WILL THE NEXT MAJOR BUSINESSES CRISIS BE ABOUT AI?
The world has been through a series of crises over the past few years, including the COVID-19 pandemic and the energy crisis that only seemed to be iling up with all of the other transformation needs (Digital, Cyber security, ESG...). It seems that the frequency of unexpected crisis and transformation need is only accelerating. These crisis have highlighted the need for companies to faster adapt to changing circumstances and transform themselves to stay competitive and profitable. However, with the arrival of a “grand public” accessible Artificial Intelligence (AI) tool, the next crisis might very well be about AI as traditional transformation methodologies and tools might not be sufficient any more.
Accessible, user friendly AI is empowering humans for doing business, creating content and projects like never before in the history of mankind. But it also points out the importance of corporate digital maturity, or "digital readiness". This article explores the impact of the proliferation of "user friendly" inexpensive AI on companies need for transformation, and the urgency for a whole new paradigm on digital transformation and business transformation strategies as numerous types of human expertise is at stakes.
CONTINUOUS TRANSFORMATION IS THE NEW NORMAL :
The pace of change has accelerated in recent years, and it is now the new norm for companies, from SMEs to large businesses. It is fair to say that catching up on novelties and innovations is a permanent preoccupation.
The rise of an inexpensive and easy to use yet powerful AI (Google Bard, Chat GPT...) is not just another step… it might be the very turning point of digital disruption for so many businesses.
The COVID-19 pandemic has shown that companies that can adapt quickly to new situations have a far better chance of surviving. The pandemic has led to a shift towards digitization, remote working, and online services. The RSE, digital, cyber security, and other transformations are also adding to the pressure to change. Companies now need to find ways to absorb these changing demands continuously.
The COVID-19 pandemic has undoubtedly accelerated the pace of change for companies but is also combines with other transformation needs to create a whole new challenge altogether and the upcoming AI crisis might be as disruptive as the smartphone leap started in 2008 when Steve Jobs presented the iPhone to the world.
A survey conducted by McKinsey in 2020 found that the pandemic has accelerated the adoption of digital technologies by several years. The survey also found that companies that invest in digital transformation during the pandemic were more likely to see a positive impact on their bottom line.
This time, will it be sufficient ? The pressure for transformation is rising even further, taking everyone by storm and reinventing any jobs that relies on text content to perform. And that's only the beginning of it all.
The shift towards digitization has been significant, and so many governments and observers thought that this is it, the digitization is engaged... with e-commerce sales increasing by 27.6% in 2020 compared to 2019, according to eMarketer. The pandemic has also led to a surge in remote working, with 82% of companies planning to allow employees to work remotely at least part of the time even after the pandemic, according to a survey by PwC. Remote work has also become a requirement for many employees before joining a new job.
The pressure to change is not just limited to digitization and remote working. The rise of Environmental, Social, and Governance (ESG) investing has also added pressure on companies to transform their business practices to meet sustainability goals. In 2020, sustainable funds attracted record inflows of $152.3 billion, up from $45.7 billion in 2019, according to Morningstar.
The digital transformation wave is also adding pressure to cyber security. Cyberattacks have increased in frequency and sophistication in recent years, with ransomware attacks alone costing companies an estimated $20 billion in 2020, according to Cyber security Ventures.
But we can only imagine what may happen when AI capabilities are available for cyber attackers ?
The COVID-19 pandemic has accelerated the pace of change for companies, with digitization, remote working, and online services becoming the new norm. But then, cyber security becomes even more of an issue and increases the pressure for implementing a constant transformation process for any company.
Just in case this was not enough… The rise of ESG investing and the pressure to transform business practices sustainably are also adding to the demand for change. Companies need to find ways to absorb these changing demands continuously and invest in cyber security to avoid the risks associated with digital transformation while still keeping an eye on all other transformation needs.
STACKING TRANSFORMATION PROJECT CREATES SILOS
The stacking of transformations creates a new challenge for companies. The different transformations that companies need to implement can create silos of information within the organization.Consequently, the lack of visibility across the company can lead to difficulties in anticipating and adapting to new changes. It is essential to create a coordinated approach to transformation to avoid creating these silos.
The stacking of transformations within companies can indeed create dangerous silos of information that make it challenging to anticipate and adapt to new changes. A study by McKinsey found that only 16% of companies reported that their digital transformation efforts had successfully improved performance and equipped them to sustain changes.
The creation of these silos can be attributed to several factors, including a lack of communication and collaboration across departments, a lack of understanding of transformation goals and objectives, and poor change management practices.
To address these challenges, companies need to adopt a coordinated approach to transformation that involves all departments and stakeholders. This approach should be guided by a clear strategy that sets out the goals and objectives of the transformation initiative.
According to a research by Gartner, by 2022, 90% of corporate strategies will explicitly mention information as a critical enterprise asset and analytics as an essential competency. This highlights the importance of having a clear view of the organization's transformation projects data and the need to align it with the company's transformation goals.
And now ? What with the sudden impact of Chat GPT ? A whole new transformation plan and strategy might be absolutely necessary.
Shifting plans and predicting transformation impact is now a must.
Another critical aspect of a coordinated approach to transformation is having a strong change management plan in place. A study by Prosci found that organizations that have a structured approach to change management are six times more likely to meet or exceed their project objectives.
Companies need to take a coordinated approach to transformation to avoid creating silos of information that make it challenging to anticipate and adapt to new changes. This approach should involve all departments and stakeholders, be guided by a clear strategy, and have a strong change management plan in place. This will enable companies to better align their transformation goals with their data assets and improve their chances of success.
But how is it possible to keep avoiding creating silos when so many transformation projects are stacking up in addition of unforeseen crisis or tech sudden impacts ?
WHY WILL THE NEXT CRISIS BE ABOUT AI?
The arrival of AI as a grand public tool has created a new challenge for companies.
AI can offer significant advantages to companies that use it, but it can also create an even greater gap between those that use it and those that don't. The companies that cannot afford to invest time and effort in AI will struggle to compete with those that do without even understanding why is it exactly tht they are loosing market shares.
The widespread adoption of Artificial Intelligence (AI) has the potential to create a new crisis for companies. Wait… another crisis, now ? Why ? How ?
According to a study by Gartner, the number of enterprises implementing AI grew 270% in the past four years, and it is projected that the business value of AI will reach $3.9 trillion by 2022.
But what this study could not really foresee is the sudden rize of “grand public”, inexpensive and accessible AIs such as Open AI Chat GPT or Google Bard.
In the (not so distant) past, the implementation of AI would require a significant investment of time and resources, including skilled personnel, data, and infrastructure. Just weeks ago, the cost of implementing AI would be a significant barrier for smaller companies, creating a gap between those that can afford it and those that cannot.
This gap was not just limited to the initial investment but also extended to the ongoing costs of maintaining and updating AI systems.
A study by IDC found that the total cost of ownership (TCO) for AI systems can be as much as five times the initial implementation cost. That is something to think about for an entrepreneur.... or not ! Open AI' Chat GPT, Google Bard, and all the inevitably upcoming offers just made the case for a massive market shift.
Not to mention that the implementation of AI can also raise ethical concerns, such as algorithmic bias, job displacement, mass politic manipulations and privacy concerns. These issues can have a significant impact on a company's reputation and can lead to legal and regulatory challenges that we can only start to imagine.
However, despite the challenges, the benefits of AI adoption is known to be more than significant. According to a report by Accenture, AI could double economic growth rates in the world's major developed economies by 2035. AI can improve decision-making, automate repetitive tasks, and provide valuable insights to improve customer experience and so much more applications that users may invent.
THE IMMENSE VALUE OF DIGITAL READYNESS
In the world before Chat GPT and all the “Grand Public” accessible IA that will inevitably follow, we could imagine that AI would only make things better.
But is it really so ?
Now AI is 20$ away from any business and in fact it is 20$ away from anyone on the planet that has access to a computer and an internet connection. Bottom-line? Accessible AI is empowering humans for doing business and creating content and projects like never before in the history of mankind.
Undoubtedly, this is not only an industrial revolution, its runs much deeper : This is probably the new paradigm change in the digital transformation permanent race, but not only.
The widespread adoption of AI has the potential to create a new crisis for companies. The risk ? Increasing the gap between those that can afford to implement it because their have enough digital maturity to do so, and those that cannot because their digital maturity is still too low. The companies that are still lagging behind on their digital maturity might just never catch up.
Hello again Digital transformation unpredictability.. my old friend.
However, the benefits of AI adoption are significant and can drive economic growth. Companies need to carefully consider the investment required and ethical concerns associated with AI implementation. By doing so, they can gain a competitive advantage and prepare for the future.
The Takeaway ? Digital readiness, is an invaluable asset for any company.
Businesses need to get a constant grip on their Digital Readyness Scoring, Assessing it every now end then is really not enough anymore.
CORPORATE ORGANISATIONNAL DESIGN MUST IMPLEMENT "CONTINUOUS TRANSFORMATION".
The crisis of AI creates an urgency to transform digitally. Companies need to prepare for the arrival of widespread “Grand Public” AI and be ready to use it to stay competitive.
This might mean training employees in AI or hiring people with the necessary skills. However, companies should also remember that digital transformation is not just about AI. It is essential to keep the transformation aligned with the company's overall strategy.
The crisis of AI highlights the urgency for companies to transform digitally to stay competitive and is proving (again) that change is the new normal.
A study by MIT Sloan Management Review found that 90% of companies believe that digital transformation will disrupt their industry, and 70% believe that they have a digital transformation gap.
According to a report by IDC, global spending on digital transformation is projected to reach $2.3 trillion by 2023, with the highest spending in areas such as hardware and services, connectivity, and IT services.
However, this new wave of digital transformation is not just about implementing AI. It is essential to keep the transformation aligned with the company's overall strategy to avoid creating silos of information and ensure that the transformation has a positive impact on the company's bottom line.
A survey by Deloitte found that companies with a clear digital strategy were more likely to report higher revenue growth than those without one. The survey also found that companies that invest in digital technologies are more likely to have a positive impact on their bottom line.
Furthermore, digital transformation is not just about technology. It also involves changes in organizational culture, processes, and skills. A study by McKinsey found that companies that invest in building digital capabilities across the organization are more likely to have a successful digital transformation.
AI IS NOT JUST THE NEW TRANSFORMATION WAVE, IT'S A TSUNAMI
The AI crisis is driving companies to digitally transform quickly, which is critical to staying competitive in today's rapidly changing business landscape. Companies must align their digital transformation efforts with their overall strategy, invest in building digital capabilities, and ensure positive impacts on the bottom line. Taking a holistic approach is essential to avoiding information silos and ensuring effective transformation, requiring coordinated efforts across all departments and stakeholders.
Moreover, as the crisis of AI looms, companies need to be mindful of the investment required to implement AI and ensure that it is part of a broader digital transformation strategy. This requires a a rapid up skill for all employees or hiring people with the necessary skills to keep up with the changes brought by AI.
How employees will adapt to the AI crisis ? Will the ability of an employee or manager to leverage and use AI services soon become a required set of skills to find a job ? This publication on the impact of Chat GPT 4 sums it all : "80% of the U.S. workforce could have at least 10% of their work tasks affected by the introduction of GPTs, while around 19% of workers may see at least 50% of their tasks impacted."
Not to be taken lightly !
To tackle the challenges of those multiple, piling up transformations, companies must establish a strong management system prioritizing collaboration, so that alignment with strategy, and change management plans that can pivot easily. New digital tools and platforms are needed to support transformation managers and consultants.
Collaboration in transformation project in 2023 also means involving partners, client and even subsidiaries in the process if one wants it to be successful.
In conclusion, companies must instill a culture of continuous transformation and establish a robust predictive transformation management system to find efficient ways to measure impact over important KPIs for each and every ongoing transformation plans.
By doing so, they can transform successfully and reap the rewards of multiple transformations, from digital transformation to ESG or AI… while avoiding the pitfalls of creating silos of information and overlooking the broader picture just because a new transformation crises just took place. It is essential to keep the transformation aligned with the company's overall strategy.
The pressure on transformation mangers and consultants and the expectations of companies on the transformation projects performances may only rise even further in 2023.
A whole new way of managing transformation is more than ever needed, and a new set of new digital tools, platforms and transformation management softwares must arise to fulfill the urgent need for a transformation managing digital tool with predictive capabilities and impact monitoring features to help transformation managers and consultants to face this unprecedented challenge.
Michael Aim
CEO and Founder of Datamensio
About the Autor :
I am the CEO and Founder of Datamensio, the first software 100% designed for transformation consultants and manager.
