Do you remember, a few years ago, when all the talk was about us increasingly living in the virtual world? Where mixed reality living, powered by technology such as virtual reality (VR), was going to define how people lived, worked and played? So much so that fashion houses started selling in the virtual world. Estate agents started selling property in the virtual world and virtual conference centres were built so you could attend business events and network from the comfort of your office swivel chair. Futurists were predicting we were going to be living semi-Matrix-style in the near future.
Has it turned out like that? No… or certainly not yet anyway.
VR is just one example of how business is uniquely adept at propagating hype, particularly when it comes to emerging technologies. And you can probably guess where I am heading with this argument… AI.
The AI overhype cycle
Since ChatGPT exploded into the public consciousness in 2022, I have spoken to scores of business leaders who feel like they need to jump on the AI bandwagon. It’s reflected by the last quarterly results announcements by the S&P 500, with over 40% of companies mentioning AI.
They are understandably caught in the hype and buzz AI has created, and often think their businesses need to integrate this technology or face being left behind. This is reinforced by a recent BSI survey of over 900 leaders which found 76% believe they will be at a competitive disadvantage unless they invest in AI.
But is that true? The answer may be more nuanced than a simple yes or no.
To be clear, I am not saying the development of AI is anything but seismic. It is recognised by many leading academics as a general purpose technology (GTP). That is to say, it will be a game changer for humanity.
However, at an enterprise level, AI has been overhyped in many quarters, creating a disconnect between reality and expectations.
Too much money for too little return
This overhype is leading to two outcomes.
First, leaders feel pressured to be seen using it and heard talking about it. So they dabble with it, often without being certain how it will benefit their business, and how to effectively measure those benefits.
Second, the lack of a proper strategy and metrics is leading to time and resources being wasted. Just 44% of businesses globally have an AI strategy, according to the BSI survey.
And importantly, if a user has a bad initial experience with a technology, it will often lead to mistrust and plummeting confidence in its future potential. This means it will take even more resources at a future date to effectively leverage the same technology.
Recent media reporting has provided cases in point. There was the story of a chief marketing officer who abandoned one of Google’s AI tools because they disrupted the company’s advertising strategy so much, while another tool performed no better than a human. Then there was the tale of a chief information officer who dropped Microsoft’s Copilot tool after it created “middle school presentations”.
This disconnect is nothing new. As a consultant, what I often see is a detachment between a company’s business goals and how their technology is set up and operated. Or as in this case, a delta between expectations and delivery capability.
“Keep it simple” and focus on the business basics
So amid all this noise around AI, my advice to clients is simple: keep in mind it is just another tool, and that the fundamentals of business haven’t changed.
You still need to provide a product or service that someone else wants to buy at a price point that is higher than what it costs to manufacture.
You still need to make a profit.
AI as a business tool may change the process by which we create and deliver value, but those business fundamentals haven’t changed and never will.
So if we recognise AI is just a tool, albeit one with the potential to accelerate the transformation of enterprises, what can leaders do to avoid landing in the gap between the hype and reality? Here are six suggestions:
1. Education
Invest in learning about the technology, its capabilities, the pros and cons, its roadmap and what dependencies AI has for it to be successful. Share this knowledge across the enterprise, so you start to take everyone on a collective journey
2. Build ethical AI policies and governance framework
Ethical AI policy is more than just guardrails to protect your business. It is also the north star that gives your employees, clients, partners, suppliers and investors confidence in what you will do with AI
3. Adopt a strategic approach
Focus on identifying key business problems where AI can be part of the solution. Put in place the appropriate metrics. This will help to prioritise investment and resource allocation
4. Develop your data strategy
AI success is intrinsically linked to data, so build your data strategy. Focus on building a solid data infrastructure and ensuring the quality of your data. This will lay the groundwork for successful AI implementation
5. Foster collaboration
Consider collaborating with external partners, such as vendors or even universities and research institutions. This collective solving of problems will help provide deep insights into the latest AI developments and best practices
6. Communicate
Given the pace of business evolution nowadays, for most enterprises change management has become a core operational competency. So start your communication and change management early with AI. With its high public profile and fears persisting about AI replacing workers, you want to fill the knowledge gap in your team members so they understand how AI will be used to empower, not replace them. Taking employees on this journey will massively help the chances of success of future AI programmes.
Overall, unless leaders know how to integrate AI in a way that provides business benefits, they are just throwing mud at a wall and hoping some will stick… and all the while the cost base is rapidly increasing as a result of adopting this hugely expensive technology.
So to answer the big question, will a business be at a competitive disadvantage if it doesn’t invest in AI?
Typically, yes it will. But invest in a plan focused on how AI can help achieve longer-term business goals. Its capabilities will continue to emerge and evolve over the coming years, so building the right foundations will help effectively leverage AI both today and tomorrow.
And ultimately remember that like all technology, AI is just one tool in the business kitbag.
Nigel O’Neill is founder and CEO of Tarralugo.
- Data & AI
