Many CEOs are wondering how to take advantage of AI for their business and competitive advantage. In our November Strategy Collaborative session, we sat down with Dan Hogan, Senior Strategic Consultant, and Marc LeShay, CEO of AEGERIA, to discuss the historical significance of this moment as AI continues to take the world by storm. Read on to learn how to recognize and leverage your AI advantage to enhance business growth.
What is the AI advantage?
The AI advantage is what will set you apart from the competition. There is a lot of hype surrounding AI, as it has become one of the most disruptive technologies of our time. Undoubtedly, it is here to stay – and today’s AI capabilities are only the beginning of what’s possible.
Understanding the Context of AI as a Disruptive Technology
What is Disruptive Technology?
Disruptive technology is an innovation that significantly shifts or alters how consumers, businesses, and industries operate.
Disruptive technology can be considered both an opportunity and a threat, depending on what side of the movement your business falls on. If you are ahead of the curve (or willing to adapt), this can certainly be an opportunity for growth.
However, if you’re behind the curve, it can just as easily impact your business for the worse.
AI as a Disruptive Technology
AI has the biggest potential impact on business transformation since the invention of the internet. Future generations will look back on this moment as a turning point in history, similar to how we view the Industrial Revolution. The advantages of artificial intelligence are numerous. Bots will soon have the ability to do AI work, such as:
- Assist with customer service.
- Complete repetitive work.
- Run analytics reports.
- Review and fix mistakes brough about through human error.
- Configure a set of algorithms.
- Serve as a digital assistant.
- Code computer programs.
- Automate emails.
- Supplement data science.
AI systems and machine learning technology open new doors for technological and business advancement, and it’s easy to see the AI advantage is real and tangible.
Why and How is AI Disruptive?
Disruptive technology isn’t new, and it has impacted how consumers, businesses, and industries have operated for centuries. AI is just the newest iteration of this phenomenon.
Some believe artificial intelligence will become the most impactful disruptive technology since the Industrial Revolution. Just as the steam engine replaced human and animal physical labor, AI solutions are beginning to replace repetitive tasks that require human cognition with artificial intelligence.
New technology, like cryptocurrency, chatbots, virtual assistants, and ChatGPT, is changing the world. Yet, as new and exciting as all of this is, you can’t lose sight of the importance of running a sound business. The foundation of any technology experimentation or adoption process must be built on tried-and-true business practices.
The foundation of any AI advantage? Good business practices.
Before we dive in and explore the possibilities and advantages of the ever-evolving technology, we feel compelled to issue a caveat that while the tech may adapt and transition, the foundational business principles should never change. We must always remain grounded in traditional business practices to build sustainable and valuable organizations. Regardless of whatever new inventions or technology develops, there are two principles that should never change:
- Your organization must provide value to your consumers in some way, whether that is a positive contribution to their personal life or their everyday life.
- Your organization must value the people who make it possible for your organization to run and function.
Pro Tip:
An AI robot, no matter how advanced, can never take the place of the people who support your organization, as without them, your business wouldn’t exist.
Tulip Mania – A historical lesson on unsustainable business fundamentals.
History provides several relevant examples that show the drawbacks that happen when evolving technology and trends take precedence over business fundamentals. One example is the “Dutch Tulip Mania ” of the 17th century.
At that time, tulip bulbs were seen as incredibly rare and desirable and were traded for sums well beyond a skilled worker’s annual wage. As the commodity became more expensive, the market for them became untenable.
Can you imagine buying flowers that exceed your yearly income? Ultimately, the market for the tulips, driven by the flower’s perceived rarity and desirability, became grossly unsustainable and unaffordable.
The integration of AI tech must connect to your long-term strategy to be advantageous.
The adoption of any new technology is not merely about keeping up with the latest trends—it’s about making strategic decisions that align with your company’s long-term goals and value proposition. When considering the integration of any new tech into your business operations, ask yourself three questions:
Question 1: Will this development be an advantage and help us accelerate our strategic goals?
Consider the AI advantage. Understanding if and how this technology can enhance your offerings to your customers is vital. Will it allow you to serve them faster, more efficiently, or creatively?
Does the tech strengthen your competitive advantage or edge, and does it completely change your business value for the better?
Question 2: What are the cons or disadvantages of artificial intelligence and will using it depreciate our value proposition in the marketplace?
It has the power to disrupt markets and displace established players. It’s crucial to ask yourself if the technology you’re considering could prove to be disadvantageous to your business or depreciate your value proposition. Will this potentially change your business value for the worse?
The threat of being replaced by technology is real and incorporating it into your business is a calculated risk. Will competitors leverage the new technology to diminish your relevance? Alternatively, can it create opportunities for you to disrupt your competitors and carve out new market space?
Question 3: Can we get new value propositions or streams out of this?
Ask what new streams of revenue or service offerings could emerge from integrating this technology. Innovation often involves venturing into uncharted territory, which can be risky but also rewarding.
Leaders must be vigilant in assessing how technology can challenge their unique selling points while embracing the potential for new opportunities. This dual perspective ensures that the adoption of AI solutions is a deliberate strategy, where organizations consider the risks and rewards associated with innovative, effective AI strategy.
General vs. narrow AI: What’s the difference?
Despite how prevalent and widespread it has become in recent years, not many of us understand what it is and how it works. Let’s break down a few key definitions regarding its application in the real world:
General AI is a general thinking machine, and it’s closer to the concept we’ve been exposed to through movies, television, and literature. We’ve been on a quest to create something like this for a long time. But don’t worry; general AI is not how it’s portrayed in movies… Bard and Sydney cannot plan a global takeover.
The reality of what we use daily is narrow AI, which is an artificial intelligence created with precision for a specific purpose. For example, your Fitbit’s sensor data steps are considered narrow capabilities.
Here are some examples of narrow AI that has become commonplace include:
- Amazon’s predictive purchase recommendations
- Fraud detection
- Facial recognition
- Image enhancement
- Language translation
- Self-driving vehicles
- Image generation
When considering how to take advantage of AI or turn any technology into a strategic opportunity, there are two fundamental use cases to consider:
- Using AI to address the core business, aka “How should we use AI technology to address the core fundamentals of our business?”
- Using AI to streamline operations or enhance productivity, aka “How do we use AI to make our lives and productivity just a bit easier?”
Like any other technology, artificial intelligence tools require us to understand the right time, place, and circumstances for proper application to get the best AI advantage possible. It is also important to be realistic and consider the disadvantages of AI as well, such as its inability to solve complex problems without instruction, the technologies’ inherent lack of creativity, and, of course, the plethora of ethical considerations.
How to maintain perspective in the face of disruptive technology.
Diversify, and don’t try to time the market.
There isn’t a way to know how rapidly or slowly tech will change, and the best you can do is invest in a way that makes sense for your business or organization and works towards your best advantage.
Pro Tip:
Think about exploring AI as an investment and making the most of your AI advantage in small ways. Don’t try to time the market; invest in a way that makes the most sense for your organization.
Don’t change who you are. Change how you think.
Rethink your business in a way that widens your perspective on your offerings and allows you to change and adopt newer technologies. Set an AI framework that fits into your larger strategy to ensure that it supports your business goals, rather than works against them.
Ex. Kodak is no longer a company that merely sells film and film cameras. With the adoption of digital photography and equipment, the company has shifted. They market themselves now as a company that helps capture and celebrate memories in any form they take today and in the future.
Don’t abandon business fundamentals.
As we discussed earlier, technology may change and transition, but the tried and tested business principles endure. Regardless of what technology you adopt, always stay grounded in the fundamentals.
How to take advantage of AI technology.
- AI will be the most disruptive technology since the Industrial Revolution. It isn’t meant to usurp your entire strategy or business practice, but it will open up opportunities to exponentially scale your business or organization.
- Think about AI as a tool you can leverage to elevate your organization and improve your business practices. It comes in many flavors, so don’t feel like you must try everything. Find the right AI advantage and tools that best serve your business needs.
- Don’t get caught off guard because it’s slow to evolve. The solutions you may have looked at a few years ago and disregarded may be leaps and bounds ahead now and be just what your organization needs. Go back and revisit those solutions and tools you wrote off before.
- Ultimately, the best way to understand it is to start using it. Experimentation is the name of the game right now. Find the tools that interest you and sign up for a trial!
Best practices to use AI in your strategy.
So, we’ve covered AI solutions, how technology has shifted and evolved, and how it will change our world. But what should you do next to ensure your organization is a part of the transformation?
Your next steps should be all about finding opportunities to implement your AI strategy. Every business is unique and has different needs. Unfortunately, we cannot presume to tell you which solution or which specific tools work best for your AI advantage, but here are some principles that apply to all businesses or organizations:
Build an AI team!
Take advantage of your human resources (aka your employee’s innovation and curiosity)! Does someone on your team have a passion for AI? Establish an AI leadership team and assign the most passionate colleagues to head up the implementation process. Help your staff create a team management protocol to explore use cases in your industry and organization. If you don’t have someone to take on that mantle, then maybe that person can be you!
Get outside help if you need it.
If the idea of adoption overwhelms you, seek outside help! There are so many resources to assist you in your journey, such as training courses, journals, associations, and even consultants.
Here is a short list of paid AI courses you and your team can take:
- Wharton – AI for Business Specialization ($39)
- MIT– AI Implications for Business Strategy ($3,200)
Work bottom-up and top-down.
You need to consider both the day-to-day application and the transformational application of AI for it to be fully advantageous to your organization. Your executive team should consider how the technology impacts the organization holistically, and your contributors should consider how it affects the day-to-day.
Look for positives and negatives.
Consider all sides of the coin. How will it positively impact your organization? How might it negatively impact your organization? How can your organization mitigate and leverage those positive and negative aspects of adopting AI into your strategic plan?
Plan for the people in your organization and ways to use your AI advantage responsibly.
In the excitement of all the new possibilities of AI implementation, be sure always to remember your people. Talk to your partners and peers about new opportunities, train your workers in the usage of these tools, and keep them from feeling obsolete within your organization.
Although artificial intelligence may have the ability to reduce human error, it also reduces the potential for ingenuity and creativity. So, don’t let these tools replace your people entirely. Unfortunately, this technology will change how we interact, hire, and structure our organizations and teams. There’s no way around that.
Ensure you’re planning for the future and success of your people, as you will need them for continued growth! As business leaders, never forget that regardless of any AI advantage you may gain, your organization is nothing without the people who support it.
Pro Tip:
Some tasks may become fully automated and not require people to do them down the road. In this case, plan how you will upskill your people into higher-value tasks. You have a responsibility to foster the growth of your people as well as the business.
7 Tips to put your AI strategies into practice.
You’ve researched, laid the groundwork, and prepped your team. Now, you’re ready to do the work! Here are a few practical and actionable tips for putting your AI advantage to use:
- Get your data in order.
- Look at the off-the-shelf tools.
- Forge partnerships with companies and academic institutions.
- Build prototypes.
- Start from the outside and move towards the core.
- Don’t lose sight of the fundamentals (the human beings and the daily lives affected by this disruptive technology).
- Build a portfolio. Start testing how AI applications will transform your organization.
Q & A on AI Strategy
We recognize that this topic can unearth so many questions! Here are a few that we covered throughout the session:
Q & A from the Session
How much will AI affect most core business practices? Is there a spectrum?
Luckily, there are tools at every level of the spectrum that require minimum buy-in. Microsoft AI tools are accessible with a $30 subscription, while ChatGPT has both a free and paid subscription option that doesn’t exceed $20 a month. Productivity tools have low buy-in, minimal impact, and continuous development updates to meet all your organization’s latest requirements.
However, in some instances, AI may impact core business practices more. For example, an organization thinking about using tools to replace agents at a call center must carefully consider the changes’ long-term impact on this core business practice.
How do we mitigate the perception among staff that we’re putting people out of work?
Fortunately, time-consuming and repetitive jobs will be the first to be automated, and people will no longer need to complete tasks like these. This will only free up valuable time for your workers to focus on tasks that need specific human intervention and strategy.
However, in cases where jobs are entirely based on these tasks, companies may need to restructure where their employees will fit. Companies should think of ways to re-train, upskill, and re-deploy their teams to higher-level tasks within the organization where the impact of their work will contribute to a better world.
What other ways are strategy practitioners utilizing AI technology?
An organization found a way to use ChatGPT and other language models to build an import tool for data entry. They told the app where to find the data and it imported it straight into the tool. You can use it to help you sift through unstructured data as well.
What are tips to ensure security with the AI tools?
Never share any kind of sensitive business or personal information with these tools. If you are in doubt, the paid versions usually have more safeguards in place for data protection. So, paying $20 a month for a subscription to a service that takes care and consideration of your data may be safer.
Some industries, such as healthcare or financial institutions, may have to consider data security issues more carefully than others.
What are some of the bigger risks or unknowns we will potentially face?
There may be a few risks, such as the unpredictable speed of technology adaptation. So, being flexible with your timing will help manage some risks. The other risk is understanding what you’re putting the tools in charge of and ensuring reliable outputs. Ensure that you have a process to audit the results you receive.
