An ‘imagination gap’ may determine who wins and loses when it comes to implementing AI. Here’s what CEOs can do to succeed.
The post Embracing AI: A Guide for CEOs to Lead the Digital Charge appeared first on ChiefExecutive.net.
Generative AI like ChatGPT and Bard may be getting a lot of the hype, and they do hold promise for a wide range of business uses. But AI’s roots in business run deep, and older, “traditional” AI that analyzes data, automates tasks and optimizes workflow is already here, widely deployed, and having a measurable impact on performance, according to the 2023 L.E.K. Consulting Digital/AI Survey.
“While many are focused on where AI is headed next, there are countless—and well-proven—use cases that CEOs can be imploring their teams to pursue now,” says Chuck Reynolds, managing director and partner in L.E.K. Consulting’s digital practice. In fact, most “likely have deployed AI and may not realize it,” he adds. “A lot of the adoption is in the meat and potatoes of AI, applications that have been around for decades.” Indeed, executives report AI has been deployed across a range of functions, including supply chain visibility (65%), planning, procurement and execution (64%) and enterprise-wide process automation in non-manufacturing settings (64%). “All the fundamentals in AI—that’s where there’s a triedand-true approach to deploying and adopting it to drive real results,” says Reynolds.
Those results include considerable improvements in specific KPIs. Asked to rate the performance impact of their AI investment by KPI relative to their KPI targets, survey respondents cited reduced customer acquisition cost (23.3%), increased lifetime customer value (13.6%), and customer count (10.7%).
Interestingly, the survey results found an AI “imagination gap” between “digital progressives” that report they have been successful with enterprise digital transformation versus “digital mainstream” companies that report they have been more conservative and/or less successful. 74 percent of the former group expect that AI will have a high impact on their business processes compared with only 25 percent of the latter group.
“There is the possibility that an AI imagination gap will set more aggressive, more optimistic companies apart from the mainstream and will help determine AI winners and losers,” says L.E.K. Consulting Digital practice Managing Director and Partner Darren Perry. One characteristic of the more aggressive set is a willingness to look outside one’s immediate peer group for inspiration, use cases and opportunities to find value with digital.
Digital progressives also are more likely to apply more rules, governance and structure around AI projects, which provides focus and prevents AI failures from significantly hindering progress. That allows firms to move more quickly, says Perry. “The governance helps to focus failures on AI not meeting business objectives versus AI going off the rails and leading to bad outcomes. The latter of those two actually hinders progress much more severely than missing financial objectives. Failing fast is one thing—failing big is something entirely different.”
CEOs looking to make the leap from mainstream to progressive on AI should:
1. Be thoughtful around the talent that AI will require. It’s not that every company needs engineers or data scientists, says Reynolds. “It’s more that the entire workforce will need to elevate its digital and AI fluency into how to integrate AI into its operations seamlessly to really drive that enhanced productivity that’s forthcoming.”
2. Implement governance to focus AI’s impact. That’s not to restrict its use or stifle innovation, says Reynolds, “but to focus its impact and make sure it’s being innovated in the right way, against the right problems and the right risk for business operations and brand.”
3. Get your data in order. The strength and effectiveness of AI applications will depend on the ability to deploy against both structured and unstructured data in a meaningful way.
4. Seek AI inspiration outside your industry. “Those who are in manufacturing, for instance, who are willing to entertain the idea of looking at an Amazon or Netflix for inspiration in certain pockets of their business,” says Perry. “It may sound far-fetched, but that’s an important exercise to go through.”
5. Start small. There are embedded AI solutions in many of the tools that we’re using today, says Perry. “And with the advent of ChatGPT and others, there are consumer-grade solutions that can have a role for internal functions, knowledge workers, etc., that can move forward with some speed.” One critical takeaway from the study is that this isn’t solely the CIO’s domain. “This is a CEO’s job to manage and execute,” says Reynolds. “It takes functional knowledge and depth of true business issues. It’s going to take more than a ‘build it and they will come’ mentality around getting the benefits and the ROI that you expect.”
The post Embracing AI: A Guide for CEOs to Lead the Digital Charge appeared first on ChiefExecutive.net.