Ten unsung digital and AI ideas shaping business

Weekly Business Insights from Top Ten Business Magazines | Week 331

Extractive summaries and key takeaways from the articles curated from TOP TEN BUSINESS MAGAZINES to promote informed business decision-making | Since September 2017 | Week 331 | January  12-18, 2024

Shaping Section | 2

Ten unsung digital and AI ideas shaping business

By Kate Smaje and Rodney Zemmel | McKinsey & Company | January 9, 2024

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If you wanted to boil down 2023 to one concept, it would have to be generative AI (gen AI). Few of us can remember a technology that has swept through the business community with such speed and impact. Hardly a day passes without a new development hitting the headlines. While still blanketed with caveats and unknowns, gen AI stands to have a profound impact on how we live and work.  But the very excitement around gen AI is in danger of distracting business leaders from some other core business imperatives and the importance of rewiring their companies. For this reason, the authors helped us to take a quick look at ten underlying ideas that might not be dominating the headlines but are shaping the modern business landscape.

1. Builders are eating the world.  The cost of building new digital products and services will continue to come down while the tools available will be easier to use, opening the door to many more citizen builders and making the build process faster and cheaper. Focus on the two most important elements of being a builder: one, build something that matters: a new product, solution, or business that creates a competitive advantage; and two, architect a team with the right incentives, tools, and governance to build products or services.
2. Innovators dominate headlines, but scalers dominate markets.  Getting the full potential value from technology requires companies to be able to scale it.  Achieving scale comes not just from building the range of supporting capabilities but also from focusing on the specific processes and mechanisms that enable scale from the beginning of any venture, whether that’s harnessing a technology or launching a new business. 
3. Leaders master the digital ‘More law’ of compounding value.  A set of leading companies haven’t just figured out how to harness digital and AI to generate value but also how to do it faster and increase the distance between themselves and other players. This is happening because digital and AI, implemented well, compound competitive advantages.
4. Digital and AI leaders must be forever transformers.  As long as tech continues to evolve, your business will need to evolve. That’s why it’s important to think of digital and AI transformation as something you’re going to be doing for the rest of your career rather than as a final destination.
5. If knowledge is power, data is knowledge.  How well companies embrace their knowledge dividend will come down to how well they harness their data. It’s fair to say that no company can have an AI or business strategy without having a data strategy. That’s because without good, clean data that is easily (and responsibly) accessible across the business, it will be impossible to generate business, operational, and AI value.
6. A workforce with gen AI ‘superpowers’ needs a human breakthrough.  Tech breakthroughs have increased productivity and created both different and more work for humans. For this reason, companies need to shift their focus to human breakthroughs in learning, reskilling, upskilling, and career management to enable their workforce to best take advantage of gen AI and other technologies.
7. Every company will become a ‘neural business’.  Speed and innovation will come from small teams led by engineers with sufficient autonomy and clear guidelines for decision making. Most of us will recognize this as a description of agile. While many might be tired of this overused term, its importance is core to a business’s ability to scale innovation. As the boundaries of agile expand across an organization, it will need to function like a neural network connecting small teams at its edges to enable the speed companies need to grow and adapt.
8. IT as a service is the next generation of your tech function.  To enable an atomized business, companies need their technology team to operate more as a service function. Distributed digital innovation is the end state of a rewired company in which tech teams can develop digital and AI solutions to improve customer experience and lower unit costs. The value will now come from IT’s ability to enable innovation by shifting from the protection of big tech assets to purveying small blocks of code. APIs will be the primary way companies expose their digital capabilities. They will be integrated into “superapps” stitched together with gen AI–type code generators for better user functionality.
9. The name of the game is the same: Value.  This might sound like business 101, but it’s surprising how often companies lose sight of it: the point of digital, AI, and tech isn’t getting better at digital, AI and tech; it’s building value. A big reason for falling short of financial targets in a digital and AI transformation is too often companies shoot for marginal gains that constrains thinking and small thinking leads to small results.
10. The best companies will be the best testers.  If you believe that change is only going to continue to accelerate—and we can all probably imagine the hundreds of entrepreneurs cooking up new businesses in their garages right now—adaptability will become one of the most important attributes of a modern company. That means being able to test more, test cheaper, and test faster. The capabilities to do so are here and growing.  These developments will change strategy (you can quickly test market demand for a solution), operations (you can test operating models and settings), and design (you can quickly build and iterate on millions of versions of a solution before building it).

2 key takeaways from the article

1. If you wanted to boil down 2023 to one concept, it would have to be generative AI (gen AI). Few of us can remember a technology that has swept through the business community with such speed and impact. 
2. The very excitement around gen AI is in danger of distracting business leaders from some other core business imperatives and the importance of rewiring their companies. Ten underlying ideas that might not be dominating the headlines but are shaping the modern business landscape are: builders are eating the world; innovators dominate headlines, but scalers dominate markets; leaders master the digital ‘More law’ of compounding value; digital and AI leaders must be forever transformers; if knowledge is power, data is knowledge; a workforce with gen AI ‘superpowers’ needs a human breakthrough; every company will become a ‘neural business’; IT as a service is the next generation of your tech function; the name of the game is the same: Value; and the best companies will be the best testers.

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Topics:  Technology, Transformation, Strategy, Business Model