Is your organization powered by Steam or AI?

by Jeff Gerkin

The early manufacturing plants during the Industrial Revolution were initially constructed to be powered by steam, a significant energy source that drove the era's machinery. The transition from steam to electricity in these plants, which occurred from the 1880s to 1950 in the US and the UK, was gradual. Initially, the electrification of plants designed for steam power resulted in minimal improvements in capacity [1]. This was because the existing infrastructure and machinery were not optimized for the new form of energy. However, as new plants were designed and built with electricity in mind, there were significant improvements in production. The design of these plants allowed for a more streamlined workflow and better utilization of electrical power, leading to increased productivity and efficiency in the manufacturing process.

This concept applies well to today’s rapidly evolving business landscape. “Being digital” and “using digital capabilities” are often interchangeable. However, they represent the difference between converting to use AI and being designed to optimize it.

Being Digital vs. Acting Digital: Unleashing Organizational Potential

1. Being Digital: A Mindset Shift

Being digital transcends mere technological use. It’s about embracing a mindset that permeates how an organization designs itself based on the capabilities of advanced technology to achieve strategic priorities. Here are the key attributes of being digital:

a. New Frontiers of Value Creation

Being digital requires organizations to reexamine their entire business model. It involves identifying and capturing new frontiers of value. This could mean venturing into adjacent categories or uncovering untapped value pools within existing sectors. For instance:

• Emerging Growth Sectors:?The Internet of Things (IoT) enables disrupters to use precise data to identify flaws in existing value chains. Connected cars redefine self-navigation and in-car entertainment, while logistics companies optimize supply-chain operations through sensors and analytics.

b. Customer-Centricity and Decision Journeys

Being digital necessitates understanding customer behaviors and expectations within and beyond your business. Organizations that can fully optimize customer analytics stay ahead of trends and create or preserve value by staying attuned to evolving decision journeys.

2. Being Digital: Operationalizing the Mindset

‘Being digital” involves translating the digital mindset into tangible actions. Here’s how organizations can act digital:

a. Clear AI Strategy

Organizations must define a targeted use of AI. Clarity is essential, whether automating repetitive tasks or augmenting human decision-making. Understanding the degree to which each job will be automated versus augmented allows for purposeful design.

b. Work and Job Architecture

Organizations can unlock productivity gains by aligning work and job architecture with AI optimization. An AI-based job architecture considers the interplay between automation and augmentation at the level at which the work is performed. ?The organization can redesign the job architecture and profile by understanding how the work will change by utilizing AI. This clarifies the true skills and competencies required and the evolved expected outcomes. It also clarifies the various roles within a workflow that need to be updated. This is how each job, each workflow, and the entire value stream can be designed to optimize AI’s power.

c. Leadership Transformation

Leadership must adapt to the digital era. Different skills and capabilities are needed to lead in an AI-driven environment. Leaders become orchestrators of AI-enabled teams, fostering collaboration and innovation. Although leaders don’t need to be Python programmers or data scientists, they must be digitally fluent and possess analytical prowess.

Conclusion: Optimizing the Power of AI

Leveraging emerging technology and digital capabilities is essential. But ‘being digital’ is where the true transformation occurs. Organizations that intentionally design their work, jobs, and leadership roles around emerging technology, data analytics, and AI will thrive. By doing so, they unlock the full potential of this powerful technology, just as early manufacturing plants soared when they embraced electricity.

[1] Power and Prediction – The Disruptive Economics of Artificial Intelligence. Argawal, Gans, Goldfarb