Winning With AI

Pioneers Combine Strategy, Organizational Behavior, and Technology

by: Sam Ransbotham, Shervin Khodabandeh, Ronny Fehling, Burt LaFountain, and David Kiron


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.

About the Authors

Sam Ransbotham is a professor in the information systems department at the Carroll School of Business at Boston College, as well as guest editor for MIT Sloan Management Review’s Artificial Intelligence Big Ideas initiative. He can be reached on Twitter @ransbotham.

Shervin Khodabandeh is a senior partner and managing director at BCG, and the coleader of BCG GAMMA (BCG’s AI practice) in North America. He can be contacted at shervin@bcg.com.

Ronny Fehling is a partner and associate director at BCG and a core member of BCG GAMMA. He can be reached at fehling.ronny@bcg.com.

Burt LaFountain is a partner and managing director at BCG and a core member of BCG GAMMA. He can be reached at lafountain.burt@bcg.com.

David Kiron is the executive editor of MIT Sloan Management Review, which brings ideas from the world of thinkers to the executives and managers who use them.

Contributors

Sylvain Duranton, Carolyn Ann Geason, Philipp Gerbert, Julia Kirby, Annais Paetsch, Martin Reeves, Lauren Rosano, and Allison Ryder

Acknowledgments

Ranjeet Banerjee, worldwide president, medication management solutions, Becton, Dickinson and Company

Werner Boeing, CIO, Roche Diagnostics

John Carrier, former chief strategist, Akamai

David Cis, chief operating officer, Generali

Hervé Coureil, chief digital officer, Schneider Electric

Shivaji Dasgupta, managing director, Deutsche Bank

Sebastian DiGrande, EVP, strategy and chief customer officer, Gap Inc.

Steve Guise, CIO, Roche Pharmaceuticals

Ali Keshavarz, vice president, head of analytics, Aetna

JeongHee Kim, director, AIR Lab, Hyundai Motor Group

Michael May, head of technology field analytics and monitoring, Siemens AG

Arun Narayanan, chief data officer, Anglo American

Markus Noga, senior vice president, SAP Cloud Platform Business Services, SAP

Jeroen Tas, chief innovation and strategy officer, Royal Philips

Harald Winkmann, head of strategy and chief of staff, Business AI, Microsoft

To cite this report, please use: S. Ransbotham, S. Khodabandeh, R. Fehling, B. LaFountain, D. Kiron, “Winning With AI,” MIT Sloan Management Review and Boston Consulting Group, October 2019.

Collaborating Organizations

MIT Sloan Management Review

MIT Sloan Management Review leads the discourse among academic researchers, business executives, and other influential thought leaders about advances in management practice that are transforming how people lead and innovate. MIT SMR disseminates new management research and innovative ideas so that thoughtful executives can capitalize on the opportunities generated by rapid organizational, technological, and societal change.

Boston Consulting Group

Boston Consulting Group partners with leaders in business and society to tackle their most important challenges and capture their greatest opportunities. BCG was the pioneer in business strategy when it was founded in 1963. Today, we help clients with total transformation — inspiring complex change, enabling organizations to grow, building competitive advantage, and driving bottom-line impact.

To succeed, organizations must blend digital and human capabilities. Our diverse, global teams bring deep industry and functional expertise and a range of perspectives to spark change. BCG delivers solutions through leading-edge management consulting along with technology and design, corporate and digital ventures — and business purpose. We work in a uniquely collaborative model across the firm and throughout all levels of the client organization, generating results that allow our clients to thrive.

BCG Henderson Institute

The BCG Henderson Institute is Boston Consulting Group’s strategy think tank, dedicated to exploring and developing valuable new insights from business, technology, and science by embracing the powerful technology of ideas. The Institute engages leaders in provocative discussion and experimentation to expand the boundaries of business theory and practice and to translate innovative ideas from within and beyond business. For more ideas and inspiration from the Institute, please visit bcghendersoninstitute.com.

BCG Gamma

BCG GAMMA is BCG’s global team dedicated to applying artificial intelligence and advanced analytics to business at leading companies and organizations. The team includes 800-plus data scientists and engineers who apply AI and advanced analytics expertise (e.g., machine learning, deep learning, optimization, simulation, text and image analytics) to build solutions that transform business performance. BCG GAMMA’s approach builds value and competitive advantage at the intersection of data science, technology, people, business expertise, processes and ways of working. For more information, please visit our webpage.

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.