History has shown that technological innovation can profoundly change how business is conducted. The steam engine in the 1700s, the electric motor in the 1800s, the personal computer in the 1970s—each transformed many sectors of the economy, unlocking enormous value in the process. But relatively few of these and other technologies went on to become direct sources of sustained competitive advantage for the companies that deployed them, precisely because their effects were so profound and so widespread that virtually every enterprise was compelled to adopt them. Moreover, in many cases they eliminated the advantages that incumbents had enjoyed, allowing new competitors to enter previously stable markets.

The latest technology with the potential to radically alter how business is conducted is, of course, generative artificial intelligence. Gen AI identifies patterns in data to create new content—including text, images, and sound—that closely mimics human creations. And because the results it creates are fed back into the datasets it analyzes, it can learn over time to create content that is more innovative, more valuable, and more humanlike. Understanding the strategic implications of this technology must encompass not just what gen AI can do now but also what it might be able to do in the future—because it’s getting “smarter” all the time.

There’s no doubt that gen AI will create a lot of value. Companies have used this technology to identify entirely new product opportunities and business models; to automate routine decisions, freeing humans to focus on higher-stakes decisions that involve ethical trade-offs, empathy, or imagination; to deliver customized professional services— including legal services—formerly available only to the wealthy; and to develop and communicate product and other recommendations to customers in ways that are faster, cheaper, and more informative than was possible with human-driven processes.

Smart early movers in sectors adopting gen AI have certainly captured some of this value in the short term. But relatively soon all surviving companies in those sectors will have applied gen AI, and it won’t be a source of competitive advantage for any one of them, even where its impact on business and business practices will probably be profound. In fact, it will be more likely to remove a competitive advantage than to confer one. But here’s a silver lining: If you already have a competitive advantage that rivals cannot replicate using AI, the technology may serve to amplify the value you derive from that advantage.

Let’s begin by looking at how gen AI is unlocking value for customers while leveling the playing field for the companies competing to serve them.