Why Generative AI Pilots Fail

Generative AI is a powerful tool, but our ability to get significant value from it continues to be stymied. No killer apps have emerged. Enterprises have done countless pilots, yet very few get into production. Our research says somewhere between 70 and 90% fail. That’s a horrendous failure rate.

Why the Generative AI Pilots Fail

Generative AI is indeed a useful tool. The pilots fail at an astronomical rate because enterprises are not putting the tools to work properly. They don’t assign tasks with a meaningful and significant ROI.

Stop Searching for the Killer App

There is no big diamond in the ring. When there is one, it doesn’t seem justifiable given the enormous effort required to redo the digital core.

Where Generative AI HAS Made a Difference

The pilots that did go into production actually had compelling results. Studying these pilots demonstrates what it takes to get a disruptive and significant return from generative AI, the shorter commute.

Infusing AI into Business Processes

For example, generative AI has been successful in the audit function. Radically improving the audit process did not involve a killer app. Instead, the auditors reframed the problem. You get an investable process when you reframe the problem into: How do I infuse the tech stack with AI?

The Successful Generative AI Pilots

These companies purchased access to a CMM. They had to rearchitect their cloud systems so they produced more reliable data. This included moving their legacy mainframe systems into the cloud. They had to retire technical debt and close the white spaces between their different technology solutions so that the rest could work seamlessly.

The Three Towers of Work

The successful generative AI pilots received significant investment across three distinct towers.

• Technology. These companies purchased access to a CMM. They had to rearchitect their cloud systems so they produced more reliable data.
• Data. Their tech stack needed to get better and more reliable. This required data cleansing.
• Business Process Engineering. This is often the most overlooked element. The companies with successful pilots had to change their operations team. They had to alter how they interacted with the workflow.

Handsome Rewards When Done Right

Deloitte and Ernst & Young used generative AI to completely transform their audit function. For example, fraud detection substantially improved. They need fewer people to achieve far better results.

The Generative AI Journey Is Neither Short Nor Cheap

These journeys are neither short nor cheap. Currently, there’s a standard one-to-one ratio between implementing an app and the effort for tech services to implement it. These AI implementations are one-to-12:50 to 20. Much more investment in the organization is required.

Conclusion

In my opinion, you should not be looking for the 100 places to add AI across all your business functions. Instead, select one or two areas where you think generative AI can make a substantial difference…and be willing to make the sizable investment across all three towers of work to actually get the benefits ChapGTP originally promised. And stop searching for that killer app!

FAQs

Q: What is the main challenge with generative AI pilots?
A: The main challenge is that enterprises are not putting the tools to work properly, leading to a high failure rate.

Q: What is the key to successful generative AI implementation?
A: The key is to reframe the problem and focus on infusing AI into business processes, not just searching for a killer app.

Q: What are the three towers of work that are required for successful generative AI implementation?
A: The three towers are technology, data, and business process engineering.

Q: Why is the generative AI journey neither short nor cheap?
A: The journey requires significant investment across all three towers of work, leading to a longer and more costly process.

The Boundary of the Firm

Where should a leader set the boundaries of the company? Initially, this question related to employees vs partners and relied on economic theories of transaction costs. For instance, should the leader of a company making automobiles directly employ people making engines, or should it outsource the engine (or subcomponents of it) to suppliers in a different company?

This is not a trivial or purely theoretical question. The chairman of Ford has admitted that his company struggles to build a fully electric vehicle because it has thousands of suppliers, each with its own software for its own components. Control of all parts of the business model, from manufacturing to sales, is what has allowed Tesla to break into what many considered a closed industry.

The Evolution of Firms

The general trend has been to outsource many parts of an operation so that each firm focuses on its unique competence. The result (usually) results in products of higher quality and lower cost. However, there are some notable exceptions, such as Boeing, where firms outsourced too much and proved unable to consistently integrate thousands of suppliers into a single product.

This question evolved into where new ideas should come from. Should a leader rely exclusively on employees inside of the firm to think of new innovative ideas, or should the company solicit opinions from people outside of the company’s walls? The latter, labeled "open innovation," dramatically accelerated the pace, scope, and creativity of company innovations.

Multi-Sided Platforms and AI

Multi-sided platforms changed the conventional wisdom on firm boundaries again. Expedia books more travel than any other firm in the world and yet does not own a plane, boat, car, or hotel room. Not only does it not own its own supply, it does not even control its supply. An airline can discontinue a flight route without Expedia’s consent. Or, absent a contract, a hotel can remove itself from Expedia’s inventory. This change generated a shift in research on leadership, expanding beyond advice for how a company CEO should lead employees and activities within a firm to how a company CEO should orchestrate activities with partners in an ecosystem of companies.

The proliferation of AI inside companies will propel another shift in the firm’s boundaries. Whereas open innovation brings ideas from other people inside the firm, AI brings all human knowledge to every employee, customer, and competitor. The CEO is no longer the person in the company with the most wisdom or knowledge. In many instances, the CEO’s role is first to accelerate AI adoption to improve employee productivity, second to promote thinking about how AI could improve customer offerings, and third to prioritize which AI-powered projects should proceed to implementation.

Broader Impact

Narrowing the boundaries of a firm does not just impact the firm or its supply chain. If many firms decide to move some of their existing positions "outside the company" to AI, we will see a major drop in overall employment. This part of the story is already well-known. This article shows the company-specific logic that flows into larger trends.

Conclusion

The debate about the boundaries of the firm is ongoing and will continue to evolve as AI and multi-sided platforms shape the business landscape. Leaders must be prepared to adapt and innovate in response to these changes, or risk being left behind.

Frequently Asked Questions

• What is the main point of this article?
  • The main point is that the boundaries of the firm are changing due to AI and multi-sided platforms, and leaders must adapt to these changes.
• What are the implications of AI on the firm’s boundaries?
  • AI brings all human knowledge to every employee, customer, and competitor, making the CEO no longer the person with the most wisdom or knowledge.
• What is the impact of AI on employment?
  • If many firms decide to move some of their existing positions "outside the company" to AI, we will see a major drop in overall employment.

Understanding Dignity: A Call to Recognition and Validation

Introduction
Dignity is often considered a complex and multifaceted concept, encompassing both self-esteem and esteem from others. In this article, we will explore the importance of dignity in the age of artificial intelligence, and how it can be maintained and promoted in individuals and communities.

Philosophical Perspectives on Dignity
Renowned philosopher Immanuel Kant defined dignity as the most fundamental and absolute value, tied to the concept of autonomy, or our capacity for free will and self-determination. This perspective emphasizes the inherent worth of every individual, regardless of their achievements or virtues.

The Power of Dignity
Donna Hicks, a conflict-resolution expert and professor, described dignity as "the glue that holds all of our relationships together." She highlights the mutual need for recognition, to be seen, heard, and treated fairly, and emphasizes the importance of feeling safe in the world, understood, and respected.

Racial and Gender Dynamics
Research has shown that African Americans often report higher levels of self-esteem compared to White Americans, likely due to strong racial identity and coping mechanisms developed in response to societal challenges related to race. However, racial discrimination in the workplace can have significant negative impacts on an individual’s self-esteem and overall well-being.

Imposter Syndrome and the Quest for Self-Worth
The phenomenon of Imposter Syndrome, where individuals doubt their abilities and accomplishments, is becoming increasingly prevalent in today’s fast-paced and hyperconnected world. This can lead to a vicious cycle of doubt and insecurity, impacting not only personal confidence but also workplace success.

A Call to Action
As educators, we can play a crucial role in promoting dignity by recognizing, validating, and honoring the value of each individual. By doing so, we can help individuals develop a stronger sense of self-worth and build more positive and empowering relationships.

Conclusion
In conclusion, dignity is a multifaceted concept that encompasses both self-esteem and esteem from others. By understanding the philosophical and psychological perspectives on dignity, we can work towards promoting a culture of dignity and respect, where individuals feel valued, heard, and empowered to reach their full potential.

Frequently Asked Questions

• What is dignity?
  Dignity is a complex concept that includes both self-esteem and esteem from others.
• How can we promote dignity?
  By recognizing, validating, and honoring the value of each individual, we can help build a culture of dignity and respect.
• What are some common challenges to dignity?
  Racial and gender discrimination, as well as Imposter Syndrome, can undermine an individual’s sense of dignity and self-worth.
• How can educators promote dignity?
  By focusing on building positive relationships, recognizing individual strengths and accomplishments, and providing a supportive and inclusive learning environment.