Generative AI: Unlocking Strategic Value in Business Transformation
By Dr. Giancarlo Crocetti, Assistant Professor, St. John’s University
Lately, I noticed a tsunami of advertisements promising that you will get to the moon by using this or that AI-enhanced tool, as if stating that everything will be okay because “something” is AI-enhanced. If we add the continuous technical advancements in the field, you might experience this overwhelming feeling of inadequacy in dealing with this pace of change.
If this story sounds familiar, it is time to focus on the fundamentals and consider the potential of Generative AI without worrying too much about the specifics.
I always bring the example of imagining using a horse-powered carriage at a time when many new electric-powered and sophisticated vehicles are entering the market. You might feel overwhelmed when thinking of choosing this or that vehicle. This is not what we should focus on. Instead, focus on the advantages this new technology will mean to you and start with the most straightforward and most affordable of these new vehicles. After all, you will take full advantage of this new technology no matter the model.
All this glamour about AI sends a simple but powerful message [I am borrowing the title of Bill Gates’s op-ed]: “The Age of AI has Begun.” As a leader, I would recommend that you take a step back and meditate on what all this means for your company and organization and ask yourself: “Am I considering AI as a simple tool to streamline operations, or do I consider it as a catalyst for fundamental business transformation?”
Answering this question will tell your current standing on the value transformation potential of AI.
AI Adoption in Businesses
The latest data from McKinsey & Company (“The state of AI in early 2024: Gen AI adoption spikes and starts to generate value”) clearly indicates that we are witnessing an accelerated adoption of Generative AI in business, with 65% of organizations regularly using AI, representing a doubling percentage from ten months prior.
While the initial adoption trend relates to automating processes and optimizing operations, this is no longer true. Generative AI is reshaping industries and driving innovation.
Insilico Medicine is the front-runner in adopting Generative AI in its drug research and development strategy. I still remember my conversation with the CEO, Alex Zhavoronkov, when the company was not even a year old in 2015 and his conviction that AI (GANs specifically) was the key to propel the industry forward. Asking other experts, I noticed, back then, an overwhelming sense of “this is all baloney.” Yet, I perceived that something was changing at the very fabric of R&D. Today, Insilico Medicine has several compounds in clinical trials, and only the results will give us a final answer.
I also had the fortune to work with a leading South Korean startup (at that time) called Standigm, which is now the leading AI Drug Discovery company in South Korea with its AI Drug Discovery workflow.
I am mentioning drug discovery because the AI-based development of chemical compounds is a complex problem. If we succeed in this area, we can succeed in others.
Despite the rapid adoption, a report from the Boston Consulting Group (“AI Adoption in 2024: 74% of Companies Struggle to Achieve and Scale Value”) finds that 74% of companies struggle to achieve and scale value from AI, indicating integration issues and a lack of skilled personnel as the main culprits.
What can we do?
Strategic Integration: The Key to Unlocking Generative AI’s Potential
Data indicates that leaders cannot rely on Generative AI as a mere efficiency enhancer. Any competitive advantage from this approach is necessarily short-lived, as competitors can quickly catch up using the same technology given the low barriers to entry.
A survey from Tata Consultancy Services indicates that 54% of executives believe that AI can have an even more significant impact than the Internet, with 59% of responders equating its importance to that of smartphones. This reflects a sentiment of acknowledgment of the potential of AI to redefine business models and operations.
Analysis of the workforce does not reflect the same sentiment. Naomi Ackerman recently published an article in The Time (“Gen Z employees were the most skeptical about AI”) reporting on her interview with Jeff Lange, CEO of TFAS (a financial advisory firm), who found that Gen Z employees exhibited skepticism towards AI assistants and concerns about accuracy and data privacy highlighting the importance of organizational culture and employee engagement in AI adoption.
The key to unlocking generative AI’s potential is its integration into core business strategies. Deloitte’s 2024 report (“Unpacking GenAI Adoption”) points out that organizations incorporating GenAI into their core strategies are better positioned to create a sustained competitive advantage. Dell Technologies exemplifies this successful GenAI integration that resulted in a revenue of $11.4 billion in the third quarter of 2024 related to AI-related activities (“Dell embodied 2 of the corporate world’s biggest themes in 2024: AI and RTO. It’s paying off.” Business Insider).
If you are unsure what to do about AI, ask yourself this question: how can I embed Gen AI in my core strategy?
Redefining your Core Strategy
This is not an easy feat, and if you are comfortable seeing things at 50,000 feet, better prepare yourself to fly even higher.
Redefining your core strategy to include Gen AI requires your business acumen to see the alignment of technology capabilities with business objectives and, even more importantly, the inclusion of Gen AI as part of your product.
At St. John’s University, for example, we have an extended program in which we help businesses do exactly that. Our AI-focused workshops help companies articulate a clear vision that positions AI at the core of their mission and strategy. They also help executives envision AI in product development, operations, and customer engagement.
Creating a strong [as sincere] innovation culture is also essential. While I am not stating anything new, a recent report from McKinsey & Company (“Companies with innovative cultures have a big edge with generative AI”) found that companies with a strong innovation culture are more adept at deploying Gen AI as they integrate technology with strategic goals. There are many studies on fostering an innovative culture so that I will say no more about this topic.
The inclusion of Gen AI into the core strategy also requires significant investment not only in AI technology but also in the development of internal capabilities.
Building a Workforce Prepared for AI Transformation
And here is the elephant in the room.
Strategic adoption of Generative AI requires the workforce to have the skills to harness its potential. Organizations face a pressing need to bridge the skills gap and cultivate AI literacy across all levels.
A business transformation cannot happen without transforming its workforce, and the best approach is the one highlighted by Prof. Karim R. Lakhani from the Harvard Business School: “AI Won’t Replace Humans – But Humans With AI Will Replace Humans Without AI.” (Harvard Business Review)
While his study focused on the disruptive effects of AI on the workforce, it is essential to consider that the transformation of your business must include the reskilling or upskilling of the workforce.
- Developing a Baseline of AI Knowledge
AI literacy is no longer confined to technical roles; it is a critical competency for employees in marketing, operations, and beyond. According to Gartner’s 2024 report (“Explore Beyond GenAI on the 2024 Hype Cycle for AI”), organizations prioritizing upskilling are significantly more likely to see positive returns on their AI investments.
Case in mind, at St. John’s, we require all students to undergo comprehensive training on Generative AI as a necessary skill for future professionals. This topic is so vital that it prompted me to create a free training course on Udemy with the hope of somewhat preparing individuals for the disruption of AI (https://www.udemy.com/course/aim810-genai/).
- Encouraging Collaboration Across Disciplines
Effective Generative AI implementation relies on seamless collaboration between technical experts and business strategists. By fostering cross-functional teamwork, companies can ensure alignment with broader goals while reducing project risks.
- Equipping Leaders with Strategic Insights
Executives play a pivotal role in embedding AI into core strategies. They must grasp AI’s opportunities and challenges, from addressing ethical concerns to identifying high-impact applications. Visionary leadership is essential to steering AI-driven initiatives toward success.
Charting a Path to Strategic AI Integration
And now, here is a “Call to Action”: What can you do now?
Before, I asked you to tap into your deepest business abilities. You must envision GenAI as your core strategy, creating specific and measurable strategic goals aligning with the new mission and long-term vision. This process involves assessing existing capabilities, identifying high-value use cases, and setting measurable performance metrics.
I recommend using frameworks like OKR (Objectives and Key Results), as this process forces you to develop clear stretch goals that are ambitious enough to push the organization without breaking it apart.
- Invest in Scalable Technology
Generative AI requires a robust technological foundation, including cloud infrastructure and advanced data management systems. Scalable and adaptable solutions ensure organizations can meet the demands of evolving AI technologies.
This is also the time to seriously consider your workforce and how to bring them along the transformation journey. Do not fall into the trap of a simple re-organization, as that will indicate failure to understand the full implication of introducing GenAI at the strategic level. - Promote a Culture of Innovation
Okay. I will repeat the jargon around this topic, which has been around for many years: successful AI adoption depends on fostering an environment where innovation thrives. Encouraging experimentation, investing in employee education, and celebrating AI-driven achievements create a fertile ground for continuous growth. - Address Ethical Challenges
As AI becomes integral to business strategies, organizations must adopt ethical practices to build trust and mitigate risks. Transparency in AI use, proactive bias management, and stringent data governance policies are essential to ethical AI deployment.
If you don’t have a data governance organization, creating one is a good time. Generative AI relies on very large volumes of high-quality data. Without a robust data governance approach, the risks associated with data quality, privacy, and compliance can seriously diminish the benefits of AI adoption.
Looking Ahead: Generative AI as a Strategic Imperative
Generative AI represents a point of discontinuity and businesses must not consider it as another new technology tool. Many experts agree that integrating Generative AI into business processes is the first step to open new frontiers for innovation, efficiency, and growth. However, to secure a real and sustainable competitive advantage organizations must integrate Generative AI into their strategic goals.
Realizing this potential requires more than technological investment—it calls for bold leadership, a skilled workforce, and a commitment to cultural transformation.
In the coming years, the question for businesses is not whether to adopt Generative AI but how to make it a cornerstone of their strategy. Those who succeed will set new benchmarks for what is possible, driving sustainable growth and leaving a lasting impact on their markets.