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    Brain Circuits

    How to resolve the five trade-offs of AI

    by Michael R. Wade, Sarah E. Toms, Amit M. Joshi, Michael D. Watkins Published February 6, 2025 in Brain Circuits • 3 min read

    The democratization of AI can bring great productivity and efficiency gains, but it also poses significant risks. Michael R. Wade, Sarah E. Toms, Amit M. Joshi, and Michael D. Watkins identify five key strategic tensions that you need to resolve to capture value.

    1. Speed versus caution

    • You don’t want to be left behind in the race for productivity and other advantages, but there’s also a danger of over-investing and moving too quickly when you don’t know what the risks and benefits might be.
    • Start with lower-risk, simple applications in areas that will have the biggest return on investment, then monitor, learn, and adapt as you go.
    • Starting simple has many benefits, including giving you a quick win and letting your people see first-hand what it takes to ramp up to more complex AI projects.

     

    2. Internal versus external use cases

    • Don’t get stuck trying to decide whether to leverage AI to improve your internal processes or to create new products or services. GenAI can do both – and so should you. The decisive factor for the organization is where it will add the most value.
    • Identify a set of clear business challenges, both internal and external, and focus on where AI can provide the most benefit.
    • Avoid the temptation to launch dozens of interesting but disconnected AI initiatives.

     

    3. Build versus buy

    • Be agile in the way you architect and execute your AI strategies.
    • It’s good practice to utilize commercial tooling where possible…
    • … but make sure your plan allows time for the technologists to adjust the AI solutions you adapt from external providers or develop in-house.

     

    4. Re-skill versus replace (or reduce)

    • Responsible employers will also consider the social and ethical implications of using AI to replace human labor along with productivity and cost gains.
    • Explore strategies for retraining and upskilling affected employees.

     

    5. Environmental impact versus efficiency gains

    • The environmental impact is often overlooked in the debate around GenAI adoption, so ensure that sustainability is one of your key AI principles.
    • Educate your organization about AI’s footprint and prioritize the measurement of resource consumption.
    • With this transparency in mind, strive consistently to reduce the harmful impact of AI on the environment.

     

    Key takeaway

    You have to balance the need for accurate predictions with the ability to interpret and explain AI decisions, especially in high-stakes applications such as healthcare or finance – but get it right and you will reap big productivity and efficiency gains, and likely gain competitive advantage.

     

    Further reading

    AI’s five strategic tensions and how to resolve them

    Bias in Generative AI: A risk that must be addressed now

    Three ways GenAI could transform supply chain management 

    Think AI is a useful ‘copilot’? Soon it will take the controls 

    All views expressed herein are those of the authors and have been specifically developed and published in accordance with the principles of academic freedom. As such, such views are not necessarily held or endorsed by TONOMUS or its affiliates.

    Authors

    Michael Wade - IMD Professor

    Michael R. Wade

    Professor of Strategy and Digital

    Michael R Wade is Professor of Strategy and Digital at IMD and Director of the Global Center for Digital and AI Transformation. He directs a number of open programs such as Leading Digital and AI Transformation, Digital Transformation for Boards, Leading Digital Execution, Digital Transformation Sprint, Digital Transformation in Practice, Business Creativity and Innovation Sprint. He has written 10 books, hundreds of articles, and hosted popular management podcasts including Mike & Amit Talk Tech. In 2021, he was inducted into the Swiss Digital Shapers Hall of Fame.

    Sarah Toms

    Sarah E. Toms

    Chief Innovation Officer

    Sarah Toms is Chief Innovation Officer at IMD. She leads information technology, learning innovation, Strategic Talent Solutions, and the AI Strategy. A demonstrated thought leader in education innovation, Sarah is passionate about amplifying IMD’s mission to drive positive impact for individuals, organizations, and society.

    She previously co-founded Wharton Interactive, an initiative at the Wharton School that has scaled globally. Sarah has been on the Executive Committee of Reimagine Education for almost a decade, and was one of the ten globally to be selected as an AWS Education Champion. Her other great passion is supporting organizations who work to attract and promote women and girls into STEM.

    She has spent nearly three decades working at the bleeding edge of technology, and was an entrepreneur for over a decade, founding companies that built global CRM, product development, productivity management, and financial systems. Sarah is also coauthor of The Customer Centricity Playbook, the Digital Book Awards 2019 Best Business Book.

    Amit Joshiv - IMD Professor

    Amit M. Joshi

    Professor of AI and Strategy at IMD

    Amit Joshi is Professor of AI and Strategy at IMD and Program Director of the AI Strategy and Implementation program, Generative AI for Business Sprint, and the Business Analytics for Leaders course.  He specializes in helping organizations use artificial intelligence and develop their big data, analytics, and AI capabilities. An award-winning professor and researcher, he has extensive experience of AI and analytics-driven transformations in industries such as banking, fintech, retail, automotive, telecoms, and pharma.

    Michael Watkins - IMD Professor

    Michael D. Watkins

    Professor of Leadership and Organizational Change at IMD

    Michael D Watkins is Professor of Leadership and Organizational Change at IMD, and author of The First 90 Days, Master Your Next Move, Predictable Surprises, and 12 other books on leadership and negotiation. His book, The Six Disciplines of Strategic Thinking, explores how executives can learn to think strategically and lead their organizations into the future. A Thinkers 50-ranked management influencer and recognized expert in his field, his work features in HBR Guides and HBR’s 10 Must Reads on leadership, teams, strategic initiatives, and new managers. Over the past 20 years, he has used his First 90 Days® methodology to help leaders make successful transitions, both in his teaching at IMD, INSEAD, and Harvard Business School, where he gained his PhD in decision sciences, as well as through his private consultancy practice Genesis Advisers. At IMD, he directs the First 90 Days open program for leaders taking on challenging new roles and co-directs the Transition to Business Leadership (TBL) executive program for future enterprise leaders, as well as the Program for Executive Development.

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