Leveraging Generative AI Successfully: Strategy, ROI and the Path Forward

The barriers to entry for using this exciting technology have come down - so how ARE you going to use it to full advantage?

"Don't be seduced by the latest technology. Focus instead on the business problem you're trying to solve." - Harvard Business Review

Generative Artificial Intelligence (GenAI) has stepped out of the realms of theory and computer labs to become available to businesses and individuals almost overnight. It is not just that the technology has evolved, it is the speed at which it has become accessible to anybody who is curious to use it.

Suddenly, GenAI is offering businesses the power to automate content creation, personalize experiences and unlock entirely new possibilities. The field is exciting, yet complex and navigating a profitable path through it requires a well-defined strategy to ensure successful implementation.

This article explores key considerations for leveraging GenAI successfully, including strategy development, return on investment (ROI) considerations, business model exploration and the decision between in-house development or leveraging consultancies.

Building a Winning Strategy: Aligning with Business Goals

While it may be tempting to jump in with both feet first and try out all the shiny new toys, the foundation for successful GenAI adoption lies in a well-defined strategy. As McKinsey advises,

“The lessons of past technology innovations still apply: value comes from having a clear understanding of business goals and how technology can help meet them. It’s important to experiment and learn rapidly, but it’s also critical to resist the temptation to develop use cases with exciting new technology that doesn’t end up creating value for the business.”

Here are key steps to consider when considering GenAI:

Identify Business Needs: Start by clearly identifying the challenges your business is facing or the areas where GenAI can create value. This could be content creation bottlenecks, inefficiencies in customer service interactions, or opportunities for product personalization. Consider how much value you will attach to a solution for each challenge and how much time you’re prepared to invest in finding that solution.

• Align with Overall Goals: Ensure your GenAI strategy aligns with your broader business objectives. Is the goal to improve customer engagement, increase efficiency, or generate new revenue streams? Don’t be distracted by an exciting feature, otherwise the tech tail will wag the business dog.

• Define Success Metrics: Set clear and measurable success metrics to track the impact of your GenAI project. This could include metrics such as cost savings, customer satisfaction scores, or lead generation rates. You will want to demonstrate clear before/after figures to achieve buy-in for future projects and further exploration.

• Develop a Phased Rollout: Consider a phased rollout approach to mitigate risks and ensure successful implementation. Start with a pilot project focused on a specific use case and scale up based on results. Sandbox with your simplest, easiest and cheapest issues before you tackle more complex problems.

Calculating ROI: Measuring the Value of Generative AI

"CIOs [Chief Information Officers] who can't measure the business value of IT projects risk losing funding and influence." - Gartner

If you are called upon to justify investment in GenAI, you will need a clear understanding of potential ROI. At the top level, you should consider these factors:

• Cost Savings: Quantify the cost reductions achieved through automation and increased efficiency.

• Revenue Growth: Estimate the potential revenue increase stemming from improved customer experiences or faster product development cycles.

• Improved Brand Perception: Evaluate the qualitative impact on brand perception through surveys or social media sentiment analysis.

What does it cost?

GenAI is accessible but not without cost. There are three major business models that allow organizations to adopt the technology at a price point relevant to their needs:

• Freemium Model: Offer a basic level of GenAI functionality for free and charge for premium features or usage tiers.

• Subscription Model: Provide access to a GenAI platform or service through a monthly or annual subscription fee.

• Pay-Per-Use Model: Charge users based on the amount of data they process through the GenAI model.

As well as the SAAS costs, there are other factors that will impact ROI, such as:

• Technology Factors: The specific type of GenAI technology (such as Large Language Models, Small Language Models, Multimodal Language Models) will have a significant impact on its potential ROI. The complexity of integrating GenAI into your existing workflows and infrastructure will influence costs and timelines. And GenAI models rely heavily on high-quality training data; limited or low-quality data can diminish the value you get from the technology.

• Business Factors: Implementing GenAI might require changes in employee workflows and responsibilities. Change may mean disruption, so an effective change management strategy must run side-by-side with a technology rollout.

• Measurement and Evaluation: Monitoring must be consistent, thorough and credible. You should anticipate the need to refine the technology's use or address emerging challenges to maintain a positive ROI. Consider GenAI as a long-term investment; while initial benefits might be incremental, continuous improvement and innovation can lead to a significant return on investment over time.

• Additional Considerations: The ROI of GenAI may be heavily influenced by your industry and target market. Understanding how GenAI is used by competitors and its potential impact on customer expectations is crucial. Regulations are lagging behind reality for GenAI so be mindful of existing rules around data privacy and ethical use of AI and stay informed about regulatory changes.

Training and People: Building the Right Team

Leveraging GenAI effectively requires the right talent. You should evaluate your organization's existing capabilities and talent pool in AI and data science. The scale and complexity of your GenAI project may dictate whether you opt for in-house development or seek consultancy expertise.

Consultancy comes at a cost, so an in-house team may be the ideal way to scope out projects that need their expertise without overspending on projects you can easily carry out yourself.

Here's a three-pronged approach to building a strong team:

1. Skills Gap Analysis: Conduct a skills gap analysis. Identify the knowledge and expertise your existing workforce needs to effectively utilize GenAI. This might involve understanding core AI concepts, data analysis skills, or familiarity with specific GenAI tools. Enthusiasm is an often-overlooked skill: is there someone in the organization who is an early adopter, champion or evangelist for GenAI?

2. Training Programs: Bridge the gap with targeted training programs. Invest in educational resources like online courses, workshops, or in-house training sessions. Equipping your employees with the necessary skills to understand and work with GenAI is crucial for successful implementation. Sharing knowledge that already exists within the organization is essential.

3. Hiring for Expertise: For complex projects or leadership roles, consider hiring individuals with specific expertise in GenAI and data science. Their specialized knowledge will guide your GenAI initiatives, ensuring your team leverages the technology effectively and achieves desired outcomes. This may be the point at which you consider external consultants.

Conclusion: A Data-Driven Decision Process

Leveraging GenAI successfully requires a multidisciplinary approach:

• Know what you want to achieve and align your strategy with your long term business goals.
• Keep a strong handle on the costs as well as the benefits of the new technology.
• Build a team that will be able to put the technology to work, achieving a balance of people who know the business inside out and external consultants who are ahead of the curve in the use of GenAI tools.

With these factors in place, you will be in a strong position to make the most of GenAI, however it evolves in the coming years. With a clear overview of strategy, coasts, benefits and people, you can unlock the immense potential of GenAI and propel your business forward.

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