2024 in Review: How Generative AI is Redefining Innovation Leadership

As 2024 comes to a close, we reflect on a year that reshaped the boundaries of innovation. Gen AI emerged as a game-changer, sparking a renaissance in creativity and operational efficiency. However, despite a record 83% of global companies ranking innovation as a top priority, only 3% are fully prepared to deliver on these aspirations.

The disconnect between ambition and readiness has highlighted a critical truth: embracing innovation isn’t just about adopting technology. It requires a clear strategy, focusing on business domains, cultural alignment, and foresight.

This edition of the MGR Mind newsletter dives into how Gen AI drives transformative opportunities, the current state of innovation readiness, and key lessons for rebooting innovation systems.

The Renaissance of Gen AI

Gen AI has revolutionized industries by enhancing creativity, efficiency, and decision-making. Gen AI adoption has surged globally, with significant variations across industries. According to a 2024 McKinsey & Company survey, 72% of organizations have integrated AI into at least one business function, a notable increase from previous years.

For example, Leveraging Gen AI, Walmart has successfully enhanced its customer shopping experience through its "Text to Shop" feature. This conversational AI tool allows customers to build shopping Lists by typing or speaking their needs into Walmart's app or website. The AI understands natural language input, translating customer requests into actionable shopping lists. In addition, the Gen AI generates product suggestions tailored to individual preferences, driving higher conversions

The "Professional Services" sector has experienced the most substantial increase in AI adoption. This industry encompasses consulting, legal, accounting, and other specialized services that heavily rely on data analysis and client interaction. The integration of Gen AI in these areas has enhanced efficiency, decision-making, and client service.

However, Boston Consulting Group (BCG) ’s research reveals that 89% of companies have prioritized Gen AI as a top-three technology investment for 2024, with 65% citing it as the most disruptive force over the next five years. Yet, only 8% of organizations have scaled its use effectively, leaving many opportunities untapped.

How Gen AI Shaped 2024

1. Content Creation and Personalization: Companies like L'Oréal leveraged Gen AI to power their "Beauty Genius" app, delivering hyper-personalized customer experiences based on 6,000+ images and global user insights.
2. R&D Acceleration: Firms such as Sanofi used Gen AI to cut clinical trial report preparation time by 40%, improving R&D efficiency and speeding time-to-market.
3. Operational Innovation: Gen AI-supported tools like ChatGPT and MidJourney helped businesses enhance ideation, customer engagement, and prototyping.

While Gen AI’s adoption has been uneven, early adopters have gained an edge by integrating it into innovation systems. Companies that combine Gen AI with traditional predictive AI have unlocked complementary advantages, balancing creativity with analytical rigour.

The Innovation Readiness Gap

Despite the buzz around innovation, readiness has plummeted. BCG’s Innovation-to-Impact (i2i) benchmark shows that only 3% of companies scored in the "ready zone" in 2024, a sharp drop from 20% in 2022. This alarming trend underscores significant challenges:

1. Unclear Strategies: Over 52% of companies cited an overly broad or undefined strategy as a top barrier to innovation readiness. Without focus, even the most advanced systems fail to deliver value.
2. Talent Shortages: 44% of respondents highlighted constraints in accessing skilled talent, further compounded by economic pressures.
3. Short-Term Focus: The pandemic and macroeconomic uncertainties have led many organizations to prioritize immediate needs over medium- to long-term value creation.

In addition to BCG's (i2i) benchmark, the Global Innovation Index (GII) 2024, published by the World Intellectual Property Organization – WIPO , offers comprehensive insights into global innovation readiness. The GII evaluates economies based on innovation capabilities and performance, providing a comparative analysis across countries.

According to the GII 2024 rankings, the top 10 most innovative countries are:

1. Switzerland
2. Sweden
3. United States
4. United Kingdom
5. Singapore
6. Finland
7. Netherlands
8. Germany
9. Denmark
10. South Korea

Switzerland maintains its position as the global leader in innovation for the 14th consecutive year, reflecting its robust innovation ecosystem and sustained investment in research and development.

It's important to note that while these countries lead in innovation readiness, the GII 2024 also highlights significant advancements among middle-income economies. Nations such as China, India, Indonesia, and Türkiye have made notable progress, with Thailand and Vietnam moving closer to the top 40. Morocco has joined the group of middle-income economies within the GII top 70 that have climbed fastest in the rankings since 2013.

•  Zombie Innovation Systems

BCG describes the phenomenon of “zombie” innovation organizations. Those that go through the motions of innovation without strategic alignment or focus. These systems produce activity without impact, wasting resources and missing out on transformative opportunities.

• Case Study: NVIDIA ’s success in 2024 demonstrates the power of aligning business and innovation strategies. In the early 2010s, Nvidia pivoted from gaming to AI chip development, positioning itself as a leader in accelerated computing. Today, it ranks as the world’s third-most valuable company and a top performer in AI-driven innovation.

Lessons from 2024: Redefining Innovation Leadership

The challenges of 2024 call for a strategic overhaul of innovation leadership. Here are three actionable steps for businesses to regain their edge:

1. Align Innovation with Strategy: Organizations must prioritize innovation domains where they have a "right to win." For example, Aptiv’s rigorous portfolio approach focuses on electric and software-defined vehicles, enabling it to lead in the rapidly evolving mobility market.

Key Question: What problems are you solving for which customers? Answering this ensures resources are directed toward high-impact initiatives.

1. Invest in Talent and Culture: Companies need to embed innovation into their organizational DNA. This includes fostering an innovation-friendly culture and treating innovation as a career accelerator. Firms that link compensation to innovation KPIs saw higher readiness scores.

Tata Group emphasizes clear direction and investment alignment, enabling its divisions to balance short-term profits with long-term bets like EVs and 5G.

1. Harness the Full Potential of GenAI: Beyond experimentation, businesses must scale GenAI capabilities to transform processes and create new value. For instance, Microsoft’s "Copilot" for Office 365 showcases how GenAI can generate incremental revenue while boosting productivity.

Six Best Practices for Innovation Success

The top innovators align their innovation with strategy by:

• Ensuring senior leadership ownership of innovation.
• Maintaining clarity on innovation’s role in the business strategy.
• Focusing on competitive advantages.
• Specifying target innovation domains.
• Structuring portfolios for impact.
• Quantifying objectives and linking them to financial goals.

Key Takeaway: Stepping into 2025 with a Boundaryless Mindset

As we prepare for 2025, one thing is evident: technology, no matter how transformative, is only part of the equation. The true differentiator lies in adopting a boundaryless mindset. A commitment to thinking beyond limitations while anchoring innovation in disciplined strategy and clear foresight.

2024 taught us valuable lessons: The integration of groundbreaking technologies like Generative AI can drive immense value, but only when paired with a sharp focus on aligning innovation with business objectives. Organizations that thrived this year didn’t just experiment with tools. They built ecosystems that championed strategic creativity, empowered talent, and addressed real-world challenges.

At Mike Ghasemi Research (MGR) , we believe the opportunities for growth are limitless for those ready to embrace this approach. To stand out in 2025, businesses must:

1. Think Strategically: Define innovation domains where you have a unique advantage and focus your resources accordingly.
2. Foster Innovation Culture: Embed creativity and experimentation into your organization's DNA, treating it as a catalyst for growth.
3. Leverage Technology Effectively: Move beyond experimentation with technologies like GenAI and scale them to enhance processes, customer experiences, and business models.

Innovation leadership focuses on fostering creativity, experimentation, and the development of novel ideas, whereas digital leadership emphasises integrating and optimising digital technologies to enhance business performance. Both leadership styles play vital roles but require different approaches and skill sets. By understanding and embracing these differences, companies can navigate market shifts, anticipate customer needs, and drive sustained growth.