How do you ensure a strategic discussion about AI and not just chasing use cases and Proof of Concepts? This is the emerging question we pose to our customers.
In many companies, we see that AI initiatives often start as small pilot projects or Proof of Concepts. This can be perfectly fine for small learning sessions. However, it is important to take a more strategic approach if larger and more transformative changes are desired. Tools like co-pilots and chatbots undoubtedly improve individual work processes.
This can result in a situation where the greatest benefits of AI primarily accrue to employees, but without a comprehensive business impact. This poses a risk of AI being reduced to just a tool for efficiency rather than a strategic driver of the company’s growth.
To avoid this scenario, it is crucial that leaders develop a clear and targeted strategy for their AI efforts. There should be a focus on how AI can be used as a catalyst for innovation and competitive advantage.
Ask questions about the strategic value of AI
In an era where AI is reshaping the rules of business, it is important to ask questions about the strategic value AI can bring to the organization beyond just operational benefits.
The promise of (gen)AI and its current maturity has caught the attention of several companies looking to integrate AI capabilities into their organizations. However, it is often unclear which strategic objectives AI should support and how they can be prioritized to ensure maximum impact.
Companies establishing an AI Center of Excellence (CoE) often struggle to navigate between internal automation tasks focusing on cost reduction and externally oriented product and service development that should support a broader growth agenda. It requires a balanced approach and a clear strategy to harness AI’s full potential for the benefit of the company.
We often introduce a framework, see below, to ensure a strategic discussion on where and how much to invest.
4 questions to clarify goals for AI
Facilitating the discussion about (gen)AI on a strategic level rather than jumping to use cases right away ensures that the effort and thus the investment balance is better aligned with the objectives of the corporate strategy. This is often also needed for long term success of technology implementations.
When we advise our customers on the choice of use cases, we often ask the following four questions inspired by Professor Ethan Mollick. He is one of the leading voices within GenAI and business. He is the head of the Wharton Generative AI Lab and publishes both in, among others, academic journals.
1: What useful thing you do is no longer valuable?
AI is reshaping the value of many traditional skills and business processes. Businesses need to identify operations that are becoming commoditized or can be efficiently automated. This recognition will help in reallocating resources to more innovative areas.
2: What impossible thing can you do now?
With AI, organizations are now able to handle complex problems that were previously difficult to solve. This includes everything from enhancing predictive analytics to achieving unprecedented levels of personalization in customer interactions. Identifying these opportunities can open new avenues for business growth as well as create competitive advantages.
3: What can you move to a wider market or democratize?
AI technologies can help businesses scale solutions that were once limited to niche markets. By leveraging AI, companies can extend their reach and democratize access to their products or services, making them accessible to a broader audience.
4: What can you move upmarket or personalize?
AI enables businesses to tailor products and services to meet the specific needs of individual customers or premium segments. This personalization can help businesses penetrate the upmarket by offering enhanced value through customized experiences.
5: What should your operating model look like based on questions 1-4?
An organization’s operating model should evolve to integrate AI capabilities across all functions. This integration should focus on enhancing efficiency, innovation, and customer engagement by leveraging insights gained from the earlier questions. Strategic investments should be made in AI technologies that align with the company’s broader business goals and market positioning.
Summary and conclusion
AI has the potential to be a strategic driver of business growth. However, many organizations risk reducing AI to merely an efficiency tool. To realize AI’s full potential, you must develop a strategy that goes beyond short-term gains from use cases and Proof of Concepts. It is essential to ask the right questions about how AI can act as a catalyst for innovation and provide competitive advantages.
By prioritizing AI initiatives that support the company’s strategic goals, you can navigate AI’s complex landscape and integrate AI strategically. This will not only improve operational efficiency but also strengthen the company’s position as innovative and differentiated in the market.
The conclusion is that companies need a clearly defined AI strategy to guide their digital transformation. This will ensure both short-term gains and long-term success in an AI-driven world.
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