Agile Start-ups Harness GenAI to Disrupt, While Mature Organisations Struggle with Digital Debt

?In today's fast-evolving tech landscape, one topic dominates IT strategy conversations: GenAI. Over the past months, I’ve engaged with organisations of all sizes exploring how to adopt and leverage GenAI solutions like Microsoft Copilot for Microsoft 365. Almost every CIO faces the dual challenge of intense boardroom pressure to drive an AI strategy while wrestling with the burdens of digital debt.

I’ve previously discussed how data governance is often not as robust as we would like. Combined with a lack of training and metrics to drive and measure adoption, many mature organisations struggle to make meaningful headway with GenAI adoption.

In stark contrast, start-ups and agile SMEs, born in the cloud, are embedding AI into their very foundations. Here are a couple of examples:

1. Challenger Law Firm: The COO of a challenger law firm revealed how they leveraged ChatGPT, despite having minimal in-house coding skills, to automate the creation of custom invoices for clients. This automation saved their team an entire working day every month, significantly improving efficiency and allowing them to focus on higher-value tasks.
2. Specialist Recruitment and Culture Consultancy: The MD of a specialist recruitment and culture consultancy shared how they use GenAI to expedite the production of marketing collateral. They even pre-check proposal work by instructing the LLM to adopt the personas of specific clients, ensuring tailored and high-quality outputs that resonate with their target audience.

The worry is that not only are employees turning to shadow IT solutions by bringing their own AI, but disruptive competitors are also gaining a significant advantage.

This leads us to a critical piece of research that every executive should be aware of:

Kim, Alex G., Muhn, Maximilian, and Nikolaev, Valeri V. (2024). Financial Statement Analysis with Large Language Models. Chicago Booth Research Paper, Fama-Miller Working Paper. Available at SSRN or DOI.

In their study, the authors used GPT to analyse anonymised balance sheet data and predict earnings. They found that GPT achieved a higher level of accuracy in its predictions than human analysts, performing comparably with state-of-the-art, narrowly specialised machine learning applications. By using chain-of-thought prompting to guide the AI through a logical analysis process, similar to how a human analyst would approach the task, the AI was 7% more accurate in predicting earnings direction than human analysts.

The researchers took this a step further by exploring GPT's ability to forecast stock prices, devising an investment strategy based on GPT's analyses. Remarkably, this strategy consistently outperformed the market.

This research is particularly intriguing for those in the financial sector, but it also demonstrates that widely available GenAI solutions can perform tasks traditionally requiring specialist human knowledge or advanced systems.

For those interested in exploring this further, and if you have a ChatGPT Plus account, I recommend checking out the companion app to the research paper. It showcases the potential tools that can be built with platforms like ChatGPT and Copilot Studio, which I believe will become integral to agile and disruptive businesses leveraging GenAI in the coming years.

In light of these findings, it's clear that GenAI holds significant potential for transforming various business processes. As an executive, here are some steps you can take to stay ahead of the curve:

1. Evaluate Your AI Strategy: Review your current AI strategy and identify areas where GenAI can be integrated to enhance efficiency and decision-making.
2. Invest in Training: Ensure your team is well-trained in using GenAI tools. Investing in skills development will help maximise the benefits of these technologies.
3. Pilot GenAI Projects: Start with small pilot projects to explore the potential of GenAI in your organisation. This could involve automating routine tasks or enhancing data analysis capabilities.
4. Learn from Start-ups: Look at how agile start-ups are leveraging GenAI. Consider adopting similar approaches to stay competitive.
5. Explore New Tools: If you have access to advanced GenAI tools like ChatGPT Plus, experiment with companion apps and explore how they can be customised to meet your organisation's needs.

By taking these steps now, you can position your organisation to leverage the transformative power of GenAI, ensuring you stay competitive and ahead of the curve in an increasingly AI-driven world.

In Sum:

• GenAI Adoption Disparity: Start-ups and agile SMEs are effectively integrating GenAI, while mature organisations face challenges due to digital debt and inadequate data governance.
• Research Insight: Recent research demonstrates that GenAI can outperform human analysts in financial predictions, highlighting its potential to revolutionise business processes.
• Action Steps for Executives: Evaluate your AI strategy, invest in training, pilot GenAI projects, learn from start-ups, and explore new tools to stay competitive in an AI-driven world.