Winning With AI

Pioneers Combine Strategy, Organizational Behavior, and Technology

by: Sam Ransbotham, Shervin Khodabandeh, Ronny Fehling, Burt LaFountain, and David Kiron
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After several decades of progress, AI technology is now poised to become a significant source of value for a wide range of businesses. In the 2019 MIT Sloan Management Review and Boston Consulting Group (BCG) Artificial Intelligence Global Executive Study and Research Report, 9 out of 10 respondents agree that AI represents a business opportunity for their company.

In addition, a growing number of leaders view AI as not just an opportunity but also a strategic risk: “What if competitors, particularly unencumbered new entrants, figure out AI before we do?” In 2019, 45% perceived some risk from AI, up from an already substantial 37% in 2017. This shift suggests an increasing awareness of and concern with competitors’ use of AI. In China, perceived risk from AI is even higher.

Significant challenges remain, however. Many AI initiatives fail. Seven out of 10 companies surveyed report minimal or no impact from AI so far. Among the 90% of companies that have made some investment in AI, fewer than 2 out of 5 report business gains from AI in the past three years. This number improves to 3 out of 5 when we include companies that have made significant investments in AI. Even so, this means 40% of organizations making significant investments in AI do not report business gains from AI.

The crux is that while some companies have clearly figured out how to be successful, most companies have a hard time generating value with AI. As a result, many executives find themselves facing a set of AI realities: AI is a source of untapped opportunity, it is an existential risk, and it is difficult. Above all, it is an urgent issue to address. How can executives exploit the opportunities, manage the risks, and minimize the difficulties associated with AI? How should they navigate all three factors?

Our findings — based on a survey of more than 2,500 executives and 17 interviews with leading experts — provide a data-driven view of what organizations that succeed with AI are doing and what real success with AI looks like. Companies that capture value from their AI activities exhibit a distinct set of organizational behaviors.

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References

1. S. Ransbotham, D. Kiron, and P. Kirk Prentice, “Minding the Analytics Gap,” MIT Sloan Management Review, March 16, 2015.

2. S. Ransbotham, P. Gerbert, M. Reeves, et al., “Artificial Intelligence in Business Gets Real,” MIT Sloan Management Review and Boston Consulting Group, September 2018.

3. E. Wilder-James, “Breaking Down Data Silos,” Harvard Business Review, Dec. 5, 2016, https://hbr.org.

4. S. Ransbotham, “Don’t Let Artificial Intelligence Supercharge Bad Processes,” MIT Sloan Management Review, March 20, 2018, sloanreview.mit.edu.

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Comments (3)
Bohdan Koretskyi
That is really interesting how seeking for new AI opportunities actually ends with a higher business value than just optimising existing processes with AI. 
Another interesting and meaningful point is that organisations should go for smaller and short(mid) term projects which will be more valuable in terms of results and clear in terms of measuring outcomes.
Thanks
Allison Ryder
Hi Claire-Juliette,
 Thanks for your question. We looked at company size by headcount, not revenue, in some instances — mainly as it pertained to some of our questions about talent. We found, perhaps unsurprisingly, that larger organizations (over 100,000 employees) were more likely to be Pioneers...but we did see that the size of the organization didn't seem to impact hiring challenges. I hope this helps!
Claire-Juliette Beale
Did you get a breakdown by market segment and if so did you notice any difference? Thank you.