In our November Strategy Collaborative session, we sat down with Dan Hogan, Senior Strategic Consultant, and Marc LeShay, CEO of AEGERIA to discuss how to create an AI strategy for 2024.
AI is here to stay – and this is just the beginning. This isn’t a comprehensive guide for building your AI strategy but rather a background and foundation for helping your organization begin the conversation to bring AI into your organization holistically in 2024.
Foundations: Any Organizational Change Must Adhere to Business Fundamentals
AI is the biggest change in business since the internet.
But don’t lose sight of running a sound business.
Before we dive into the exciting world of AI and explore the possibilities of the ever-evolving technology, we feel compelled to issue a caveat that while the tech may adapt and transition, the tried and tested business principles should never change.
New technology and AI capabilities, like cryptocurrency and ChatGPT, are changing our world.
But, as leaders, we must always remain grounded in traditional business practices to build sustainable and valuable organizations. Your organization must provide value to your consumers, and you must value the people in your organization that make it possible to exist.
Tulip Mania – A historical lesson on unsustainable business fundamentals.
History provides other relevant examples that show how tech must align with business fundamentals. One example is the “Dutch Tulip Mania” of the 17th century.
At that time, tulip bulbs were traded for sums well beyond a skilled worker’s annual wage. Can you imagine buying flowers that exceeded the income you made in a year? Ultimately, the cost of the tulips, driven by the flower’s perceived rarity and desirability, was grossly unsustainable.
Integrating AI must be connected to your long-term strategy.
Adopting new technology, such as AI solutions, is not merely about keeping up with the latest trends —it’s about making strategic decisions that align with your company’s core goals and value proposition. When considering the integration of any new tech into your business operations, ask yourself three questions:
Question 1: Will AI development help us accelerate our value proposition and strategic goals?
Understanding if and how a technology can enhance what you offer to your customers is vital. Consider whether it allows you to serve them faster, more efficiently, or more creatively.
Does the tech strengthen your competitive advantage or edge? Or does it completely change your business value for the better [or worse]?
Question 2: Will this technology depreciate our value proposition in the marketplace?
New tech has the power to disrupt markets and displace established players. It’s crucial to ask yourself if the technology you’re considering could depreciate your value proposition.
Can competitors leverage it to diminish your relevance, or does it create opportunities for you to disrupt others and carve out new market space? The threat of being replaced by technology is real and must be a calculated risk.
Question 3: Are there new value propositions or new value streams we can get 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 adopting new technology and completing AI projects is a deliberate strategy considering the risks and rewards associated with innovative, effective AI strategy.
What is Disruptive Technology?
Disruptive technology is an innovation that significantly shifts or alters how consumers, businesses, or industries operate.
People may consider disruptive technology an opportunity and a threat, depending on what side of it they’re on. If you are ahead of the curve (or willing to adapt) this can certainly be an opportunity for growth.
However, it can negatively impact your business or organization if you’re behind the curve.
Technology disruptors and missed opportunities.
Unfortunately, being ahead in the market for a time doesn’t always mean you’ll be ahead of the market forever. Technology disruptors have derailed some pretty significant players in various markets. Here are two that you may recognize:
Remember Blockbuster? They had the biggest opportunity in their marketplace to innovate with the technology to change and adopt streaming options into their business model. They didn’t, and the rest was history.
Similarly, Nokia led the world in cellular phone development and innovation throughout the early 2000s. However, they missed the opportunity to diversify research and development for alternative touch screens, flip phones, etc., and were left behind as Apple and Samsung leaped ahead.
This is where developing a strong strategic foundation and understanding its potential relationship with technology is key to a successful AI strategy.
By considering both the opportunities and the threats that technology poses, your business can harness technology not just as a tool for maintaining their relevance, but as a means to create new value and achieve strategic advantage over the competition.
Technology disruptors ahead of their time.
On the opposite end of the missed opportunities spectrum, we also see what can happen if tech is ahead of its time. Ultimately, when it is too far ahead of its time, it can potentially cause a blind spot. AI solutions can fall into this tendency as well, including:
- Self-driving cars: The initial excitement for this was followed by early adoption with the expectation of complete self-driving capabilities. The reality is that this technology has faced slow development.
- Wearable computing (e.g., Google Glass): The reality of this slow take-off of the technology has led to skepticism of future tech.
- Cold fusion: Long wait for tangible results.
- Quantum computing: Development may differ from expectations.
Recognizing our biases as shaped by past encounters with disruptive technologies is essential. It doesn’t negate their future potential, even if they’ve developed slowly or differently than anticipated.
3 Tips for maintaining perspective in the face of disruptive tech.
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.
Think about exploring AI as an investment. Don’t try to time the market, just invest in a way that makes the most sense.
Don’t change who you are. Change how you think.
Rethink your business in a way that widens your perspective and offerings and allows you to change and adopt newer technologies.
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 that takes place 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.
Why and How is AI Disruptive?
As outlined previously, disruptive technology isn’t new and has impacted how consumers, businesses, and industries have operated for centuries.
However, the introduction of AI opens entirely new doors for technological and business advancement. Some believe AI will become the most impactful disruptive technology since the Industrial Revolution.
Just as the steam engine allowed a replacement for human and animal physical labor, AI technology is allowing us to replace some tasks that require human cognition with artificial intelligence.
General vs. narrow AI: What’s the difference?
Despite how prevalent and widespread AI has become in recent years, not many of us really have a working understanding of what AI really is and how it works. Let’s break down a few key definitions regarding AI and 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 AI created for a specific purpose. For example, your Fitbit has narrow AI capabilities (sensor data steps).
Narrow AI that we may not even consider to be AI anymore could include:
- Amazon’s predictive purchase or recommendations
- Fraud detection
- Facial recognition
- Image enhancement
- Language translation
- Self-driving vehicles
- Image generation
When considering how to leverage any technology into strategic opportunities, there are two fundamental uses: addressing the core business vs. addressing how to streamline operations.
During your AI strategy process, consider these questions:
- Should we use AI technology to address the core fundamentals of our business?
- Or do we use AI to streamline our operations and make life and productivity just a bit easier?
AI, like any other technology, requires us to understand the right places to make changes and where not to make changes.
Key takeaways on 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 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. AI has various shapes and sizes; you don’t have to use everything. Find the right fit and tools that best serve your business needs.
Don’t get caught off guard because it’s slow to evolve. The AI technology 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.
Ultimately, the best way to understand AI is just to start using it. Find the tools that interest you and sign up for a trial!
Identifying Opportunities in Your AI Strategy
So, we’ve covered AI solutions, how AI 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 AI solution or which specific tools work best for your organization, but here are some principles that apply to all businesses or organizations:
Put someone in charge of AI. Or, build an AI team!
Does someone on your team have a passion for AI? Make them responsible for it in your organization. Let them explore use cases in your industry, vertical, and organization. If you don’t have someone to take up that mantel, then maybe that person can be you! It can be helpful for someone to do pilot AI projects before deploying a full AI strategy.
Get help if you need it.
If the idea of AI adoption overwhelms you, seek outside help! There are so many resources to assist you in your AI strategy development and journey.
Work bottom-up and top-down.
Your executive teams should consider how the technology impacts the organization strategically, and your contributors should consider how it impacts the day-to-day.
Look for positives and negatives.
Consider all sides of the coin. How will AI 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 use responsible AI.
In the excitement 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 never allow them to feel obsolete within your organization.
Above all else, AI 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 your organization is nothing without the people who support it.
Some tasks may not require people to do them down the road. Instead, plan how you will move your people up into higher-value tasks. You have an obligation to your people as well as to 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 helpful, practical, and actionable tips for putting your AI strategy into practice:
- 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.
- 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 and minimal impact.
However, in some instances, AI may have a bigger impact on core business practices. For example, an organization thinking about using AI tools to replace agents at a call center will need to carefully consider the long-term impact of the changes to this core business practice.
How do we mitigate the perception among staff that we’re putting people out of work?
Unfortunately, tasks will be automated, and people will no longer need to do those tasks. Companies should think of ways to re-train, upskill, and re-deploy their teams into higher-level tasks within the organization.
What other ways are people, as 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 AI to help you sift through unstructured data as well.
What are tips for ensuring security with the AI tools?
Never share any kind of sensitive business information with these tools, and if you are in doubt, the paid versions usually have more safeguards in place for data protection. So, it may be safer to pay $20 a month for a subscription to a service that takes care and consideration of your data.
What does it mean to say you’ve integrated AI into your apps?
E-commerce platforms are building narrow AI functionality into the tool itself. Pretty much any tool you will use nowadays has some sort of AI powering them.
What are some of the bigger risks or unknowns we will potentially face with AI?
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 AI in charge of and ensuring reliable outputs. Ensure that you have a process to audit the results you receive.