The Generative AI Fallacy

How Business Leaders Can Avoid Technological Solutionism

Despite all its hype and potential, Gen AI is still far from delivering its promised business value. A utopia where Business and Finance Leaders, will have a ChatGPT or Claude-like user experience to access and act on any information across the organization is met with concerns like privacy, security, and insanely high costs of training and maintaining these AI models.

The overall AI failure rate is close to 80%. A recent survey by the global Think Tank RAND revealed that 84% of respondents attributed these failures to one of the leadership problems about optimizing the wrong business problem, using AI to solve something that needed simpler solutions or an inflated expectation of AI’s ability to cater for the business nuances with certainty. With Goldman Sachs estimating investment behind AI ballooning to $200bn in 2025, one can only imagine the resource carnage it will leave behind in its wake.

What the Generative AI hype has further done is move business leaders' attention away from solving the business problem to what famous writer, Evgeny Morozov referred to as Technological Solutionism, which, in this context, we can call an oversimplification of the use of AI to solve complex business problems.

Business leaders need to take a step back and revisit their digital strategies. Here are 3 immediate considerations that can put their digital investments back on track:

1. Re-think the Operating model: AI is not a plug-and-play software that can fit into the existing tech stack. Maybe for a solution or two it might, but fundamentally reinventing operations or driving new avenues of business growth requires a re-architecture of its operating model. AI deployments are inherently different from traditional ERP or any other software implementation. The initial model deployed might not be the most sophisticated one but as more users use the model, it generates more data, which means more data available to train the model, which in turn means a better model, which then results in more usage, and the cycle goes on. This requires an operating model with agile AI product delivery underpinned by strong Data as a Product capability. Businesses need to be able to quickly prototype, test, and iterate solutions to solve specific business needs.
2. AI is not a technology problem: Business Leaders must realise that AI is not a problem rooted in technology. It is as good as the business challenge it can solve. AI is a leadership opportunity that requires a different way of thinking on the Leader’s behalf on how to redesign their business models owing to the rapidly evolving technology world around them. It requires rethinking how current innovation is being done, what redesign the core operations need, and how it is challenging its competitive position. Despite inventing the first digital camera, Kodak still failed to stay in business. It was not a lack of innovation (they currently have 79,0000 patents in their name), it was the inability to rethink how their core film business was being disrupted by digital memory businesses and smartphones.
3. Build a Digital Mindset: The least business leaders can do today is build a digital culture and mindset in their organisations. A BCG study suggested that organizations are five times more likely to succeed in their digital initiatives if they have a culture built around that. A Digital Mindset is simply the ability of business leaders to connect the output of data and algorithms to solve specific business needs. It also means building a culture where data is the primary source of decision-making versus intuition or experience. AI democratizes the information and with that comes ambiguity.  Leaders acknowledge that they don’t know the answers to everything and are willing to update their assumptions around business problems in the light of new knowledge. This involves continuous upskilling programs on data and AI for employees outside traditional tech functions.

Business leaders are at an inflection point today where investing in powerful technologies like AI has the potential to reinvent their business model. However, the road to successful deployment and harnessing such power is complex. With the right business-first (as opposed to technology-first) mindset, a culture of innovation and the right operating model, it is all within reach.

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I am Tariq Munir ...through my talks, training, and content, my mission is to inspire business leaders to craft a Tech-enabled Humanistic future.

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