  

Generative AI creates challenges.  Will it be disruptive?   Yes, for sure, in something like translation services.  But in many other areas, you can defend.

In business schools, we are facing this head on.  But we will survive for a number of reasons:  credentialling, filtering for employers, providing alumni services.  There are strategic assets that AI can’t deliver.

And AI may not teach our students everything that they need to learn?

We have to reinvent how and what our students learn.   We need to help students to cultivate basic skills in AI, but we can do more.   Employers want students who understand and can cope with uncertainty.   The challenge now is to find the right balance.   Can we really afford not to have students struggle with the capital asset pricing model?  Probably not.

Progress requires that we don’t move too late, but also that we don’t move too early.  As the BP example shows, it’s possible to waste resources and legitimacy and energy by moving too early.   At the same time, we know that organizations can’t move too late.  Its the right time to dabble to build absorptive capacity.   And you need to watch for disruptions.   We know that, eventually, professional services firms may stop hiring our students in large numbers.  At that point, we may have to take decisive action by, for example, establishing a new organizational unit in the new technology.  But this is not a step that you want to take because it’s risky, expensive, competitive, and painful internally.

Does AI have the potential to sweep through society at a level that is transformative across large swaths of activities?

The effects will vary by industry.   Where AI disrupts a firm’s source of supply, like in biotech, the challenge is less likely to be existential.  But where it disrupts demand, the challenge may be greater.   This demand-side challenge occurred with the internet in music, video, books.   The key is to understanding analytically what’s happening and to strategize at the level of the challenge at the right time.

Julian gets the final word.

These are huge questions.  Please think analytically about potentially disruptive technologies.  This doesn’t need to be a Kodak moment.   Analysis of the situation is what will allow you to find your way forward.