A new study by Boston Consulting Group and MIT Sloan Management Review reveals growing concern among executives about the risks of AI. It also highlights the five organisational behaviours that companies that are successfully harnessing the value of AI have in common.
After several decades of progress, artificial intelligence is poised to become a major source of value for many companies but, according to a new report from MIT Sloan Management Review (MIT SMR), BCG GAMMA y BCG Henderson Institute by the Boston Consulting Group, companies are not yet aware of its potential. The report reveals that while executives see AI as a key business opportunity, many are increasingly concerned about the strategic risks associated with AI.
Titled Winning With AI: Pioneers Combine Strategy, Organizational Behavior, and TechnologyThe report is based on a survey of more than 2,500 managers and 17 interviews with leaders and experts. The data reveals that:
- Nine out of ten executives agree that AI represents a business opportunity for their company.
- At the moment, seven out of ten companies report minimal or no impact from AI. 90% have made at least one AI-related investment, but fewer than 40% claim to have achieved AI-related revenue in the last three years.
- In 2019, 45% perceived some AI-related risk, up from 37% in 2017.
"The report confirms that artificial intelligence is a relevant topic for leaders across all industries. However, while some companies have already made significant progress, most are still struggling to create value from artificial intelligence," notes Sam Ransbotham, one of the report's authors. "How can corporate leaders seize the opportunities, manage the risks and minimise the pitfalls associated with AI? These are increasingly important questions that companies need to answer to advance the value creation associated with AI.
The report reveals that companies that are successfully creating value through their AI initiatives today share five common behaviours:
- Integrate their AI initiatives with business strategy. 88% of respondents who allude to the value of AI in their business strategies integrate their AI initiatives with their digital strategy.
- They unify their AI initiatives with their transformation strategies. In order to generate business value through AI, managers must be able to draw data from different departments and initiatives and integrate it into working groups by establishing cross-functional collaboration.
- They take big risks, prioritising revenue growth over cost reduction. Respondents who highlight only cost reductions as a result of AI initiatives are less optimistic about the potential for further savings from AI than those who have seen revenue growth. Only 44% of those who have achieved cost reductions expect the same results over the next five years, while 72% of those who have increased revenue expect that success to continue over the same period.
- They align the development of AI with its use. Beyond the tools, systems or processes to implement artificial intelligence, these companies ensure that employees use solutions that employ AI, can measure the results and are aware of the value generated.
- They avoid the "technology trap". Companies that perceive value gains from AI initiatives recognise that it is not just a technology opportunity, but also a strategic initiative that requires investments related to talent attraction and retention, new ways of working and change management. Companies with AI initiatives overseen by the CIO, whose team typically manages technology initiatives, are almost 50% less likely to see the value that AI can bring.
"As business leaders develop an AI strategy, talent is a complex problem with no easy answer. The skills that the workforce of the future will require will differ markedly from those of today, not only for the relatively small number of workers developing AI solutions, but even more importantly for the much larger number of workers who will be using AI solutions directly or indirectly," says report co-author Sam Ransbotham.
The report's findings on talent development reveal that 65% of respondents derive business-related value from the use of AI when they use a multi-pronged approach: build internal teams and rely less on external vendors; selectively import talent with AI expertise for technical leadership roles; and train their current employees in skills related to understanding and managing artificial intelligence (upskilling).
In Spain, Llorenç Mitjavila partner responsible for BCG Gamma in Iberia, believes that there is a virtuous circle for the development of AI. "Access to talent, the consolidation of Spain as a technology and innovation hub, and eminently positive media coverage, contribute to a widespread enthusiasm for Artificial Intelligence. Many large Spanish companies are investing in AI solutions, and we have a vibrant ecosystem of start-ups based on these technologies that is attracting significant investment.
"AI is a major strategic opportunity, which carries strategic risks if companies do not act carefully. There is already a gap between winners and losers, and this gap will widen in the coming years. To realise value, technology and algorithms are not enough. Companies must integrate AI into their corporate strategy and processes. This is often much more difficult than the technology itself, and doing so successfully requires new ways of working that are different from the approach required to derive value from technology initiatives," concludes Shervin Khodabandeh, another of the report's authors.
Winning With AI: Pioneers Combine Strategy, Organizational Behavior, and Technology: Link