"AI" - - Hold on a second...

It is seldom an enjoyable experience to be the first to identify a significant flaw in a situation.

Since OpenAI launched ChatGPT in the autumn of 2022, the impact of AI on our industry has been significant. As a Senior Vice President, working for one of the global moguls of this technology, I have been promoting the new possibilities, giving numerous talks and workshops on the subject.

It is therefore difficult for me to refrain from saying, ‘Let’s take a step back and calm down’. However, this is necessary.

There has been a considerable amount of hype surrounding the potential of AI, with many prominent consultancies and universities making bold claims about the benefits it will bring.It has been asserted on numerous occasions that AI will result in enhanced productivity, superior quality, and the introduction of novel processes and business models.

The media and thought leaders on LinkedIn have been eager to disseminate information about this exciting new development. It is therefore unsurprising that the hype has reached the upper echelons of management. A recent IBM survey found that 59% of CEOs and 72% of top-performing CEOs view AI as a critical factor for the future success of their companies. It is clear that the potential gains are significant and that the potential consequences will be far-reaching.

However, the AI bubble is about to burst.

An analysis from The Economist has found that market expectations of the benefits of AI significantly exceed the actual value creation for companies that have AI at their core.

To illustrate, the market capitalization of three of the largest technology companies – Alphabet, Amazon and Microsoft – has increased by three trillion dollars since the advent of AI.

In comparison, AI solutions are only anticipated to impact their sales by $20 billion by 2024. This equates to an AI multiple of 150, which is highly unusual.

My own experience, based on close observation of the AI market over the past 18 months, is that…

Most of the concepts I have encountered are unfinished and unproven, yet they are being presented as groundbreaking innovations. Or projects that are, at best, data analytics, but are being promoted as ‘next generation AI’. Furthermore, numerous start-ups, business models, and value propositions have been labeled as AI without any clear definition of what this means.

An example: Novo Nordisk (infamous med-tech company) in Denmark, apparently bought 10.000(!) Microsoft CoPilot pre-licenses for their network in late 2023, to be sure to be on the AI bandwagon and save oh so many millions of resources and gains in development. I guess it was the IT consultants that have prospered and made their aggressive sales budgets, so far.

It appears that greenwashing may have a new cousin in the form of AI-washing. It is important to recognize that transformation takes time. I am a technology optimist and I recognise the disruptive power of AI.

It is therefore time for a reality check.

It is not realistic to expect that the world will change overnight or over the course of a year. The majority of organizations and societal structures are simply too complex and extensive for them to be feasible. In lieu of pursuing misguided and unrealistic goals, I suggest the following three guidelines, which, based on my experience, help prevent the worst-case scenarios from materializing.

1) AI is a tool, not a solution in itself.

It is important to recognize that no technology can resolve underlying issues such as flawed strategy, poor product design, or a toxic culture. Understandably, there is a temptation to believe that AI can provide a quick fix. However, it is not realistic to expect that a company will suddenly become successful simply by implementing new AI tools.

2) There is currently a disproportionate focus on user-facing AI applications.

The most innovative solutions leverage the power of AI to perform tasks in the background. It is possible to become a 10 percent better software developer, accountant or copywriter. To truly advance your business, it is essential to prioritize the less visible tasks. The complex processes, the vast quantities of data, and the intricate mechanisms.

3) Practical solutions are more effective than theoretical conjecture.

Oh-so-many McKinsey reports, Harvard studies, and influenced "tech-sources" can serve as useful indicators. For inspiration, look to those who are leading the way. For example, IKEA has automated its customer service and retrained 8,500 employees as revenue-generating design consultants.

Or NASA, which is using AI to develop new, intelligent materials. As an alternative, one might consider Temu, a Chinese company that has used AI to reduce its time-to-market. Artificial intelligence presents a distinctive opportunity for businesses of all types to develop and grow.

It would be prudent to learn from history and recognize that implementing change takes significantly longer than anticipated.

Should you now put the brakes on all the strategic AI initiatives you've launched in the last six months?

Absolutely not. Once the waves of change start rolling, the impact is twice as strong. Get your strategy in perspective. Review your business model for consistency, and remember: If it is too good to be true, it often is. The Emperor's New Clothes prevails, as it has since 1837.

And there is STILL...nothing there (yet)!