A recent report by Boston Consulting Group indicates many business leaders really struggle when it comes to doing meaningful innovation as well as assessing and adopting newer technology !
An example of this is most enterprises are challenged in utilizing GenAI – where the stakes are high given its potential to meaningfully improve outcomes by – reducing costs and improving operational efficiencies , growing sales and expanding revenue streams, increasing profits, expanding opportunities and the options to engage for new business, creating new value by making innovation more rewarding, extending competitive advantage, better managing change, mitigating risks when pursuing strategic objectives, etc.
The Challenges to Change
The challenge with slow AI adoption in enterprises today is similar to their slow adoption of other newer technologies in the past. For example, Smartphones, the Internet, the PC, numerous software products, etc. only became ubiquitous in enterprises long after being used by individuals and small businesses !
In this case, 66 % of Enterprise Executives are unhappy or unsure about their progress with AI and GenAI so far because they view there is a –
- Shortage of talent and skills
- Lack of clear AI vision and strategy
- Disregard for ethical and responsible use of AI and GenAI
- Preference to watch for a while since the technology is changing / evolving
- Challenge in determining “ Use Cases “ (that align with company strategy as well as risk / reward tolerance)
While valid concerns, what is being done to address the more significant reasons for enterprise latency in adopting new digital capabilities with C-Suite –
- Familiarity and comfort with the current operation, environment, etc.
- Lack of technology knowledge
- Little feel / confidence in how new digital capabilities could impact the business
- Uncertainty about how ChatGPT (or other technologies) could undermine their career goals or status in the organization
- Struggles to determine the merits, value and adoption of new digital services based on AI
- Challenges with knowing how to Innovate for Impact
- Concerns with political uncertainty or unintended consequences associated with trying to effect change
- Insufficient potential reward (not meaningful additional $, career opportunities, higher status, etc.) – versus the risks of dealing with many unknowns
- Difficulty in thinking and performing tasks based on “ Process and Predictability “ + acting on “ Insight and Inspiration “ (to add value and/or challenge the status quo)
Getting Past the Challenges to Change
From this long list of “ Reasons Not To Change “, it becomes clear why change (especially potentially disruptive change) in enterprises is difficult and slow ! For those who appreciate evolution is natural and the only constant is change, they realize there are consequences for not changing on a timely and intelligent basis – including a slow death or quick extinction (triggered by a paradigm shift – usually from a company new to the space). Evidence of this comes from the ~ 50 % turnover in the Fortune 500 list every 10 years ! For further insights, see other articles at www.cail.com/BI . With this, hopefully there is incentive for enterprises to be much more entrepreneurial, enlightened, and proactive at effecting change – by being much better at business innovation.
At this time, with GenAI (as with all game changing technology having paradigm shifting implications), the early adopters are experimenting and learning now to build their knowledge and fast track determining how to benefit with the opportunity now available to meaningful improve outcomes and leverage these capabilities for further advantage. For example, leading companies utilizing GenAI expect up to $1 billion in productivity gains and are looking at ways to reinvest into new business models and growth.
To win going forward, leading companies serious about innovation by pursuing AI as a strategic initiative are –
- Improving productivity by investing in being more efficient – to be more agile, for higher profits, have greater competitive advantage, etc.
Why ? Because companies that plan to invest more than $50 million in AI and GenAI this year are 1.3 X more likely to see cost savings next year – and 1.5 X more likely to achieve more than 10 % in cost savings in the future.
- Top-line growth – additional sales of current products / services + additional revenue streams from product extensions / new products / new services.
- Upskilling Personnel – with 21 % of companies spending more than $50 million on AI and GenAI this year, they have already trained more than a quarter of their people.
- Pursuing projects where there could be significant “ Value Add “ from Innovation – while observing “ Cost-of-Use “
- Cognizant of the need for ethics and quality results that respect AI (RAI) principles + being mindful of security considerations + human oversight and accountability
- Exploring – new opportunities , extending business relevance , creating a new ecosystem(s) , evolving to a new business model + +
Summary
With these significant advantages, it begs the question – Why is anyone engaged in innovation to improve outcomes waiting or watching ?
If interested in sharing insights on this topic or other aspects of making innovation more rewarding, please contact CAIL.
Jan 17, 2024 by Nick Farrell / CAIL CAIL Innovation commentary
info@cail.com www.cail.com 905-940-9000