Learning to Manage Uncertainty, With AI

Organizations that combine AI with strong learning capabilities, termed “Augmented Learners,” are better equipped to manage uncertainties in tech, talent, and regulations, as illustrated by companies like Estée Lauder that use AI to adapt swiftly to changing consumer trends.

The second Artificial Intelligence and Business Strategy report of 2024, from MIT Sloan Management Review and Boston Consulting Group, looks at how organizations that combine organizational learning and AI learning are better prepared to manage uncertainty. It examines how the emergence of generative AI is changing workers’ and organizations’ attitude toward the technology and the opportunities and risks that it poses.

Uncertainty Abounds

Uncertainty is all about the unknown. The less an organization knows, the greater its uncertainty and the less able it is to manage resources effectively. Managing uncertainty, therefore, requires learning. Companies need to learn more, and more quickly, to manage uncertainty.

Addressing uncertainty constitutes a pressing challenge for leadership, especially today, when geopolitical tensions, fast-moving consumer preferences, talent disruptions, shifting regulations, and rapidly evolving technologies complicate the business environment. Companies need better tools and perspectives for learning to manage uncertainty arising from these and other business disruptions. Our research finds that a major source of uncertainty, artificial intelligence, is also critical to meeting this challenge. Specifically:

Companies that boost their learning capabilities with AI are significantly better equipped to handle uncertainty from technological, regulatory, and talent-related disruptions compared with companies that have limited learning capabilities.

The Estée Lauder Companies (ELC) offers a case in point. The cosmetics company has a strategic need to anticipate consumer trends ahead of its competitors. In earlier times, consumer preferences might have shifted seasonally. Now, preferences are less certain; shifts happen more quickly due to social media and digital influencers. Fashion trends can change by the week. If the color peach suddenly captures the public’s interest, the company needs to discern that trend as quickly as possible.[…]