The Great Business Dying: Why AI Threatens Half Of All Businesses & What To Do About It.
Most businesses aren’t transforming fast enough. Adam Benjamin, Head of Technology Investments at Fidelity, summed it up nicely this morning. I’m paraphrasing for brevity…
“In 2023, investors took an AI basket approach where everything with AI exposure got a boost. 2024 is the year of differentiation when we find out who really benefits from AI and who will be most disrupted by it.”
Most are focused on determining the winners, but we’re missing the impacts of disruption. That’s not getting enough attention. If it’s this much of an imperative, why aren’t businesses moving faster? Why are so many business leaders barriers instead of sponsors?
One of the biggest themes in data and AI is how to get buy-in and overcome resistance. I hear it from almost everyone in my courses and seminars. LinkedIn is filled with posts about businesses that refuse to transform. Most data and AI strategy frameworks ignore the problem altogether. They operate under the assumption that everyone falls in line and the whole thing moves ahead seamlessly.
Instead of a solution, strategists repeat the same thing, “Adapt or die.” Transformation consultants promise returns will materialize at some point in the future but don’t deliver specifics. The combination of the two is a giant red flag for business leaders. What’s intended to create a sense of urgency makes businesses dig their heels in.
In this article, I will explain the frameworks I use and why they succeed in overcoming resistance where others fail. The key realization behind my approach was watching business leaders come around as soon as they could quantify the magnitude of the opportunities and risks. I developed frameworks to do that upfront, so resistance wasn’t a factor.
Data and AI need C-level sponsors to succeed. These frameworks get the business to support impacts and outcomes by positioning technology as the most efficient way to drive them.
What’s Stopping Business Leaders From Moving Ahead?
We must ask ‘why’ instead of moving ahead with changes. Transformation consultants make a colossal mistake when they charge in with an initial assessment and implement a framework. They must evaluate how the business got here to develop a strategy that meets the business where it is.
My moment of clarity came during a meeting between a client’s C-level leaders and the Big 4 consulting firm they retained for transformation. The topic was an initial assessment. The consultants were explaining the process and assessment points. They got to “leadership commitment and buy-in” when the COO cut them off.
“Tell me what I’m buying into. Am I getting married to technology or committing to the cloud? You’re asking me to commit before you’re telling me what I’m committing to. I’m not writing you a blank check.”
Leaders rarely push back on the transformation narrative, and the consultants fall back on the default responses. “Adapt or die,” and “The business must commit to transformation and innovation, or it won’t be able to take advantage of new opportunities in the future.”
The COO said something we had discussed, “What should we do given all the opportunities in front of us? How do we prioritize? What technology do we use? I’ve been told that machine learning is the most expensive approach. If a cheaper technology can deliver the same value, we should use that one, right?”
Those points were pulled from meetings we held over 6 months while I delivered the company’s first data science initiative to production. This story is important because these questions live in the back of every C-level leader's mind. This is why there’s so much resistance.
Senior leaders don’t know how to ask questions as directly as my client’s COO did. They ask questions about these themes and don’t like the answers they get. The answers they get from data teams are overly technical. Transformation strategy delivers answers that are overly vague about returns and execution.
The COO pointed at me and said, “You need to work with him because he’s the first person to talk about technology as a value creator, not a cost center.”
The Great Business Dying
The blank check line kicked off what would become The Big Picture. If leaders won’t buy in or commit before seeing what they’re committing to, we must deliver a complex picture of:
Major Decision Points
Investment and Returns Associated With Each Option
Capabilities Required For Each Option
Implementation Capabilities For Each Option
Talent and Infrastructure Required For Each Option
Business Transformations Required For Each Option
Frameworks For Strategy Planning and Implementation
Business Value Maturity
Every one of those must include actionable strategies and roadmaps. The Big Picture reveals the true level of effort required for transformation. Most frameworks don’t give CEOs a way to understand how far they should go and how fast they need to transform. However, the investment they’re asked to make provides some insights into how big the undertaking is.
The Big Picture is also my thesis for why half of all businesses are threatened with failure. Most businesses have some of The Big Picture, but maturity gaps exist. For technology to successfully deliver value, maturity gaps must be resolved. Businesses must be built to monetize technology rather than being disrupted by it.
Technology advances rapidly and adds more steps to the maturity model with each iteration. Returns must materialize before the next investment in technology is required to support the next maturity step. That’s how technology becomes a cost center. A transformation strategy requiring significant initial investments for returns that are 3+ years away fails out of the gate.
Incremental maturity must generate incremental value. Investments in a technical maturity level must hit breakeven and profitability quickly. The cycle of technology as a cost center is unsustainable. Returns must be delivered before new costs are incurred. Each investment should generate positive ROI or what’s the point?
Students tell me these themes are common in Big Tech and Fortune 500 job interviews for data leadership, AI strategy, and product management roles. Most of these companies have learned tough lessons built from multiple failures. They’ve started calling this “The First Mile Problem.” Companies that can’t solve it will be driven out of business by two forces.
One force pressuring businesses comes from transformation costs. Without incremental returns, business leaders will eventually pull back on technology investments. The other comes from how long it takes to implement The Big Picture. Implement too slowly, and the business falls behind. Eventually, the road to catching up is too long, and more mature competitors push the business out.
Supporting Major Decision Points In The First Mile
The C-suite must make 2 critical decisions.
How mature should the business aim to be?
How fast must the business mature to achieve its goals?