Using AI to Optimize your Business with Harvard’s Karim Lakhani

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Hello everybody and welcome to the keynote by CNBC Events. I'm Tyler Matheson. On this podcast, we bring you in depth candid conversations with executives, experts and thought leaders. On this episode, you'll hear from Harvard Business School professor and AI specialist Karim Lakhani. Lakhani spoke with my colleague, reporter Christina Partzonevoulos on August 2, 2023 as part of CNBC's Small Business Playbook event about how business owners should be thinking about a and the ways they can tap into new technology to optimize operations and drive growth. Here's their conversation.

Kareem I think it was an understatement when Tyler just mentioned, oh, the hype. Because every single company seems to be mentioning AI in any shape or form. Even Kroger's, a grocery chain, Intel 58 times on their call. Before I get into the small business part overall, do you think that perhaps there's a little bit of hype added into this, or do you really believe it's the next revolution?

I think, well, thank you Christina first for having me here. Great to be here with you and to talk about small businesses. I think this thing is real. I've been studying technology and businesses for close to 30 years and this reminds me of the browser age when the browser first got invented. There was 30 years of the Internet and the browser came in and people said, wow, now I understand what the Internet is and what it can do. And, and we lived through that whole browser era collectively and what it's done to us and our economies and to our small businesses. And I think the same thing is happening with generative AI. There's been 20 years of hardcore AI development being used in the plumbing of many companies. Our daily lives are in many ways being mediated through AI, whether you use Google or Facebook or Amazon and so forth. But now generative AI shows you what the real power of AI is.

Okay, so we have this real power. But as a small business owner, let's say I'm a small business owner, I immediately think, hey, can I really afford to implement changes within my business? Do I have to buy expensive GPU chips to implement this. What are the smaller players do?

Well, look, I think the first thing is everybody should go get accounts in three places, right? Get ChatGPT+ get Bing Bing chat. And I love this new service called Popoe.com, which has multiple different AI models available to you, and those are about 20 bucks a month. And all of a sudden what you get to see is the power of generative AI being applied to your business. And I think about generative AI for small businesses in three different categories. One is in all your consumer contact, and we can talk more about that one in sort of you as a thought partner with you to think about your businesses and new ideas. And the third thing is to think of it as your super assistant, being able to do many things that are drudgery for you.

Today you just named three. But if money was constrained, which one would you pick as the number one choice?

Oh, I would pick Chad plus.

Okay. And for the customer, Bing is free.

Bing is. Microsoft has made Bing free, so you have that as well.

But what about the quality? Sometimes the answers aren't always correct. Right between 3. And then there's debate about, like chatbots 3.5 and chat GPT 4. Should, as a business owner, should we be concerned about the accuracy that's being spewed back at us?

Well, so I think the use case is very different, right? So the use case is not information search for information search. You still want to go to Google and, you know, verify the sources. But the way I think about ChatGPT is really, it's a thought partner and is lowering the cost of cognition, helping us with new ideas and new considerations. A cool example that I first came across when I knew this was important was a VC in California was helping sort of immigrant businesses in lawn care and fence care and so forth. And typically they had, you know, not great English skills. And he would help them communicate with them, create the right text messages, create the right emails for them so they could communicate with those customers. All of a sudden, you know, now these entrepreneurs could literally put their, you know, their broken English into ChatGPT and get perfect Harvard English, perfect Oxford English, perfect whatever English you wanted in the communication. So all of a sudden they had this new superpower where before English communication through text was very difficult, and now it became super easy. That's just one example of the various things you can start to do if you think about small businesses. And they need a social media strategy. They need something to come up with in terms of all the tweets they need to do all the Facebook posts, they need to do all the TikTok videos, they need to create. Well, ideas for them can be generated through ChatGPT. So here you're not basically asking it for particular factual information, you're thinking with it, and it's thinking back with you and coming up with ideas. And they're amazingly implementable ideas that you can put into practice right away.

So you mentioned the content angle and I know you had described it into three different buckets. If we were to focus on just the customer experience and streamlining, can you be a little bit more specific on how companies can utilize AI to streamline some of their tasks?

Absolutely. So just imagine even customer communications, like if you have irate customers coming to you by email or by various various things, you can basically have bullet points made up saying this is what your response should be. Take the irate customer's email, tell ChatGPT I want to address it in this way and calm them down. ChatGPT will come up with many ways for you to calm them down, as one example. But if you sort of imagine all the customer communications you're doing right now in your organization, both the positive ones and the negative ones, right, Enabling your workers to have ChatGPT help help along with that, it'll be incredible. Secondly, in all of your marketing copy, right, Both in the traditional marketing you might be doing or the social marketing you'll be doing, including ChatGPT into that process, I think will be very good and very efficient. And then of course, there's also these image generation tools. Three, if you wanted to create new images and so forth, you can go to something like stability, you can go to midjourney, you can go to Dall? E. Bing can help you create new images. So image generation for your marketing content is also very good. And then all your socials can also be done through this system as well.

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Are you describing a future which already, right now, we barely speak to humans on the phone and deal with them on computers. But are you describing a future where virtually everything will be done through a chatbot? Because I think of Domino's, they launched their own chatbot called Order with Dom. And what is it? Facebook's going to be launching a chatbot with, I guess, Abraham Lincoln theme in there, or sounds like Abraham Lincoln. So is that the future for businesses?

Oh, absolutely. Look, I think the way I think about it for a business, what you care about are three things. Scale, scope and learning. How many more customers can you serve? How many different products you can offer, and how do you keep learning? Integrating AI and generative AI into your systems will allow you to serve more customers in better ways. They'll be happier. I believe you can offer them more things and more ways to engage with you, and then you can be learning from all those interactions and becoming better as a business. So your operating model, how you deliver value to your customers, to your business, can be supercharged with something like a ChatGPT generative AI system.

Karim, this is just an observation, but it's awesome that you're a professor because you always outline things in three points and obviously you do remember that. No, it's great. It's great because I remember it and I can refer back to your three points. If you gave me four, I'm not so sure. But again, going back to small businesses, how could they take advantage of. Do you have any additional resources, tutorials? Because if you're coming in this blind and I own, let's say, a furniture shop and maybe I have two locations and I have no idea what I'm doing. How do you start?

Yeah, 100%. Look, YouTube is your friend. I can't tell you how much I've benefited as this revolution happened. And you. Look, I've written the book on AI called Competing the Age of AI. But as this generative AI revolutions got kicked off in November, I've been like spending so much time on YouTube because there's these great creators who spend all the time and effort thinking about various different problems and then coming up with solutions on how you could solve them through ChatGPT and other generative AI systems. So I recommend everybody start to build a crash course on YouTube. YouTube has great AI algorithms to help guide you along the way. And soon you'll be down the rabbit hole. But the key really, Christina, is practice. You got to learn how to practice. You got to embrace it and know both. It's great benefits, but also its limitations. Like you were mentioning, hallucinations, right? It can be inaccurate. The way I think about it in my own life as a, you know, nerdy academic, when I've got my glasses on and I'm, you know, lecturing or I'm doing research, writing obscure papers, you know, in that work, I look at ChatGPT as being my thought partner, right? My copy editor, you know, my sparring partner. And. And, you know, I've got. I'm very lucky to have a great lab and a great institute with many people working with me. But ChatGPT never gets mad at me for changing my mind. ChatGPT gets mad at me for asking 10 million things. And so it becomes a thought partner, but it only happens through practice. So I really want to encourage everybody out there to engage in practice. Start using it today, right? Get into it today, and as you acquire more skill, you'll see all the different applications you can do. Crazy thing, Christina, the furniture store example you gave me, you can go in and say, I'm a furniture store owner. Here's what my furniture store looks like. Where can I apply ChatGPT? You can ask ChatGPT that question and see what it comes up with as well.

It's funny because you just described, you know, I have it, my sparring partner, somebody who doesn't get mad at me. You're pretty much describing eliminating human jobs in place for a computer.

No, look, I think it's the opposite. Look, there's an old adage in computer science that machines won't replace humans, but humans with machines will replace humans without machines.

Okay, that's true.

And my view actually is I'm going to go to the Marvel universe. ChatGPT is the Iron man suit that we now have available to us. Tony Stark is not a superhero or a God from a different galaxy or different dimension, Right? He's just a human being. But with the suit, he's got the superpowers. This is what generative AI and AI tools can do for every single worker and every single business owner along the way as well. It is your AI power suit, and it can enable you to do things that. That word seemed outlandish. Like, just think translation. Small businesses are on the Internet. They're using Shopify. Let's say they want to translate their website now into many different languages. Well, before, it would be very costly now you can do that with ChatGPT just as one example. Think again as you with AI are going to be 10 times better and your team of 100 people will now have the footprint of a thousand people. You can do more. And I want all of us to think about the abundance that it creates for us instead of the scarcity worries that we have.

Just a very brief last question. I think right now is the moment where if Companies don't adopt AI and ChatGPT and their own bots and all of the content and different ways you can use it, then those companies are going to be the ones that really fall behind in the next five to 10 years. Is that an accurate assessment?

I agree with you completely. I mean I think there is a digital divide occurring between companies and between executives. But I think for small businesses you have the advantage, right? You are nimble, you can turn on a dime. If you invest in learning, if you invest in thinking and application, I think you'll be better off with that was.

Harvard Business School Professor Karim Lakhani. He joined us at CNBC's Small Business Playbook event on August 2, 2023. The keynote is produced by the CNBC Events team. For more information about upcoming CNBC events and how you can join us, visit CNBCEvents.com I'm Tyler Matheson. Thanks for listening.

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