GenAI Urges A Shift From Digital Transformation To Business Transformation

Close-up Portrait of Software Engineer Working on Computer, Line of Code Reflecting in Glasses. … [+]
A new breed of AI-first companies are reimagining how businesses work, creating a gap between more traditional and risk-averse companies.
And 2025 is the year all companies need to get serious about generative AI and AI-first business transformation. With 89% of aspiring CEOs ranking genAI and AI as a top-three tech priority in 2024 and 85% of ambitious leaders saying they will increase technology spending to increase competitiveness, it would seem that AI-led business transformation might pick up where the short-comings of digital transformation left off.
Yet, 90% of more traditional leaders are cautious, limiting experimentation and waiting for genAI to move beyond the hype. This may accelerate a competitiveness gap between AI-inspired companies and everyone else.
Already, there are two separate camps in how large enterprises approach generative AI investments. Beyond the basics, one group is more enterprising, exploring ways generative AI influences business and operating model transformation. These fast movers recognize AI as an investment in competitiveness and innovation. The other group is taking a more observational and cautioned approach, evaluating where genAI can make incremental improvements in business-as-usual before considering bolder transformation projects.
One group is already falling behind.
The Wait-And-See Approach
According to a recent BCG report, slow movers are dragging their feet intentionally, with 90% of executives waiting for GenAI to move beyond the hype. Two-thirds of all executives surveyed believe that it will take at least two years for AI and genAI to move beyond the hype. And 71% of companies are only focused on limited experimentation and small-scale pilots. Just 6% of companies have begun upskilling employees to work with AI in a meaningful way. And 45% of leaders say that they don’t yet have guidance or restrictions on AI and GenAI use at work.
Where Are Large Enterprise Companies In Their AI Transformation?
Scale AI, a startup that helps top tech companies improve the data used to build artificial intelligence products, published a report called “Zeitgeist” that studies corporate AI readiness.
In its research, it uncovered the disruptive nature of ChatGPT and genAI at large. Only 20% of companies said that they were developing an AI strategy in 2024. Scale also found that 74% of companies see AI to be highly critical to their business over the next three years. But only 38% currently have some level of genAI model in production.
It’s Still Early for GenAI Investments
AI Readiness Report 2024
Of the large companies exploring opportunities with genAI, 26% are developing the first AI model/application, and 25% are still evaluating use cases. Those companies deploying models ensure that use cases align with business objectives.
Basic Challenges In Adopting AI Technologies
Considering the widespread exploration of generative AI tools by businesses and consumers, leaders would benefit from starting with a deep look within.
Even in its current form, generative AI is disruptive to business as usual. The challenges and reasons that executives list today threaten to widen the gap between fast- and slow-moving companies. But as Marie Forleo’s mother would say, everything is ‘figureoutable.’ That starts with a mindset shift to see that AI creates whitespace.
Top Challenges In Adopting GenAI:
- 61%: Infrastructure, tooling, or out-of-the-box solutions don’t meet my needs
- 54%: Insufficient budget
- 52% Concerns about data and privacy
- 47%: Uncertain ROI
- 42%: Difficulty attracting and retaining talent
Top Reasons For Not Adopting GenAI:
- 28%: Security/data concerns
- 26%: Lack of expertise
- 22%: Other initiatives take priority
- 21%: Waiting for AI tech to mature
- 18%: Lack of budget
- 15%: Traditional tech meets needs
- 13%: No applicable use case
- 11%: No executive support
AI Readiness Report 2024
AI Investments Focus On Productivity Gains And Process Optimization
Companies that are investing in AI are exploring a wide spectrum of use cases that augment human productivity while automating and optimizing legacy processes.
According to the companies that participated in Scale AI’s research, the top areas of implantation include:
- 65%: Computing programming/developer tools
- 58%: Content generation
- 56%: Data analysis tools
- 55%: Customer chatbots
- 47%: Process automation
- 47%: Knowledge management/Employee copilots
- 40%: Summarization, report generation
- 25%: Recommendation systems
The companies that further focus on executive and employee augmentation will eventually unlock opportunities for business innovation, transformative strategy and the ability to create net new value.
GenAI’s ROI Has Big Business And Operational Impacts
Those companies investing in genAI models, are already reporting positive outcomes. And those positive outcomes reflect a spectrum of investments that balance cost takeout and control with innovative ventures into new value creation.
- 62% report organizational process efficiency
- 59% see customer experience improvement.
- 47% are enhancing their ability to develop new products or services
- 43% report the improved functionality of existing products or services
- 40% realize better collaboration across business functions and silos
- 34% credit genAI with optimizing strategic decision-making and the same percentage report profit and ROI
AI Readiness Report 2024
Fast Movers Balance AI Innovation And Iteration
Though generative AI is new and AI in all its forms is still evolving, asking new questions will lead to different answers. And as a result, new possibilities will be revealed that will reshape how AI-first businesses transform vs. those that see AI as a tool for incremental productivity and process optimization gains only.
The way I describe the difference between iteration and innovation is rooted in outcomes. While AI is new to many organizations, it may appear as innovation simply because it’s new. But in practice, iteration is doing what we did yesterday, better, faster, more efficiently, less expensively, at scale.
BCG recognized that fast movers exhibit several characteristics that set them apart from their laggard counterparts.
1. Fast movers invest in productivity and topline growth, with half estimating more than 10% in cost savings. These leaders also reinvest savings into the business to create new revenue streams and drive new growth.
2. Fast movers are upskilling teams to use AI effectively, and also identify opportunities for augmentation, where new roles are created to help employees perform tasks not possible before. In fact, BCG estimates almost half of the organizational workforce will need to be reskilled in GenAI over the next three years. Companies report that only 1-10% of workers are currently trained on genAI tools. Leading companies have three times as many full-time employees upskilled on AI over their laggard counterparts.
Executives need training as well, with AI demonstrating an increasing capacity to reason, analyze, and make informed decisions. A study by EdX, an online learning platform created by administrators at Harvard and M.I.T., featured insights from chief executives on their views of AI impact. The response was telling with 47% of executives stating that most or all of the chief executive role should be completely automated or replaced by AI.
3. Fast movers are mindful of costs and ROI. Though cost is a prohibitive factor for all companies, genAI represents an opportunity to deliver on cost savings and net new revenue generation.
4. Fast movers build strategic relationships. BCG research found that only 3% of executives consider preexisting partnerships a priority when evaluating AI solutions. This means that leading executives are exploring new partnerships that can help them gain access to leading-edge solutions that help them achieve more valuable outcomes while creating new value.
5. Fast movers are mindful of responsible AI principles. Being mindful of security, ethics, and governance increases safety and trust. According to BCG, organizations whose CEOs participate in RAI initiatives realize 58% more business benefits than those whose CEOs are not involved.
6. Fast-movers reshape critical processes and functions. Business as usual is rooted in the trap that we assume that work today the foundation for tomorrow because it’s the way it’s been done before. AI automates effective processes to make them more efficient and rethinks efficient processes to make them more effective. More so, AI can help augment human capacities to perform new work that reshapes how companies achieve existing and new outcomes.
7. Hire a Chief AI Officer or appoint an AI transformation leader to navigate the complexity of balancing AI business transformation. The growing list of companies creating this role include the U.S. Justice Department, the United Nations, eBay, WPP, and NASA. The Financial Times (FT) recently described the role of CAIOs as executives who “oversee the deployment of AI and generative AI within an organization: improving workforce efficiency, identifying new revenue streams, and mitigating ethical and security risks.”
The transformative potential of generative AI is evident, but realizing its promise requires more than mere acknowledgment and observation; it demands bold vision, decisive action, and unwavering commitment. As leaders, it is incumbent upon us to embrace this technology not just as a tool for incremental improvement but as a catalyst for profound innovation.
In the journey towards an AI-first future, we find ourselves at a crossroads, where the path chosen today will determine the trajectory of tomorrow.
The fast movers are already forging ahead. Their willingness to reimagine their business in an era of AI is setting a new standard for what’s possible. Those that are still on the fence, need to shift their mindset to recognize AI as an unparalleled opportunity to redefine their competitive edge, enhance productivity, and unlock new avenues for growth. The future is not something we enter; it’s something we create.
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