By now, business leaders understand the importance of artificial intelligence (AI). They know AI is going to be a game changer. But what this really means, at both the strategic and operational levels, remains unclear.
Many businesses still look at AI in a relatively narrow perspective. Most businesses would say, AI can help them cut costs and improve efficiency. Some see it as a mechanism to improve customer intimacy and redefine business models. These are all valid, but they only touch the surface of what AI can do.
China, of course, is a leader in AI. Some of its large language models (LLMs) are ranked among the world’s best, head-to-head with leading United States models. Many Chinese LLMs also are open-sourced, making them appealing to a broad range of users.
With China’s wide range of application scenarios — driven by the breadth of industry development — the country has taken on a globally leading position in AI applications, commonly called “AI+”.
Chinese companies are adopting AI at a remarkable speed. While many are still at the early stages, others are beginning to use AI to redefine their business boundaries, business models, supply chains, and customer reach.
At the same time, an increasing number of “AI-native” companies are also emerging in China. These companies were created in the AI era, and are designed and operate with AI at their core. In parallel, an increasing number of so-called “one person companies” (companies with few staff members) are emerging, as AI tools — especially AI agents — are empowering humans with a level of proactivity that was not possible before.
For managers of foreign-invested enterprises (FIEs) in China, these developments create unseen challenges.
They know AI is progressing fast in China. They see Chinese competitors are equipping themselves with AI, and customers are expecting different levels of services, products, and experiences.
On top of this, technology in general, and AI in particular, are entering into a situation of “one world, two systems” — one US-led and the other China-led. The headquarters naturally tend to employ the US system. China operations, however, cannot and would not do so in the same way.
Data adds another complexity. In many countries, including both the US and China, data security is considered a matter of national security, directly affecting how FIEs collect, store, move and use data across borders.
It’s time for corporate executives to recognize the real meaning of AI and to demonstrate the leadership to embrace it with the right mindset
AI is not just a technology or a tool. It’s a driver for business change, transformation and often a fundamental redefinition of identity.
Company executives need to understand the implications of AI and AI+ from a philosophical standpoint. AI will certainly disrupt many existing businesses, but it will also give rise to many new ones — often taking very different forms compared to the incumbents.
Will AI eliminate many jobs? Certainly, some jobs will disappear. But AI will also create many new ones, especially in the realm of innovation. AI will accelerate the speed and intensity of innovations across the board, generating new opportunities for both businesses and entrepreneurs.
Our understanding of ourselves, the universe, and the relationship between humans and nature is still extremely limited. There is much more to explore, both physically and spiritually. AI will open up new frontiers for exploration and understanding.
A recent Wall Street Journal article proposed that AI will widen the gap between high performers who master AI and those who do not. For business executives, the key question is: What kind of capabilities and organizational structures will be required in the AI era?
Looking ahead, routine tasks will be increasingly replaced by AI. The use of AI agents will become more prevalent. Productivity will increase. As this happens, organizations will be flatter, and the need for middle management will decrease. Processes will become more streamlined. The combination of humans and AI agents will become common.
In such an environment, businesses and humanity will move further toward exploring the unknown and driving innovations. Today, humans only understand a tiny fraction of the universe and remain physically limited to the Earth and its near orbit. We know almost nothing about the quantum realm. With AI’s growing capabilities, businesses will be able to probe into realms previously inaccessible. New discoveries will be made, and many of them will be transformed into innovations.
The people who thrive in this new world will be those with strong problem-solving abilities, who can navigate ambiguity and complexity. They will learn to apply critical thinking and first-principles reasoning.
Corporate leaders in the AI era will differ from those in the industrial era. Instead of relying on “command and control”, leaders will need to become thought leaders — guiding their organizations toward innovation and breakthroughs.
Large companies will continue to exist. However, many smaller and swifter companies will emerge and be competitive in their own right. New sectors will form, creating more “new lanes” for innovation and business development
Based on my recent interactions with many corporate executives, most would say that they are using AI, but very few are fundamentally building, or rebuilding, their entire business around AI. In many cases, AI tools are being adopted, but processes, organizational structures, and systems remain largely the same. This mismatch will create lots of problems down the road.
At the same time, a small but quickly increasing number of companies are not just adopting AI; they are building or rebuilding their enterprise around it. They are not simply measuring efficiency; rather, they are building agent capabilities. They are also managing their data appropriately, extracting key essence from the data and codifying it into knowledge as an institutional capability.
Those who truly “get it” will disrupt many incumbents, forcing the latter into a precarious situation. A new era of capital and talent recalibration is imminent.
It’s time for corporate executives to recognize the real meaning of AI and to demonstrate the leadership to embrace it with the right mindset.
The author is founder and CEO of Gao Feng Advisory Co, a strategy and management consulting firm with roots in China.
The views do not necessarily reflect those of China Daily.
