Put bluntly, AI is changing the world at an unprecedented rate and it is causing us to re-visit our traditional and perhaps outdated means of how we create and capture value.
Unless you have been living under a rock for the last 10 years, I would wager that you are all too familiar with the Silicon Valley mantra of ‘move quickly and break things.’
While this legacy Facebook value does well to summarise the ‘need for speed’ culture that now characterises the technology industry, I would caution that, as more ‘traditional’ organisations attempt to become more Digital and adopt the associated culture and technology, we need to take a step back and consider the potential damage this philosophy can have on our organisations.
It is important for us to re-frame this mantra in light of the current climate of progress. Artificial Intelligence (AI) is disproportionately changing the competitive landscape in favour of the early adopters, as we now enter the race for AI. Consider the following; the Global AI market is expected to grow by 121% from £27.7 Bn in 2019 to £61.2 Bn in 2022 and the number of jobs requiring AI capabilities has increased by 450% since 2013. Machines and algorithms are expected to create 133 million new roles by 2022 and it is estimated that in 2021 AI augmentation will generate $2.9 Tn in business value and recover 6.2 Bn hours of worker productivity. Put bluntly, AI is changing the world at an unprecedented rate and it is causing us to re-visit our traditional and perhaps outdated means of how we create and capture value.
So what? And what does this mean for AI and our esteemed Silicon Valley mantra?
It is clear that the world is changing, rapidly, and in ways that we could not have predicted, and amongst this change there are clear threats and opportunities for all organisations. As we add the ‘need for speed’ tech culture to this melting pot of change I would argue that organisations have become so consumed with the ability of being able to do things quickly, just because they can, that they have lost sight of whatthey should be doing quickly. This is particularly true in the AI space where solutions are predominantly developed in a tech-led fashion to explore what’s possible, instead of being grounded in clear theories about how AI can unlock organisational value.
I further posit that, having the ability to do things quickly in a fast-changing world of opportunity, many firms are increasingly experiencing anxiety about not moving quickly enough that they are frequently succumbing to ‘choice paralysis’. The sheer number of AI tech vendors is so overwhelming that firms are concerned about making the wrong choice in vendor selection. Typically we see ‘choice paralysis’ playing out in three ways:
- Do nothing: organisations assuming a state of anxiety inertia as their products, services and technology stagnate paving the way to a slow death;
- Do everything: firms support large, expensive and uncoordinated innovation portfolios that are not connected to strategic objectives and deliver little return to the business in the form of monetary value or learning;
- Accelerate current path: organisations blinkered by the ability to move quickly continue to disproportionately invest in sustaining their current technology because customers will always want better, faster and more feature rich products / services… right?
It is obvious to see the pitfalls of the first two scenarios above, but to understand the misconception of the third I will refer to Clayton Christensen’s famed book ‘Innovator’s Dilemma’. In his work Christensen examines how many top flight organisations fail due to overinvesting in incremental improvements in current technology resulting in the development of rich products that overshoot demand. This blinkered investment in accelerating current technology development trajectories creates a gap for disruptive technologies, such as AI, to enter and create new markets as well as unhinge existing markets. Put simply, if you focus too much on getting better at what you are currently doing and solely follow your current customer, you will miss opportunities to extend your capabilities to serve new customers with different and emerging needs using the best in breed technologies available.
So where do we go from here?
Some advice from Edward Osborne Wilson, an American entomologist and biologist, seems particularly pertinent at this point:
“We are drowning in information, while starving for wisdom. The world henceforth will be run by synthesizers, people able to put together the right information at the right time, think critically about it, and make important choices wisely.”
As a scientist and strategist, I have a natural affinity for these words, and what it means to me is that, during our endless pursuit of progress and our obsession with speed, we have somehow lost the importance of building in time to think about answering the ‘where to play?’ and ‘how to win?’ choices. What this really boils down to is bringing strategy back into the frame in order to clearly identify the core strategic anchors that act to direct organisational progress and development. This prevents organisations from investing in AI technologies until they’ve taken a step back to holistically review where it can drive real and long term value for the organisation.
Defining your strategic anchors
Over the years we have worked with clients across multiple sectors including Financial Services, Oil & Gas, Aviation and Retail to help them redefine their strategic direction and build a framework that allows them to apply their ability to move at pace in a coordinated and constructive manner. We’ve spent the last 5 years doing this in the AI Space.
Across this broad range of experience we have identified the following key components of success:
Fight to be unique: firms need to be able to meet their customer needs in a way that is different to competitors in the market – if not you are reduced to competing on operational excellence where the odds are typically in favour of firms that have budget, size and scale. From an AI perspective it is important for organisations to assess the impact that AI will have on their brand and whether it is likely to drive customer loyalty or breed mistrust;
Dig deeper than tasks: seek to build a deep understanding of your customer that extends beyond functional activities and includes social and emotional motives that underpin jobs to be done. Adopting Design Thinking practices can help you to build a thorough and diverse understanding of your audience and remain close to their raw needs, and Machine Learning uncovers patterns and insights in customer data that may have previously remained hidden;
Understand the competitive landscape: be clear on what your competitors offer and what substitute products / services exist that may threaten to diminish demand for your product / service. Understand how this landscape may evolve as a result of changes to societal, technology, economic, demographic and regulatory requirements. When it comes to AI technologies, in order to maintain flexibility and the ability to adapt as the market changes we recommend adopting a vendor agnostic AI framework that allows you to take advantage of the best in breed AI technology over time in order to avoid investing in a solution that requires vendor lock-in;
Don’t go alone: no organisation is an island so seek to strike strategic partnerships to bolster your access to capacity, capability, culture, technology and data, including looking for partners who will upskill your teams on AI to drive long term value;
Be clear on your value mechanics: build a meticulous understand of how and where your firm creates value as well as how you destroy it. This picture will help to identify what investment or changes in AI can have the greatest impact and help you to resist the allure of glamour projects.
Why us and why now: clearly outline what your ‘right to win’ is. What we mean by this is what qualifies you, over others, to address the customers need or occupy a market niche. This should be paired with the important question of what makes now the right time to pursue this direction which can be substantiated by shifts in customer behaviour, technology capability, competition, market economics, or regulation.
Have a clear narrative: the Native American proverb “those who tell stories rule the world” highlights the importance of building a strong narrative and I firmly believe in this for two reasons; 1) stories help you to build empathy and relationships, and 2) if people can empathise with you they are more likely to care.These two points together will enable you to engage your customer in a more meaningful way while also garnering buy-in within the organisation. Understanding the narrative behind a change is crucial to overcome to mistrust that sometimes arises with users when it comes to AI solutions, so it’s critical that you can clearly articulate the why.
So what’s the bottom line?
The underlying message I want to communicate is this; slow down. Yes, AI native organisations are drastically changing consumer expectations, yes, your competitors are probably experimenting with AI, and yes, it is about time you started your play in the AI race. But victors in the fast-paced and dynamic world of AI will be defined as those that seek clarity about howAI can be applied to address the customer’s raw, unmet needs in a unique and sustainable way.