AI: The Strategy Game-Changer Everybody is Underestimating

Prepare for Impact.

Are you among the ones saying AI and Large Language Models in particular are widely overestimated? Then I have bad news for you. It’s a hype at the moment, but long-term effects are largely underestimated, on a level that will scare almost every business. And it is only the start.

It was the year 2023 when ChatGPT initiated a radical change in the business landscape, turning proven business practices upside down, creating uncertainty about the future, and, also, paving the way for new companies and business models to thrive. We are facing a major shift in our business environment.

Developing the right skills is essential for those who don't want to drift but shape the future.

With this in mind, I would like to suggest a model that highlights the obstacles companies will encounter in the coming years.

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Phase 1: Artificial Productivity

Let’s have a look at the long existing part of AI first. Artificial intelligence, which has been integrated into various business operations has increased productivity tremendously by assisting individuals to complete their tasks.

A long historical development in the field of AI is the analytical and predictive technology, which relies heavily on statistical techniques. These methods enable the analysis of vast amounts of data and the identification of patterns that may not be recognized otherwise.

Sophisticated machine learning systems have the capability to forecast upcoming conditions of machinery, inventory levels, sales projections, customer patterns, and other variables.

Since a few months, a new technology has taken the field of business applications by storm.

Large Language Models (LLMs) like ChatGPT, Gemini, Claude, Mistral, and others have introduced an intriguing element to productivity. They provide access to vast amounts of information and have automated the generation of various types of content such as texts, images, code, videos, and more.

Many people are deeply impressed, and for good reason. The appeal of Generative AI (GenAI) lies in its ability to interact in a natural, almost human-like manner. This similarity to humans is an important factor contributing to their rapid spread.

The buzz about artificial intelligence, its capabilities and the threat of Artificial General Intelligence (AGI) was born.

To be precise, we should be talking about artificial productivity rather than artificial intelligence. The real revolution is yet to come.

In general, companies in the Productivity Space tend to use AI infrequently and do not fully incorporate it into their operational procedures. AI remains a specialized field, primarily overseen by the IT department.

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One of the main characteristics of the Productivity space is that AI is a technology assigned to specialized departments. Technical experts like data scientists, data engineers, AI specialists, and developers are the ones primarily involved in analytical and predictive AI. While GenAI may be utilized in marketing and sales departments, it is rarely seen in other areas.

AI is a productivity booster in this stage. That is OK, but it leaves the full potential undiscovered.

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Phase 2: Integration and Automation

For many companies, this has long been a reality. They not only consider the findings and forecasts, but also rely on the suggestions provided by the systems to help decision-makers make improved choices.

A key characteristic of the Decision Space is that AI systems not only acquire the ability to make decisions and take action independently, but are also empowered to do so. Self-governing systems are progressing.

Advanced technology such as fully or partially autonomous robots, self-driving vehicles, and automated customer interactions that can analyse what is being communicated and act accordingly are intriguing. However, this progress is still in its early stages.

There are two main trends in the Decision Space that are converging: the combination of Analytical and GenAI into Multimodal AI, and the increasing integration of AI into nearly all aspects of business operations.

AI is evolving into an autonomous and responsible entity, marking the end of expert-led AI that we have seen in the previous Space.

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A Fundamental Change in the Company Architecture, Roles and Responsibilities Follows

Experts will not be laid off. On the contrary, they will be required even more than in the past. However, effectively managing AI in businesses involves more than just technical knowledge for various reasons:

Factors residing in artificial intelligence itself:

• AI making decisions on its own will greatly affect processes, outcomes, roles, user and customer experience.
• AI should be regarded as a crucial member of the team rather than just a technological tool.
• The AI environment needs to be meticulously planned and managed.

Factors deriving from the users‘ perspective:

• Management must deal with opposition to the implementation of artificial intelligence.
• All employees, particularly those in middle management first, need to undergo training on how to effectively utilize AI systems.
• If users and departments insist on using AI tools they have implemented themselves, it is essential to manage the risk of having too many systems in place, as it could result in high costs.

Strategical factors:

• The possibilities for effectively utilizing AI need to be identified.
• The management must carefully consider and control both the advantages and disadvantages.
• It is important to calculate and keep track of investments and ongoing expenses.
• Sooner or later, there will be a need toto make extensive changes to business processes.
• Adhering to regulations is a difficulty that must be dealt with.
• Novel business opportunities and models will arise and require assessment.

It is evident that there is a growing focus on the importance of management. Skilled professionals are required to create, implement, run, and assess systems while offering valuable insights. However, this alone is not sufficient.

It’s time for a new role.

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The Role of an AI Operations Manager

While they don't have to possess the same expertise as AI developers or data scientists, AI Operations Managers still must grasp the fundamental workings of the systems and know how to utilize them effectively.

While they do not need to have a full understanding of all business operations like a process manager does, they should still be able to identify areas where artificial intelligence can enhance a particular process.

While they may not directly engage with clients like salespeople or market analysts, they still need to know the fundamental concept of how the company communicates with the public.

AI Operations Manager is the emerging role that focuses on the integration of AI into the overall structure of a company. And in this sense, AI is no longer just a technical tool. It is a new and unprecedented layer in the organization’s architecture.

It is unlikely that you will come across many people on the job market or even within your company who possess such diverse skills .

Until now, no one has been qualified for this position because it did not exist previously.

When faced with new challenges, individuals can grow and evolve. The main requirements for this growth include:

• A fundamental understanding of AI technologies,
• effective communication skills,
• some experience in change management, and
• a comprehensive understanding of strategy and operations.

Further qualifications can probably be acquired through on-the-job training.

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A new role is always a challenge for the HR department. How can it be described in a job portal? A warning: if you publish all the requirements, it may be that no one really fits. Leave room for learning on-the-job.

The responsibilities of AI operations managers can also differ based on the needs of the business and the way the organization is set up. Typically, these tasks will be included:

• Researching and assessing the potential of emerging AI technologies,
• continuous communication with the technical departments (such as artificial intelligence, data analysis, and information technology),
• creating training programs for staff, putting them into action, and occasionally providing lessons,
• identifying situations where the use of AI results in lack of attention and a decrease in quality,
• taking on a collaborative role in the implementation of new processes, especially in situations where there is opposition that needs to be addressed,
• creating recommendations for investing in artificial intelligence,
• providing guidance and advice to the management on potential benefits, risks, and regulatory obligations.

The important thing in the Decision Space is to assemble a team of various experts. In addition, the ?AI Operations Manager steers the smooth integration of systems and communication with different departments.

AI has moved beyond being solely a technical tool and is now considered an integral component of business operations that must be effectively managed.

We are just starting to explore the Decision Space, and the journey to becoming a fully AI-integrated company is difficult. Companies who prepare early by establishing necessary roles, hiring the right people, and seeking external support will be better equipped for a future where the potential of AI is uncertain.

Remember: We are all still undervaluing this technology and have no idea where it will lead us in the future.

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Phase 3: The AI-shaped Company

Let's say, companies have mastered the Decision Space of AI and are working towards a completely integrated, AI-driven future.

An Artificial General Intelligence (AGI) will not be necessary. What is important is that AI systems can provide insights much quicker than even the most skilled managers.

Managers will continue to be more innovative than AI and will exploit the benefits of AI by combining it with their own intelligence.

The Future Might be Uncanny

Whether you like it or not, management will undergo a significant and unexpected transformation, with potential outcomes that are currently beyond what we can foresee.

• Managers will need to pay greater attention to creating and improving the overall strategy of a company.
• AI will act as a collaborator that carries out, develops, and puts into action the strategy, while also adjusting to evolving market dynamics in real-time.
• AI will establish systems and workflows through the knowledge it acquires.
• Managers and employees will rely to a certain degree on decisions made by AI.
• The way we lead others will undergo significant transformation.
• It is important to address the fear to lose secure and stable working environments, as well as the fears that come with it.
• Artificial intelligence will play a significant role in influencing the corporate cultures of organizations.
• Leading AI is a job that does not currently exist but needs to be created.
• Major changes in how companies are structured, plan, and operate will happen much faster. What used to take years can now happen in just a few weeks.
• Ultimately, AI will have a more significant influence on the company than any CEO.

In this phase, artificial intelligence is no more just a tool. It is an integral component of business infrastructure, shaping the organization and its culture as if it were a living entity.

Does it frighten you? As mentioned earlier, it is impossible to accurately foresee what the future holds. However, all the possibilities mentioned are completely feasible with the technological progress we have today.

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Why Should We Go This Way?

The explanation is straightforward: competition drives it. Although it may not feel right to allow AI to operate autonomously, and to limit human control, it is highly probable that numerous companies will eventually adopt this approach.

When companies use AI and data to make strategic adjustments that outperform any competitor, and their systems appear to be so advanced that they are incredibly successful, other companies will adapt in order to remain competitive.

A ruthless competition will start, with advancements happening at a much faster rate. The progress made in digitalization over the past 50 years will now be achieved in just 5 years. The current state of AI is comparable to what we witnessed in the field of digitization during the 1970s.

Prepare for impact. Now is the right time to adapt to handle the increasingly competitive business environment. It is crucial to be proactive and make necessary changes in advance to ensure long-term success. What can you do?

• Evaluate and deploy systems based on artificial intelligence,
• hire AI experts and build an outstanding team,
• keep your company’s learning curve steep,
• educate employees and managers in particular,
• redesign your organization,
• and take artificial intelligence out of the technical corner and give it a place on the board.

New Top-level Roles: The AI Strategist and the CAIO

The last point already makes it clear: new roles are needed in top management.

In contrast to the Decision Phase, simply implementing AI at the operative level is no longer sufficient. It is now necessary to integrate it into management decision-making processes. To effectively handle the fast-paced advancements and risks, a more comprehensive viewpoint and unique strategies are required. This will involve appointing AI strategists, such as a Chief AI Officer (CAIO).

One of the biggest challenges for a CAIO is to keep the pace of development at a reasonable level. Neither too fast, nor too slow.

Going too fast can be the biggest threat. Pursuing every advancement and potential benefit does not guarantee that companies will grow and be more successful. In fact, it may result in organizations struggling more with the difficulties of their own growth instead of winning the market.

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Relying on artificial intelligence for efficient management and maintaining control is challenging. It requires a combination of skills, vision, and insight that AI is unable to offer.

Where Do We Stand Now, and When Should We Start?

Many companies are currently testing what the Productivity Space can bring them. Meanwhile, bigger corporations and niche startups are diving into the Decision Space. Regardless of a company's stage, having a team of experts is essential.

Those who want to integrate AI more deeply into their operations should consider getting an AI Operations Manager as soon as possible. These people, with their extensive knowledge and experience across multiple disciplines, increase the chances of a smooth transition greatly.

I cannot find any good reason for a delay in hiring an AI Strategist or CAIO until the Design Space is reached. I am aware that finding suitable candidates for this role is challenging, but by giving qualified and experienced individuals the opportunity early on, they can enhance their skills while on the job.

The time to start is now.

Do You Need Help?

Don’t hesitate to get in touch with me .

This article was previously published on https://weinreich.com/en/ai-strategy/