As a board member, I’ve enjoyed learning from those companies that perform at the highest levels in the area of AI. When I think about how to guide my company’s strategy, I look at what the winners in various industries are doing to see what I can learn from them.
McKinsey presented us with answers to what the highest performing companies were doing in The state of AI in 2020. I will summarize some of the essential findings and conclusions from their work.
Companies typically adopt AI to reduce costs or increase revenues. The primary areas companies invest in AI to reduce costs are optimizing talent management and automating contact centers and warehouses.
While AI is often used to reduce costs, more companies are focused on increasing revenues from AI. The primary functional areas where they apply AI include service operations, product or service development, and sales and marketing.
10% of the McKinsey survey respondents who had adopted AI reported a greater than 10% increase in revenues. What kind of revenue increase is your company seeing from AI?
In one of my previous articles, I pointed out that AI is a Winner-Takes-All game. If your competitors take the lead in revenue growth by using AI, you may never catch up. The highest-performing companies are taking the lead, even during Covid-19.
Two major factors stand out from the companies getting the most value from AI: leadership and resource commitments.
- Leadership: The highest-performing companies have an engaged and knowledgeable champion in the C-suite. Also, they view their executive team as being more effective than their peers.
- Resource commitments: High performers report allocating more of their digital budgets to AI and will increase this investment in the future. Secondly, they employ more AI-related talent.
McKinsey reports many practices that differentiate high-performing companies from others. Since my perspective is for a board member or senior executive, I’ll highlight the most strategic factors:
- Prioritizing AI initiatives linked to business value
- Defining the AI vision and strategy
- Committing to the organization’s AI strategy
- Managing an extensive range of AI ecosystem partnerships
- Aligning AI strategy with the broader corporate strategy
How well does your company measure up?
Companies seeing the most value from AI are doubling down on the technology. Most high performing companies are increasing their investments during the pandemic.
We are familiar with the rapid adoption of digital channels due to the pandemic. This applies to adopting and scaling AI as well. For example, companies focused on increasing revenue are using more AI in pricing and promotion, customer service analytics, sales and demand forecasting, and inventory and parts optimization.
Additionally, companies see opportunities to improve customer acquisition and customer experience by using richer data from digital channels accelerated by the pandemic.
I’ll summarize two examples representing how high-performers are using AI more during Covid-19.
- A bank was already involved in bringing together customer-service data from online and offline interactions. When customer behavior changed (e.g., fewer visits to branch offices), the bank accelerated its efforts to serve customers better. Because they had created a rich data set, they launched an AI-based chatbot to help customers who had different needs due to the pandemic. Not only did this improve customer service, but it showed to internal stakeholders that AI-based initiatives could be worthy investments in other areas within the bank.
- A pharmaceutical company accelerated its adoption of AI to manage operations remotely due to a reduced onsite workforce. They had laid the groundwork for AI through data preparation and application development. The pandemic accelerated the adoption of these AI systems. Like with the bank, success in one area accelerated interest and development of AI systems in other parts of the company.
Board members and senior executives should watch what the winners are doing and determine how they can guide these activities within their own company. How do your company’s AI efforts compare to the highest performing companies?