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Despite all the buzz, most companies have yet to scratch the surface of artificial intelligence’s promise, a recent McKinsey & Co. study found. Employees have been experimenting, but their companies lag behind in finding ways to expand that activity into an organizational strategy to gain value from generative AI.
“Organizational maturity with gen AI is strikingly low,” the trio of consultants reporting on the survey – Charlotte Relyea, Dana Maor, and Sandra Durth – note. Businesses must transform their processes, structures and approach to talent to take advantage of the new technology’s true value.
Paul Griggs, the head at PwC’s American consulting force, outlines a two-part strategy. The first is to simply give workers AI to do their jobs, which will offer incremental benefits. At the same time, the second part, requires a metaphoric clean sheet of paper to completely reimagine, from back to front, the way you drive your business forward. As an example, PwC has pulled partners out of their regular work in certain areas of the business and told them for the next 12 to 24 months their job is to remap the business in its entirety. How can they deliver in a completely different way, using the available technology and what follows it?
To get organizational benefits requires research and development into AI use since it’s so new and there is not a lot of experience to draw on, internally or externally. Ethan Mollick, a professor of entrepreneurship and innovation at the Wharton School, points out on his blog that for decades companies have outsourced their organizational innovation to consultants or enterprise software vendors who develop generalized approaches based on what they see across many organizations.
“That won’t work here, at least for a while. Nobody has special information about how to best use AI at your company, or a playbook for how to integrate it into your organization. Even the major AI companies release models without knowing how they can best be used, discovering use cases as they are shared on Twitter (fine, X). They especially don’t know your industry, organization or context. We are all figuring this out together. If you want to gain an advantage, you are going to have to figure it out faster,” he writes.
Part of the research will include whether to use readily available generative AI models or build your own. It appears from McKinsey’s research that companies are roughly split down the middle on those options. Senior partner Lareina Yee recommends another option, partnering: “It is hard to build all of this on your own. It is also not feasible to buy all of this on your own ... We’re seeing a lot of companies build a constellation of partnerships in order to deliver the promise of gen AI solutions.”
Babson College professor Thomas Davenport and John Sviokla, co-founder of GAI Insights, highlight rigorous experimentation. “The only reliable way to determine the level of value is to design a controlled experiment in which some people are using gen AI tools and some people are not, and their productivity or effectiveness is measured and compared,” the duo write in Harvard Business Review.
They urge companies to fund responsible rebels who are longing to make things better by breaking the status quo. Many organizations are over-focused on standardization, but need to fund those who can create new pathways without causing chaos. One way is to have a small innovation fund with a fixed amount of funding; project teams present to a senior group of operating executives to obtain money. One of the review panel members must serve afterward as a sponsor, to ensure political commitment to the idea. In reviewing projects, they recommend thinking through how it relates to the identity and key goals of the organization.
Organizations will also have to give priority to the right unit of transformation, which will mean focusing on specific domains, such as product development, marketing or customer service.
For example, the McKinsey trio explain, in software development, generative AI can revolutionize work by delivering higher-quality, resilient products much faster – days instead of months. In marketing, it could finally enable true personalization for a large number of people.
“Gen AI is also set to revolutionize cross-cutting domains, such as performance management and team management. For the latter, gen AI can put coaching prompts at managers’ fingertips and make it easier to access employee resources. This can meaningfully shift the time managers spend on certain tasks: Less on administrative to-dos, more on checking in with team members and developing soft skills,” they write.
They stress that the technology’s potential to accelerate automation and transform operating models will significantly affect the roles and skills your organization needs. You must keep people at the centre of your thinking and organization, however. That requires you to understand your talent and skill needs, adopt various strategies to close skill gaps, and invest in upskilling and reskilling.
They argue with employees already asking their organizations for more, no matter where your organization is on its gen AI journey, the time for making transformational change is now.
Cannonballs
- New Zealand executive coach Suzi McAlpine recommends asking new staff members: “How do you like to receive feedback?” Three other handy questions: “What does success look like for you in one, three and six months?” “Where do you feel more confident and less confident in your role?” “What frustrates you are work, and conversely, what lights your fire?”
- Purpose statements are increasingly popular these days but don’t get carried away with hype, warns former AT&T Business CEO Anne Chow: “While your statements should be aspirational and ambitious, you also want them to be attainable and actionable. Credibility is key. Oftentimes companies choose words that feel too lofty, abstract, broad or buzzy, and the effect is like an astrological horoscope that is generically applicable but says nothing.”
- Former Rotman dean of Management Roger Martin says the permissive or authoritarian styles we may be applying in parenting are extremely dangerous when carried into the workplace. A permissive style is an abdication of management. An authoritarian management style infantilizes staff members reporting to the leaders. Instead, apply the authoritative approach, which combines high responsiveness with high demandingness, and can lead to effective two-way communication.
Harvey Schachter is a Kingston-based writer specializing in management issues. He, along with Sheelagh Whittaker, former CEO of both EDS Canada and Cancom, are the authors of When Harvey Didn’t Meet Sheelagh: Emails on Leadership.