At my previous company, we grew from 10 employees to over 1,000 in five years. The growth put a strain on our small business accounting system, since it was not designed for larger organizations.
Although we still could have run the business just fine by throwing more accountants at the problem (most of our finance operation was in India, so it was very cost-effective), we decided to upgrade. Once we made the decision, failure was not an option because our management was not going to stand for a failed financials upgrade project when we already had a manual accounting operation that was working fine.
Two years and $3 million later, we finally had our upgrade even though the extra accountants seemed to have been replaced with some of the developers to maintain the enterprise resource planning (ERP) system. Even with that, we did realize the return on investment (ROI) not only by saving manual work, but by being able to close the financials within 12 days of last month (compared to 30 days earlier).
However, when it comes to automation and AI, I see many management consultants and executives talking about “crawl before you walk” and “start small,” whereas I believe the advice should be to “think big and start small.” In other words, there should be no starting small if one is not thinking big.
There’s no doubt that AI is the Fourth Industrial Revolution and that it’s already here. Companies that were born digital have been using AI over the past decade to the detriment of their traditional competitors. Amazon’s AI-based recommendation engine was introduced almost a decade ago and got incrementally better thanks to better data and incremental enhancements to its algorithms. According to research conducted by McKinsey & Company, as of 2018, it drives almost 35% of Amazon’s revenue.
In my view, many organizations must develop a strategic and tactical plan for the implementation of automation and AI in which failure is not an option. When executives set low expectations within the organization by starting small, they are permeating the view that automation is optional or nice to have.
To develop strategic thinking, the executives must start from business goals such as tangible expense reduction goals and/or revenue increase goals using these technologies. AI allows you to automate tasks, workflows and processes at various levels. The automations can be rules-based and eventually intelligence-based as they use AI techniques and become more autonomous.
For executive and management teams looking to educate themselves about automation and AI, there are plenty of business-oriented and strategy-oriented short courses offered online. If you’re looking to enable this level of transformation in your business, here are some suggestions:
Build centers of excellence and shared services with core competencies in automation and AI.
Most companies already have shared services groups focused on operational efficiencies within IT and business operations. I recommend creating a separately budgeted center of excellence (COE) focused on automation and AI with properly qualified team members.
Your COE team must have clear deliverables, including the creation of business road maps, as well as establishing partnerships among various business units (BUs) and product and services vendors. The COE must enable BUs not only to initiate projects, but also to execute on projects with clearly defined ROI metrics with an understanding that it’s OK to pivot and adjust those goals as your organization builds the core competency within these technologies.
Promote a culture of questioning the status quo.
In 1958, according to a recent study by McKinsey (via IMD), the average lifespan of companies listed on the S&P 500 index was 61 years. That lifespan is now less than 18 years, and the study estimates that 75% of the companies currently on the S&P 500 will be gone by 2027. This means executive and management teams have to question the status quo on the how, what and why regarding questions around the products and services they deliver on an ongoing basis.
Few people thought that the ride-sharing concept was going to be this big as compared to hailing a yellow cab. Blockbuster had an opportunity to buy Netflix but did not understand that the fundamental way it delivered movies was going to change in just a few years. Netflix itself is now in the middle of streaming wars waged by the likes of Amazon, Apple and others. Transformation requires a culture change — and that requires promoting the mentality of questioning the status quo.
Build the right team.
Any organization with a transformational mindset must constantly study and adapt to the market. I believe that the CMO or the marketing organization should have the mandate beyond the traditional corporate marketing duties to also prepare the executives and the organization for how their industry itself is evolving and changing.
Passive marketing organizations are only focused on the marketing metrics of the past, but active marketing organizations are focused on the market trends and positioning, as well as guiding the organization as a whole toward adapting its products and services to those market trends.
The biggest roadblock to the adoption of automation and AI is the lack of education within the management ranks about what these technologies can do. Whether you are in the business of making analog doorbells for homes or digital timer-based lawn irrigation systems, you need to know that AI-based internet of things devices will eat into your market very soon. The examples are countless, but once you are educated about how the markets will evolve over the next few years, you can put the investments into these technologies and continue to maintain and grow your market position.
Just like there is no “starting small” or “small thinking” when implementing the ERP software or any other big-software transformations, automation and AI technologies require big thinking about collective incremental gains attainable from these technologies. In many ways, in the age of hyper-automation, your organization’s survival may depend on it.