In a Data Enabled, AI Powered World – Where is the Human in the Loop

1. Introduction including Agentic AI

We are entering a whole new transformative age, some of have coined this Industrial Revolution 4.0, but this could be more transformative than everything that we have seen in the past 250 years.

Agentic AI

Agentic AI represents the next major leap—one in which AI doesn’t just react but thinks, plans, acts, and continuously improves.? Agentic AI is an emerging evolution of AI and integrates the four types of AI Summarised by Bill Schmarzo as:

·?????? Predictive AI – Forecasts what will happen next.

·?????? Causal AI – Understands why things happen, not just correlations.

·?????? Generative AI – Creates new solutions and strategies dynamically.

·?????? Autonomous AI – Executes multi-step decisions in real-time.

#AgenticAI is likely to evolve towards something that approximates as #AGI (Artificial General Intelligence) sooner than you think!? Don’t think of AGI as some omnipotent, self-aware computer like HAL9000 (2001: A Space Odyssey) or SkyNet (Terminator), just as a combination of AI capabilities that outperforms humans at a broad range of tasks.?

“AI won’t replace Humans, but Humans using AI will replace those who do not.” Satya Nadella CEO provided this quote in 2023, AgenticAI really starts to make that a reality,

2. Organisational Implications

This paper discusses the adoption of the full spectrum of AI capabilities and what that means for your company, business, organisation, and critically where are your Humans in the Loop ?

• The reality is in most cases, your business and it’s Decisioning Making is TOO SLOW.? In many organisations this is because the Board and Executive are more focused on Risk Management and Risk Minimisation and this often overrules any ‘Growth Mindset’?
• AI and AgenticAI offers the opportunity to dramatically speed up decisioning, giving a more predictive, forward looking business model and the ability to change at pace (as Change will be your only Constant) BUT
• These changes are not happening in the next 100 years, they are happening in the next 3-5 years, so adopting these capabilities is not something you can put off until 2030.. AND
• What does that mean for your PEOPLE.? Where and how will you have ‘humans in the loop’ in this new fast paced model!? ?

3.The Intelligent Enterprise to Capitalise on AI

We have a definition for those companies, that are designed for change, Data Enabled, and AI Powered: the Intelligent EnterpriseTM.? An organisation that uses insight, analytics and artificial intelligence to dynamically reconfigure itself in response to the expected needs of its customers, and simultaneously anticipate and respond to changes and events in the external environment?

The Intelligent Enterprise model is our codified version of the Good to Great flywheel used at Amazon now embedding RBV and Dynamic Capabilities standardised so it can be deployed in almost any organisation to create a Predictive by Design operating model!? It is both intrinsic and extrinsic in this definition that the organisation is uniquely able to leverage data, analytics and AI to enable and sustain this capability.? The use of Resource Based Theory and Dynamic Capabilities (see below) help us to identify the resources and business capabilities that will form the differentiation for the business.?

Critically, the Intelligent Enterprise maintains Humans at the top of the Decisioning Pyramid and ensures a People Driven/Human in the Loop model for a Data Enabled, AI Powered World

4.Intelligent Enterprise Strategic Frameworks;

The Intelligent Enterprise is based on the Constructed Strategy approach. The "Constructed Strategy" approach: those following Jay Barney (2010) argue that companies with a competitive advantage possess strategic capabilities, i.e., unique resources and distinctive competencies that can reshape existing industries or create new ones.? This internally conditioned approach is generally known as the "Resource-Based View."

Resource-Based Theory - VRIO

If a business seeks to be competitively differentiated, it cannot realistically expect to be ‘world-class’ at everything.?Resource Based Theory (2) helps firms to identify and focus on internal resources that are best aligned with opportunities and threats from the external environment, to identify key combinations of internal capabilities that uniquely differentiate.?? The VRIO framework is a strategic analysis tool designed to evaluate an organization's resources and capabilities to discover competitive advantages. The acronym VRIO stands for four questions to ask about a resource or capability to determine its potential: Value, Rarity, Imitability, and Organisation. If a resource or capability is valuable, rare, costly to imitate, and the firm is organised to capture its value, it can sustain a competitive advantage.

Dynamic Capabilities - Sense, Seize, and Transform

Dynamic capabilities refer to a company's ability to continuously renew its competitive advantages in response to rapidly changing business environments.? The VUCA world we live within, seems to be here to stay, so being able to drive continual renewal will be critical to maintaining competitive advantage.? The Dynamic capabilities framework is built around three key actions: Sense, Seize, and Transform. 'Sense' involves identifying and assessing opportunities and threats in the external environment. 'Seize' is about mobilizing resources to capture value from those opportunities and mitigate threats. 'Transform' requires the firm to continuously renew and reconfigure its assets and organizational structure to maintain alignment with the changing business landscape. This approach empowers organizations to be proactive and adaptive.

The biggest challenge for RBV in the era of AI is the reliance on a static perspective, which in the modern highly volatile economy is challenging, albeit using Dynamic Capabilities will mitigate this challenge.? The rapid development of AI will make Dynamic Capabilities ever more important as Companies will need to focus more on building their capacity for continuous adaptation rather than maintaining static competitive advantages.

5. Operationalising Agentic AI with Humans in the Loop

Many organisations trying to use Technology (Digital, Data, AI) focus on the implementation of the technology, which typically is not Rare or Difficult to copy. This is why so many Tech led initiatives fail to deliver anything other than competitive parity. For example if you and your competitors use Salesforce CRM capabilities - how do you get any differentiation when you software is off-the-shelf and in the Cloud? Typically you don't!

For 25 years, Consulting Firms have focused on People, Process and Technology to design the Operating Models of businesses.? Today, I predicate that is an outmoded concept and Process/Technology are only ‘second order’ capabilities in determining performance.?

• Process is a 19th Century concept developed for mass manufacturing – the future Intelligent Enterprise needs to be able to dynamically reconfigure it’s key activities to serve its customers and markets
• Technology – whilst of fundamental importance, for the majority is less a source of competitive advantage, and rather as it is not difficult to copy/nor rare the case is not having Technology is a source of competitive disadvantage.?

?This is the #AI paradox and is discussed by Jay Barney and Martin Reeves in HBR. ?If everyone has #GenAIhaven't we just raised the bar, and not given anyone an advantage?? The reality is that many companies lack differentiated capabilities, and in this case the #intelligententerprise model is the way forward. If you lack rare capabilities and resources, the way to create a competitive advantage with AI is to build your business model around it.? Or in the case of the Intelligent Enterprise build your Operating Model around People who are fully AI enabled

? By truly embedding #AgenticAI into your Organisational DNA, you can create a competitive advantage, building Rare and Difficult to copy capabilities which deliver unique value to your Customers. ?To be clear that's not just building your own #LLM, #AgenticAI or similar, as those capabilities can be imitated, it's actually to buildAI into your corporate DNA and seek to integrate and/or obliterate key business processes. This is at the heart of the #intelligententerprise model, where we are not so much delivering transformation, as building an Organisation #designedforchange.

Instead, People, Data and AI (PDA) are now the critical levers in determining the optimum operating models for businesses.?

• People – those people who are data enabled, and AI Powered will displace those who are not. These are your Humans in the Loop.? They need to be at the pivotal points in your Value Chain to both set the context, for the AgenticAI and to challenge and moderate the outputs ?
• Data is both the fuel of the business, and the material from which insights are derived to better improve decision making in the business.? Critically that Data can be from inside and external to the business.? Data is what we use to measure those leading and lagging KPIs that we will use to drive the business
• (Analytics and) AI are the means for exploiting that Data to drive value. They serve your People and AI is now the means of mastering your Process and Technology.

6. Call to Action

The combination of Data and AI becomes the brain of the business, powering your People!

More and more logic is removed from legacy enterprise systems (CRM, ERP etc) and the intellectual property and insight to drive competitive performance sits with your People and their capability to use that ‘corporate brain’.?

That becomes a capability that is Rare, Difficult to Copy and if you bring the whole organisation with you ‘organisationally embedded’.??At that point you have developed a sustained competitive advantage and maintained Human in the Loop Decisioning!

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References

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1.???? Barney, Jay (1 March 1991). "Firm Resources and Sustained Competitive Advantage".?Journal of Management.?17(1):?99–120.?doi:10.1177/014920639101700108.?S2CID?220588334.

2.???? ?Teece, David J.; Pisano, Gary; Shuen, Amy (August 1997). "Dynamic capabilities and strategic management".?Strategic Management Journal.?18?(7):?509–533.?CiteSeerX?10.1.1.390.9899.?doi:10.1002/(SICI)1097-0266(199708)18:7<509::AID-SMJ882>3.0.CO;2-Z.?S2CID?167484845.

3.???? Barney and Reeves HBR https://hbr.org/2024/09/ai-wont-give-you-a-new-sustainable-advantage

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