Business leaders still not ready for the AI revolution
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When the internet went mainstream at the end of the last century, many once-household names paid the price for failing to adapt.
I believe AI will further transform business and society, but in my work with companies of all shapes and sizes, I find that many are still unprepared for the changes that are coming.
In fact, the main problem I face is that our leaders are woefully unprepared for a revolution that is already underway.
The speed with which AI has arrived, especially the latest generation of generative AI tools and large-scale language models, has been staggering. Where companies have adapted, it has often been in the form of “bolting on” chatbots. From Windows to the iPhone, it’s hard to find a software platform that hasn’t scrambled to add natural language capabilities.
But in my opinion, this is far from making the most of the potential it offers. In fact, I am amazed almost daily by the gap between leaders’ understanding of the potential of AI and how dramatic the change it will bring.
It’s often thought of as a new way of interacting with machines, using verbal commands rather than simply clicking icons or typing codes.
It has to be said that even tech giants like Google and Amazon have been caught off guard. Sure, both have developed chatbots and integrated them into their services in various ways. But do they grasp the potential that AI has to fundamentally change the paradigm when it comes to online search and shopping?
They built their empires this way in the early days of the internet era, but I don’t think they’ve been able to replicate the same transformative impact with AI yet — and in that failure, perhaps they’ve left the door open for others to do just that.
So what’s holding them back? Is it a strategic misalignment or just a lack of thought? And what challenges do they need to overcome to avoid becoming the next Blockbuster, Borders or Kodak?
The Big Picture
In my experience, one of the biggest failures in leadership vision is seeing AI as simply a tool to help them do what they already do, rather than something that will completely reinvent the way they do business.
Going back to the example of the internet, going online not only enabled businesses to connect with customers in new ways using email and websites, it completely revolutionized the world of marketing, giving rise to pay-per-click advertising, search engine optimization, and today’s AI-powered personalized and targeted marketing campaigns.
Google wasn’t the first company to use an index of web pages to allow people to search the internet, but they found a way to make this functionality practical for business through Adwords and paid search placements.
Similarly, while Amazon wasn’t the first online store, it pioneered personalized recommendations, next-day delivery infrastructure, and online marketplaces that have completely reshaped the entire business of retail.
Ironically, online search is one of the first established digital business models that AI threatens to disrupt. ChatGPT and other large-scale language models (LLMs), such as Anthropic’s Claude, reduce the need for users to browse pages of results to find the knowledge they need, instead providing them with to-the-point answers in plain language.
Indeed, Google is in the process of integrating the Gemini chatbot into Google Search, similar to how Microsoft integrated OpenAI’s GPT-4 into its Bing search engine, but isn’t this a case of simply “plugging in” a new tool rather than fundamentally rethinking information services?
I think this is a case of companies not thinking fully about the possibilities they offer – often they engage with small experiments or narrow use cases that improve the experience or efficiency across a small subset of features.
There are some good examples out there: I recently spoke with a senior executive at Boston Consulting Group, who told me that all of their consultants have access to a generation tool, and they can now solve problems in two days that previously took two weeks.
But what I really want to see is more leaders thinking even bigger – instead of thinking about how it can be applied to individual processes, they need to envision how it can be used to transform entire business models, industry trends and customer experiences.
New Titans?
The scale of the opportunity offered and the lack of vision among many current business leaders will contribute to the major changes that all industries will experience in the near future.
We expect that within the next five years, new companies will emerge that will establish themselves as new giants in the AI era and displace the existing giants.
Today’s technology giants built their empires on the foundations laid by giants of the past – the communications networks built by telcos – and similarly, tomorrow’s giants will stand on the shoulders of giants who built today’s cloud servers and infrastructure models.
These young, AI-native companies solve problems that even the most technologically advanced companies today can’t solve. And it’s not just a matter of technology. Take buy-in, for example: Their employees don’t fear being replaced by AI because their roles are enabled and enhanced by AI. These are the types of jobs the World Economic Forum described when it said that more jobs will be created by AI than will be replaced. Jobs that could not exist without AI.
To keep up, today’s leaders must proactively address the skills gap and invest in continuous learning to develop an AI-ready workforce.
Companies will also need to develop guardrails and robust frameworks around ethical, transparent and responsible AI, which will be critical to ensure that AI doesn’t create more problems for business than it solves.
It is an inescapable reality that every company is becoming an AI company, and the most important task facing leaders today is to prepare for this change. The organizations that will survive and thrive will be those led by individuals who understand this, think boldly, and are unafraid to take bold actions to embrace AI.
