How Companies Are Unlocking AI's Value Beyond the Hype
IN THIS ISSUE: Learn how companies are cutting through AI hype to build effective, winning strategies with the technology. Plus, OpenAI's AI-powered search is now available to the public, marking a pivotal moment: Is this the end of traditional search as we know it? Will Google’s crown be at risk? Finally, don't forget about this week's roundup of AI news.
Where's the Value in AI?
What’s the key to some companies unlocking real value with artificial intelligence? Many struggle to devise a viable strategy, but those able to move beyond the proof of concept phase are seeing results, including strengthened capabilities, greater productivity, increased revenue, and a competitive advantage. While so many organizations appear to be caught up in the AI hype cycle, a small group has found a way to separate themselves from the pack to generate results. A new report from the Boston Consulting Group (BCG) outlines six characteristics that define these leading firms.
"AI leaders are raising the bar with more ambitious goals," Nicolas de Bellefonds, one of the study's coauthors and BCG managing director, said in a statement. "They target meaningful outcomes on cost and topline and prioritize core function transformation over diffuse productivity gains."
BCG polled 1,000 chief experience officers and senior executives from more than 20 sectors, ten major industries, and 59 countries in Asia, Europe, and North America. Each was asked to evaluate their company's AI maturity in 30 enterprise capabilities.
Nearly all (98 percent) reported that their firms are "at least experimenting with AI." Almost three-quarters have yet to show tangible value. However, the remaining 26 percent have broken through, establishing processes to extract value. BCG calls these businesses leaders. Four percent of that group is considered "at the forefront of AI innovation, systematically building cutting-edge AI capabilities" and scaling them across the organization. These leaders have seen a higher return (60 percent) on shareholder value, greater revenue (50 percent) than the overall average, and a higher return (40 percent) on invested capital.
Six AI Leader-Defining Characteristics
Focus on the core business processes and support functions: Many believe AI's primary value is in streamlining operations and reducing costs in support functions—customer service, IT, and procurement. However, its most significant impact is on core business processes—operations, sales and marketing, and research and development. BCG recommends that companies use AI across core business and support areas to gain a competitive advantage.
Be ambitious: Leaders are looking beyond the productivity plays and investing in AI and workforce enablement, doubling down on several AI aspects: digital, people allocation, and the number of AI solutions scaled.
Invest strategically in a few high-priority opportunities to scale and maximize AI's value: Be more targeted in the initiatives you're working on. Leaders expect twice the Return on Investment this year and are successfully scaling over twice as many AI products and services.
Integrate AI in efforts that lower costs and generate revenue: Nearly half of leaders (versus 10 percent of non-leaders) are integrating AI in their cost transformation efforts across functions. More than a third are also using AI to boost revenue, compared to a quarter of non-leaders.
Focus efforts more on people and processes than technology and algorithms: Successful leaders invest 10 percent of resources in algorithms and 20 percent in technology and data. Seventy percent is put into the people and processes, which BCG says are the real assets.
Move quickly to embrace GenAI: Leaders are early adopters of generative AI because "their more advanced capabilities facilitate putting the prerequisites (e.g., large language models) in place."
Many of these insights echo what author and analyst Charlene Li shared with me, which I reported earlier this month.
The BCG report then breaks down the sources of AI value by sector and includes a playbook that companies can follow to become leaders themselves.
"Three-quarters of companies have yet to unlock value from AI. Without decisive action, they risk falling significantly behind. This research reaffirms our long-held belief that when companies undertake digital or AI transformations, they need to focus two-thirds of their effort and resources on people-related capabilities, and the other third or so split behind technology and algorithms," Amanda Luther, another report co-author and BCG managing partner, remarked.
OpenAI Takes on Google, Perplexity With ChatGPT Search
Three months after announcing the prototype of an AI-powered search engine, OpenAI is officially making it available for ChatGPT users. It's initially available for paid subscribers, but plans are to expand it to all users in the coming weeks. The addition of search to the popular generative AI chatbot underscores a new era of content discovery on the web, one that threatens Google's dominance and even earlier entrants in the space, such as Perplexity.
ChatGPT Search provides real-time sports scores, stock quotes, news, weather and more—similar to what you'd find on a legacy search engine. One significant difference: You won't need to use keyword-specific phrases. Instead, you can use natural language to make requests.
OpenAI claims its search will surface original, high-quality content from the web. It states chats will include links to sources, seemingly to alleviate attribution concerns publishers raised with Perplexity earlier. To ensure accurate news information, the company has partnered with multiple news organizations and publishers, including Associated Press, Axel Springer, Conde Nast, Dotdash Meredith, Financial Times, Hearst, Le Monde, News Corp, Reuters, The Atlantic, Time, and Vox Media.
OpenAI and Perplexity aren't alone in developing AI-powered search engines—Microsoft and Google have also launched their own Search Generative Experiences (SGE), with ChatGPT driving Microsoft's version and Gemini powering Google's. However, these experiences aren't fully AI-native, as Bing and Google still rely on the traditional "10-blue-links" format. In contrast, OpenAI and Perplexity are leading the way in creating a new, more intuitive user experience.
Interestingly, before ChatGPT Search's release, Google launched real-time search capabilities for Gemini, allowing its models to be grounded by its search engine.
"Google currently owns 92 percent of the market share for search and is the go-to engine for most consumers," Jim Yu, the Chief Executive of BrightEdge, tells me. "Their dominance is not just tied to being the oldest and biggest engine, but really stems from [its] incredible data on local content, events, products, and more. Now we're seeing new AI-powered engines take on Goliath—and they're gaining traction with consumers, which we can see through referral growth. At this stage, referrals are crucial to success and show that consumers are engaging with the engines and their proposed responses."
Though he expects Google to retain its dominance and establish a harmonious balance with new rivals, "these new entrants will open up new opportunities, similar to how the smartphone did not replace the PC but instead enabled new phone-centric experiences. For AI search, they will likely introduce search experiences that are conversational and multimodal with speech and video/image recognition. Plus, they'll also most likely start first on mobile devices that best suit these experiences."
But what does this AI search reality mean for marketers? Yu describes this moment as a "searchquake" because "AI search engines are shaking up everyone's SEO and content strategy." He boasts that it's an "exciting time" for marketers, saying "more effort can directly lead to more reward" and it'll bring "lucrative opportunities for those who stay ahead."
"We’re seeing our customers attract more qualified, purchase-ready buyers who’ve done their product research via content sourced by the AI engines," Yu explains. "To break into these overviews and citations to drive referral traffic, marketers are taking the time and effort to make their content tailored to high-intent keywords and more specific, complex queries, including follow-up questions."
His warning to marketers: There's no longer a one-strategy-fits-all in this new search market for success.
ChatGPT Search is available on iOS, Android, and OpenAI's MacOS and Windows desktop apps.
Today's Visual Snapshot
There’s no established standard yet for pricing AI services. Unlike the Web 2.0 era, technology companies can no longer rely on a seat-based subscription model. AI vendors today charge by various metrics, from the number of tasks automated or by the hour to the number of conversations, the amount of input/output tokens, or by successful resolution. Kyle Poyar from the "Growth Unhinged" newsletter provides the above infographic illustrating some of the "most disruptive AI pricing models." It will hopefully give those evaluating AI technologies a better idea of how much these services might cost them.
Quote This
"We are prioritizing shipping [ChatGPT] o1 and its successors. All of these models have gotten quite complex and we can't ship as many things in parallel as we'd like to. (We also face a lot of limitations and hard decisions about we allocated our compute towards many great ideas.)"
— OpenAI Chief Executive Sam Altman responding to a question posed during a Reddit AMA about why the company's GPT-5 model is "taking so long" (CNBC)
This Week’s AI News
?? AI Trends and Industry Impact
?? AI Models and Technologies
?? Generative AI and Content Creation
?? Funding and Investments
?? Enterprise AI Solutions
?? Hardware, Robotics, and Autonomous Systems
?? Business, Marketing, Media, and Consumer Applications
?? Retail and Commerce
?? Legal, Regulatory, and Ethical Issues
?? Disruption, Misinformation, and Risks
?? Opinions, Analysis, and Editorials
End Output
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