Chapter 7: Riding the Digital-Technology Wave
Understanding how to navigate and leverage the current wave of digital technology advances
Navigating the AI Technology Wave
Executive Summary: The current wave of AI capabilities requires leaders to understand how technology adoption works and how to ride the wave effectively. Learning from internet adoption patterns can provide valuable insights for AI adoption. The key is staying updated while managing the relentless pace of change. Time Investment: 5-7 minutes to understand the approach.
The Challenge: The past fifty years have seen an astonishing evolution in digital technology, affecting every aspect of business and society. With the current wave of AI capabilities, the advances seem to just keep coming, making it essential for leaders to stay updated while managing adoption effectively.
The Approach: One effective strategy is to learn from how internet adoption took place and relate this to AI's adoption journey. This historical perspective can provide valuable insights for navigating current and future technology waves.
The Digital Revolution's Impact
Understanding the profound changes digital technology has brought to business and society.
The digital revolution we are now experiencing has changed the face of both business and society. While the pace of progress already seemed unstoppable a few years ago, the past few years have seen even more rapid evolution and innovation in digital technologies. There are no signs of this relentless pace letting up, either, with new advances constantly revising business operations, reshaping the interaction between the business world and the public, and redefining business-to-business relationships. This has immense implications for business and society alike, and it raises important questions about how organizations and individuals can keep up to date with advances in digital technology, and how they should manage their adoption into current ways of working.
To get to grips with all this, it is essential to place this endless flow of digital technologies into perspective. The power of digital technology to transform our lives is undeniable, and we have all seen first-hand the massive potential that digital approaches can bring. Yet, as with any kind of technology, it is easy to focus on the obvious short-term changes to working practices and overlook the deeper longer-term implications. As Roy Amara's law neatly summarizes, we tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run. This observation has proven true time and time again, and digital advances certainly prove the point. Despite the obvious day-to-day changes, organizations of all sizes are still waking up to digital transformation's disruptive impact on their future. In the face of this disruption, they are simply trying to survive.
Why Organizations Must Keep Up with Digital Technology
But standing still is not enough. In today's rapidly evolving business landscape, making use of digital-technology advances is no longer optional: it is imperative for organizations that are aiming to thrive and remain competitive.
- Operational Efficiency and Productivity Embracing and integrating cutting-edge technology into an organization's daily practices can lead to significant improvements across various aspects of business, from enhancing efficiency and productivity to attracting and retaining key staff. First and foremost, adopting the latest digital technologies enables businesses to streamline their operations and improve overall efficiency. What we have seen is that automation and AI tool adoption can optimize routine tasks, reducing human errors and freeing up valuable time and resources. Together with the implementation of cloud-based services, companies can scale their operations more effectively, minimizing infrastructure costs and improving accessibility for their workforce.
- Competitive Advantage and Market Position Moreover, keeping up to date with digital-technology advances can significantly boost an organization's competitiveness in the market. Consumers' expectations are continuously changing, and technology plays a pivotal role in meeting those demands. Organizations that integrate digital tools and platforms into their customer service, marketing, and sales processes can deliver more personalized and convenient experiences, fostering loyalty and gaining a competitive edge over rivals who are slow to adapt.
- Talent Attraction and Retention Furthermore, attracting and retaining top talent is increasingly dependent on an organization's tech-savviness. In the digital age, skilled professionals seek opportunities to work with forward-thinking companies that invest in their development and provide a dynamic work environment. Employees value flexibility and access to digital tools that enable collaboration and remote work. By staying up to date with digital technology, businesses can demonstrate their commitment to employee well-being and productivity, making them more appealing to job seekers and reducing staff turnover.
- New Revenue Streams and Business Models Additionally, digital technology can unlock new revenue streams and business models. Companies that create outcome-based approaches and employ data analytics can gain valuable insights into customer behavior, market trends, and operational efficiency, allowing them to make informed decisions and identify untapped opportunities. This data-driven approach can lead to the creation of innovative products and services, opening doors to previously unexplored markets.
- Security and Resilience Finally, and significantly, staying ahead of technology advances is crucial for ensuring the security and resilience of an organization. The ever-evolving digital landscape brings new cybersecurity threats and challenges. By aligning with the latest technologies and security measures, businesses can better protect their data, systems, and reputation.
McKinsey's Technology Trends Analysis
With so much attention focused on the development of digital technologies, it is easy to be overwhelmed by the variety of directions and be overtaken by events as new products come to market. Which ones are essential to drive near-term operational impact? What are their long-term implications for organizational strategy?
With so much attention focused on the development of digital technologies, it is easy to be overwhelmed by the variety of directions and be overtaken by events as new products come to market. Which ones are essential to drive near-term operational impact? What are their long-term implications for organizational strategy?
The AI Revolution
Broad application of AI is now seen in almost every domain. McKinsey estimates the potential economic value at stake from applied AI to be between $17 trillion and $26 trillion, and the number of companies pursuing that value has been increasing. Industrialization of machine learning operations (MLOps) is adding to this potential by scaling ML models and greatly reducing the cost of applying ML. By adding the excitement of generative AI solutions to this mix, the AI revolution has now moved into a higher gear.
Building the Digital Future
Our digital future relies on effective ways to create, deploy, and maintain the software that will underpin it. Next-generation technologies are transforming the capabilities of engineers at every stage of the software development life cycle. The software stack is also evolving.
AI's Journey: Mirroring Internet Adoption
In a confusing digital world, it is important to step back to reflect on the path we are traveling and to assess current directions.
In a confusing digital world, it is important to step back to reflect on the path we are traveling and to assess current directions.
In so doing, we can see that the journey of understanding and adopting AI technology mirrors the phases of development of the internet. Initially confined to tech experts, AI's accessibility has expanded rapidly, and generative AI systems such as ChatGPT have engaged a broader audience in real-world applications. Now, with simple use cases such as chatbots, text generation, and language translation, a new phase is unfolding: a phase marked by increased automation and more user-friendly interfaces. Exciting AI products are being released by many companies – from sectors as diverse as sales, healthcare, education, and customer service – simplifying the use of this technology.