Where does AI belong in strategy?
Finding a “fit”.
If you believe statista.com, based on data and forecasts from Tractica (other forecasts may vary significantly), the market revenue for Artificial Intelligence (AI) will grow to 125 billion USD in 2025 (Liu 2020). However, according to Gartner, Inc., many AI-specific areas such as Composite AI and Generative AI are still in the “Innovation Trigger” phase (August 2020) – moving towards a peak of inflated expectations, before potentially reaching the known “Plateau of Productivity” (Panetta 2020).
Regularly, Gartner Inc. publishes the “Hype Cycle for Emerging Technologies” covering emerging, hyped and established technologies in the context of time.
- Hype Cycle for Emerging Technologies, 2020 Gartner Inc. (Panetta 2020)
What does this mean concerning strategy?
In the press release article from Gartner, Inc. published a few weeks ago, Gartner explains five of the identified hype cycle trends (Gartner 2020). Citing the report, David Pereira, Head of Data & Intelligence for Europe at everis in the Barcelona Area (follow him on LinkedIn here) embraces this to be the time to reflect on AI in a strategic setting in an article he wrote on medium.com (Pereira 2020).
He points back to the Priority Matrix for Emerging Technologies of Gartner, Inc. in which especially Composite AI (e.g., combining different learning methods for improved learning capabilities) and Generative AI (e.g., the automated creation of content such as a Facebook post) should be focus areas for AI leaders in companies (Pereira 2020).
So? Where can we put this in strategic development?
Just as IT strategy, AI strategy is derived (but also influences) from the overall corporate strategy (the highest strategy level in an organization) (Wright 2020). Of course, this might be less true if your organization is purely about AI, but that is a topic for another day.
I was thrilled to follow up on the AI workshop of Steffen Maas (CEO at Ginkgo Analytics GmbH in Hamburg) and Ingo Hoffman (Managing Director at AI.HAMBURG) a few weeks ago. I want to especially thank Steffen Maas again for providing the follow-up slides on the strategic workshop and redirecting the primary sources, and presenting some of the ideas in this presentation. Give him a visit on Ginkgo Analytics or follow him (Twitter, LinkedIn) if you are interested in data analysis services or careers.
Corporate strategy & AI strategy in context.
- Applying AI: The elements of a comprehensive AI strategy (Hartmann, Liebl & Waldmann, Alexander, Brakemeier, Hendrik 2020)
Keep in mind that this graphic is an excerpt from the full report published from the Initiative For Applied Artificial Intelligence (AAI) and should be seen in its context. Regardless, we can find core aspects of this and other graphics in the report. For example, we can see the influence mentioned above and the dependency of the AI strategy and Corporate strategy. It needs to fulfill an overall “corporate purpose” (Hartmann, Liebl & Waldmann, Alexander, Brakemeier, Hendrik 2020). Similar to the corporate strategy, we derive from the vision first and only then move towards setting the scene by analyzing and implementing factors needed for execution. We then (or already) have defined use cases for AI that are clear and can lead to an execution that is surrounded by a well-defined plan (even if it might change as it often does in the CRISP-DM framework (Wiemer, Drowatzky & Ihlenfeldt 2019, p. 4)) (Hartmann, Liebl & Waldmann, Alexander, Brakemeier, Hendrik 2020).
You can find much more information in the report. I can only recommend giving it a read (it is not long guys, come on).
AI adopting, AI embracing, AI-first companies?
The report, in conjunction with the presentation from Steffen Maas showed there are different types of companies and their implementation and weighting of strategy. Depending on your current state, you might be classified as an AI adapting business (e.g., the German telco provider Telekom) upwards to an AI-first company (e.g., Google) where AI takes a prominent spot in the organizations overall corporate strategy.
Taking a closer look: Different business types and their amount of integration into corporate strategy.
- Ginkgo Analytics - AI Strategy Workshop (Maas & Hoffmann 2020)
What to watch out for:
While the report of AAI is laying out each and individual step in a condensed form for a great start of the AI strategy development in one organization, it also outlines major possible pitfalls.
The report summarises five common issues:
Isolated development of AI use cases that do not create value for the business.
Issues in scaling developed use cases from pilot to production.
Internal resource gaps (and the difficulty to fill related positions).
Lack of clear vision on AI and blind investments.
Lack of a maintenance strategy for implemented AI use cases.
Conclusion
AI in strategy is rapidly becoming a highly relevant field that needs to be addressed by managers today. While the lack of understanding AI is the first barrier to overcome, many more lay ahead. However, leaving out AI in most strategic environments is mostly also not responsible.
“In the past a lot of S&P 500 CEOs wished they had started thinking sooner than they did about their Internet strategy. I think five years from now there will be a number of S&P 500 CEOs that will wish they’d started thinking earlier about their AI strategy.”
- Andrew Ng, Fortune Magazine (06/2016)
What are your thoughts on this location of AI in companies? Would something like this work for your business, or can you not even remotely picture this being executed any time soon? Let me hear your thoughts and comments here, on Instagram, Facebook, LinkedIn – or any other channel of your choice.
I am excited to hear from you.
Further Readings
If you are interested in more numbers and predictions evolving around AI on a worldwide basis, check out the comprehensive summary from statista.com here.
Do you think about a more hands-on and in-depth look at AI strategy? Check out the report from the “Initiative for Applied Artificial Intelligence” regarding the elements of a comprehensive AI strategy here.
References
fast.ai 2016, Andrew Ng says Deep learning is the "New Electricity"; what this means to your organization · fast.ai, 12 September, viewed 25 September 2020, <https://www.fast.ai/2016/10/11/fortune/>.
Gartner 2020, Gartner Identifies Five Emerging Trends That Will Drive Technology Innovation for the Next Decade, 24 September, viewed 24 September 2020, <https://www.gartner.com/en/newsroom/press-releases/2020-08-18-gartner-identifies-five-emerging-trends-that-will-drive-technology-innovation-for-the-next-decade>.
Hartmann, P, Liebl, A & Waldmann, Alexander, Brakemeier, Hendrik 2020, The elements of a comprehensive AI strategy - appliedAI, 24 September, appliedAI, viewed 24 September 2020, <https://www.appliedai.de/hub/elements-of-a-comprehensive-ai-strategy>.
Liu, S 2020, Artificial Intelligence market size/revenue comparisons 2020, viewed 24 September 2020, <https://www.statista.com/statistics/941835/artificial-intelligence-market-size-revenue-comparisons/>.
Maas, S & Hoffmann, I 2020, AI Strategy Workshop – Ginkgo Analytics, 25 September, Ginkgo Analytics, viewed 25 September 2020, <https://www.ginkgo-analytics.com/ai-strategy-workshop/>.
Panetta, K 2020, 5 Trends Drive the Gartner Hype Cycle for Emerging Technologies, 2020, 24 September, viewed 24 September 2020, <https://www.gartner.com/smarterwithgartner/5-trends-drive-the-gartner-hype-cycle-for-emerging-technologies-2020/>.
Pereira, D 2020, Gartner 2020 Hype Cycle for Emerging Technologies. What’s in It for AI Leaders? | by David Pereira | The Startup | Aug, 2020 | Medium, 24 September, viewed 24 September 2020, <https://medium.com/swlh/gartner-2020-hype-cycle-for-emerging-technologies-whats-in-it-for-ai-leaders-a66eb4768b1>.
Wiemer, H, Drowatzky, L & Ihlenfeldt, S 2019, ‘Data Mining Methodology for Engineering Applications (DMME)—A Holistic Extension to the CRISP-DM Model’, Applied Sciences, vol. 9, no. 12, p. 2407.
Wright, T 2020, Corporate Strategy: The Four Key Components, 24 September, viewed 24 September 2020, <https://www.executestrategy.net/blog/corporate-strategy>.
