Advanced Practices Council (APC) Insights - October 2021 Member Meeting Highlights

Advanced Practices Council members – senior technology and data executives across industries – gathered virtually in October to continue learning from exemplary researchers and practitioners (including themselves) on topics they voted as high priority for their future success.

One theme of the meeting was accelerating digital business transformation, especially through AI and analytics, while achieving high business results. The other theme was re-thinking organizational arrangements given emerging trends.

NEW BUSINESS MODEL OPPORTUNITIES WITH ARTIFICIAL INTELLIGENCE

Dr. Amit Joshi of IMD in Switzerland reminded us that the truth about AI’s value is different from the hype for many reasons: companies may not have the right high-quality data; collecting and preparing data is expensive and time-consuming; models that use data for AI may not be adequately integrated into a company’s work processes and overall architecture; companies may not have defined appropriate outcomes from use of AI; and ethical considerations may not have been adequately considered.

Of course there are many situations in which use of AI has already proven very valuable, such as for automation situations (e.g., personalized customer discounts); for recommendations to decision makers (e.g., money laundering); and for provocation (e.g., design ideas). A useful way to categorize valuable business opportunities is (1) using AI as a complementary system to humans (e.g., Zebra offers second opinions on medical scans for $1); (2) using AI as a substitute for humans (e.g., automation assistance on cars); and (3) using AI as a service (e.g., Google Cloud’s offering of off-the-shelf solutions for machine learning applications).

DIGITAL TRANSFORMATION: EXECUTION AND DYNAMICS

Dr. Vijay Gurbaxani of the University of California Irvine presented findings from his second research project for the APC. First, he reminded us of his key theme throughout both projects: software, which codifies your company’s knowhow, is the key differentiator of success. You win in a software-driven world through digital transformation, which is the reinvention of a company. In the first project, Vijay identified six dimensions needed for successful digital transformation: strategic vision; strategic alignment; digital capability in the form of talent; technology assets; knowhow and intellectual property assets; and culture of innovation. Have companies in his annual survey improved on these dimensions in 2021? The answer is yes on strategic vision, strategic alignment, knowhow, and technology assets. However, the answer is no on two essential dimensions: digital capability in the form of talent and culture of innovation.

Based on interviews conducted as part of this second research project, Vijay recommended 9 key steps in executing a digital strategy. He particularly emphasized developing a long and medium-term vision and then building a top-down transformation strategy with clear business goals and metrics, highlighting the value of taking a multi-stakeholder perspective (i.e., customers, internal stakeholders, organizational context). He shared a range of options successful organizations have taken for building software capability, including: developing in-house capabilities for proprietary software; launching strategic partnerships with software companies; acquiring tech companies for key technologies; investing in in-house innovation centers; and using commercial software for undifferentiated capabilities. He also highlighted the value of creating a culture of continuous learning, which might include changes to the operating model (e.g., allocation of decision rights, incentive systems, monitoring and measurement systems). He reminded us that executive role modeling is essential.

THE FUTURE OF ORGANIZATIONS

Dr. Rick Watson of the University of Georgia helped us explore ways to prepare for future organizational success. He discussed four noteworthy changes that will significantly affect organizations. The first change is a shift in dominant logic to doing more with less (fewer or different resources) while considering environmental, social, and governance goals. He speculated that we might discover that this new dominant logic might be a superior way to maximize shareholder wealth. Whether or not it does, an implication of this shift is adoption of new measurement systems, such as those for sustainability.

The second change is the ongoing energy transition to cheaper sources of energy, such as electricity that can be generated by wind-catching systems and scaled significantly. Such energy transitions will be disruptive for large energy users and also present opportunities to deliver products and services at lower energy costs.

The third change is cognitive computing growth and expansion. Although the reality doesn’t equal the hype, as Dr. Joshi pointed out, emerging examples already indicate that cognitive computing enhances productivity and accuracy. Psychographic profiling, for example, delivers better personality judgments than humans. Self-driving cars will continue to improve as will medical diagnoses.

The fourth change relates to ecosystems. Digitization and the Internet have led to ecosystems of companies working together to create economic capital. Amazon and Microsoft are obvious examples of keystone organizations that lead ecosystems.

Considering these four changes, Rick predicted that future organizations will: continue their focus on economic capital creation while trying to do more with less and with consideration of environmental, social, and governance goals; use cheaper sources of energy; will enhance their use of cognitive computing; and start or join ecosystems.