What’s needed for successful use of GenAI
By 2026, over 80% of organizations will have used generative artificial intelligence, up from less than 5% in 2023, but only 16% will do it successfully. This prediction comes at a time when markets are discussing when there will be a return on years of heavy investment in AI.
Business leaders need to focus on using GenAI to address real problems rather than on adopting this new technology just for the sake of adoption, write Kalin Anev Janse, Chief Financial Officer of European Stability Mechanism (ESM) and José Parra-Moyano, Professor of Digital Strategy at IMD Business School, in a blog post for the World Economic Forum.
Successful implementation of GenAI hinges on three main factors: the financial value it can bring to the organization, the availability of relevant data to train the AI models and the impact on the workforce, they argue.
“Even if pursuing GenAI does not result in the intended objective, it may garner useful learnings for the organization that will foster later successes. However, addressing the questions around financial value, key data and people enablers can contribute to a more straightforward path to the successful adoption of this new technology.”
“Currently most AI initiatives do not succeed, with some projections suggesting a failure rate up to 80%. Moreover, even more GenAI applications are likely to fail, given the tech’s novelty and the lack of experience using it since its inception.”
“Trusting these figures, we could extrapolate that by 2026, about 20% of organizations will not have used any GenAI, about 64% will have used it and failed and just 16% of them will have used it and succeeded.”
The authors write that the question about value is deceptively simple: “Which financial value does our organization aim to generate with this GenAI product or service?”
This is deceptively simple because it is easy to launch initiatives to use GenAI for the sake of using it without assessing the financial value this aims to create, the authors argue.
“The first step for C-suite leaders is to identify their organization’s real problems, asses the financial value that solving that problem would bring to the organization and then search for potential solutions to that problem.”
“Business leaders should determine if they have the necessary data for deploying GenAI models. If not, they need to plan for data acquisition while understanding that progress without it may not be successful.”
“Without entering into a discussion about revenue augmentation versus cost reduction or what the “right” thing to do is, business leaders must decide whether they want to do what they are doing with fewer resources and thus substitute some of their people with the GenAI system or to do more of what they are doing with the same resources, enhancing the people resources that they have.”
“Unsurprisingly, organizations going down the road of substitution will face internal opposition, something that could backfire and compromise the otherwise successful adoption of a GenAI solution.”
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