![7
'DEPLOY' Overview | 'DEPLOY' unlocks 10-15% productivity improvement
and prepares organization for broader AI change
What is 'DEPLOY'?
Deploy efforts take the “toil” out of work;
investments in early wins that prepare
organizations for an AI-powered future
How are companies using it?
'DEPLOY' tools in the market
of companies employing
GenAI solutions have
'DEPLOY' plays in motion1
ChatGPT
Enterprise
GitHub
Copilot
Microsoft
Copilot
Adobe
Firefly
69%
Knowledge management
67%
Code development
62%
Meeting summaries
55%
Content drafts
48%
Image/visual
content generation
44%
Research extraction
and synthesis
33%
Contract/SOW drafts
31%
Calendar management
31%
Invoice reconciliation
Tech is being deployed across various workflows and everyday tasks,
with a few standing out as the most common
Q: How is your company deploying GenAI in everyday tasks today? (N=188)1
1. BCG Deploy, Reshape, Invent Survey 2023; 2. GitHub; 3. Microsoft; 4. BCG Henderson Institute; 5. Adobe
Illustrative, non-exhaustive
60%
"Personalized recommendations are now at
the fingertips of all our developers. [With
GitHub Copilot], they are coding faster,
collaborating more effectively, & building
better outcomes."
– Engineering Manager at a leading
technology company
10-15%
productivity
gains](https://image.slidesharecdn.com/bcg-executive-perspectives-ceos-guide-to-maximizing-value-from-ai-ep0-3july2024-250615155530-f2722c3d/85/BCG-Executive-Perspectives-CEOs-Guide-to-Maximizing-Value-from-AI-EP0-3July2024-pdf-8-320.jpg)
![9
'INVENT' Overview | Select companies are inventing with AI, ushering in a new
era of innovation & taking the lead in shaping the future of their industries
What does 'INVENT' look like?
How are enterprises reinventing
themselves?1
88%
64%
52%
46%
New customer value proposition
for existing products or services
New products or services
New target customers
New pricing/cost structure
for existing products or services
Source: BCG Deploy, Reshape, Invent Survey 2023; 1. Survey question: How will your company invent new business models with AI? Please select the type of new business models AI will generate at
your company (N=142, companies pursuing Invent)
What is 'INVENT'?
'INVENT' develops AI-native offerings that
elevate customer value proposition and
unlock new business models & revenue
opportunities
of companies employing
GenAI solutions have
'INVENT' plays in motion
46%
New customer experiences
AI enhances businesses' ability to craft
engaging, personalized customer
experiences, driving greater loyalty,
engagement, and brand advocacy
New business models
AI drives business model innovation by
evolving & learning from existing
operations, enhancing competitive
advantage and enabling novel models
New line of products
AI empowers businesses to create
data-driven, dynamic products,
leveraging insights to enhance
profitability and competitiveness
[Our company] has always lived at the
intersection of tech and creativity.
Recent developments in AI represent
an opportunity to take this
convergence to the next level. We view
AI [and GenAI] as an exciting new
creativity tool to open avenues for
imagination and explore premium
product offerings that allow us to
innovate with our clients and partners
on a new frontier in media.
– CEO at leading internet
media company](https://image.slidesharecdn.com/bcg-executive-perspectives-ceos-guide-to-maximizing-value-from-ai-ep0-3july2024-250615155530-f2722c3d/85/BCG-Executive-Perspectives-CEOs-Guide-to-Maximizing-Value-from-AI-EP0-3July2024-pdf-10-320.jpg)
BCG-Executive-Perspectives-CEOs-Guide-to-Maximizing-Value-from-AI-EP0-3July2024.pdf
- 1. Executive Perspectives July 2024 Introduction CEO’s Guide to Maximizing Value Potential from AI in 2024
- 2. 1 1 In this BCG Executive Perspective, we will show you how to leverage AI to create business value Introduction We meet often with CEOs to discuss AI---a topic that is both captivating and rapidly changing. After working with over 1,000 clients in the past year, we are sharing our most recent learnings in a new series designed to help CEOs navigate AI. With AI at an inflection point, the focus in 2024 is on turning AI’s potential into real profit. Here are some key questions CEOs often ask about getting value from AI: • Where should my organization start? • What are the highest value and opportunities where GenAI and AI can transform my business and functions? • How can I achieve short-term performance with AI and GenAI while building the necessary capabilities in my organization? • How can I build enthusiasm for AI across all levels of my organization and drive adoption among front-line employees? This document is a guide for CEOs to cut through the hype around AI and understand what creates value now and in the future. It explains current AI adoption trends, the technology's capabilities, and how to use it for a complete enterprise transformation.
- 3. 2 Executive summary | CEO’s guide to maximizing value potential from AI in 2024 The time to act on AI is now The maturity of AI brought us to an exciting moment, where Generative AI is complementing Predictive AI, and going well beyond the hype in delivering superior value for organizations AI mature companies (~10%) are also the first to scale GenAI, further widening the gap vs. peers AI technology is also evolving rapidly, from mature value sources ready to scale at the present time to exciting innovations on the horizon Companies are embarking on AI transformation journeys; setting ambitious targets both in top line and bottom line Three strategic plays to create value at scale with AI Three strategic initiatives to drive value and achieve end-to-end enterprise transformation: • 'DEPLOY' utilizes off-the-shelf tools to boost workforce productivity by 10-15%, improve employee satisfaction, and generate excitement for broader AI change in the organization • 'RESHAPE' allows for re-imagination of functions through workflow re-engineering, to drive 30-50% improvements in efficiency, effectiveness across affected functions • 'INVENT' leverages AI to expand revenue streams and "invent before getting disrupted" by introducing new offers, services, and experiences to the market Executing successfully To successfully deploy AI at scale and convert it into business impact, organizations need strong foundational capabilities (e.g., talent, technological infrastructure, etc.) and a 10-20-70 approach in terms of level of emphasis anchoring on algorithms (10%), tech & data (20%), and people & processes (70%) Long-term competitive advantage will come from data, talent, and culture; the time to act is now, otherwise, organizations risk being left behind
- 4. 3 GenAI is extending the value and excitement around AI broadly, with leading adopters realizing superior outcomes +38% 3-year EBIT growth +2.6x 3-year revenue growth +50% 3-year market share growth +45% Customer satisfaction score …and rewards are clear for those further ahead in AI journey2 Companies with the highest AI maturity are further extending their lead by scaling GenAI applications1… 1. BCG Build for the Future C-level GenAI survey, 2023/2024, N = 159; BCG Client Experience 2. BCG Company of the Future Survey 2022; n=536; Comparison of 'Discovering' companies with none/limited AI solutions vs 'AI driven' companies with multiple at scale AI solutions Read What GenAI's Top Performers do Differently Piloting Developing few focused MVPs to test value from GenAI Scaling Are scaling 1 or more GenAI applications across functions/ enterprise No-action yet Taking no action on GenAI yet ~ 10% companies ~ 50% companies ~ 40% companies Majority have historically lacked predictive AI project execution capability Majority have historically piloted a number of predictive AI projects, but few have successfully scaled Majority have historically scaled several predictive AI initiatives in a few functions Higher AI maturity 3
- 5. 4 AI technology continues to evolve rapidly; while value proofs exist already, even more exciting opportunities are on the horizon Demand forecasting Commercial spend simulation and allocation Optimization: operations, price, promotions, precision media Established value sources Customer facing chatbots Content generation including text & image Trend sensing, product refinement Summarization & recommendations from unstructured data Emerging applications Independent decision-making without human in the loop Video/audio content generation New product development Early experiments Non-Exhaustive
- 6. 5 Three complementary strategic plays to maximize value potential of AI Enhance efficiency with GenAI tools that streamline everyday business processes reducing the need for additional hires & daily operating friction Elevate business impact by transforming workflows with AI, enabling multi-functional reshaping and end-to-end organizational transformation Develop AI-native offerings that elevate customer value proposition and unlock new business models & revenue opportunities Examples of 'Deploy' • Meeting summary • Code development • Calendar management • Invoice reconciliation Examples of 'Reshape' • Design and Engineering • Marketing • Customer Service • Technology Examples of 'Invent' • Hyper-personalized customer experience • AI-powered services/products • Data monetization across value chain • Insights and innovation platform DEPLOY RESHAPE INVENT End-to-end transformation across all 3 plays Combine multiple AI initiatives for an end-to- end transformation Scale from functional transformation to company-wide transformation Read Turning GenAI Magic into Business Impact 5
- 7. 6 Key principles and CEO imperatives for scaling strategic plays Tech Risk/ Responsible AI Operating model People AI outcomes Dedicated platform Client facing risks Incubation-led Advanced design + AI New revenue play Off the shelf software (e.g., Copilot, ChatGPT Enterprise) Technical risks IT/HR-led Upskilling & adoption 10-15% productivity DEPLOY GenAI in everyday tasks Assembly of predictive & generative AI systems; function-specific Operational risks Function-led Process redesign, workforce planning 30-50% efficiency, speed, and effectiveness/ROI improvement RESHAPE Critical functions INVENT New business models CEO imperatives • Engage CFOs and CHROs (beyond CIOs), as champions • Embed tools in existing workstreams with role-specific features • Communicate capabilities & goals to avoid unrealistic expectations • Shift dialogue from uses case/point solutions to function transformations • Upskill leaders & use persona-based communication to facilitate change • Build a baseline, select priority workflows, & run pilots • Be prepared to continuously test & adapt operational plans • Maintain focus on providing customer value vs technology capabilities • Align (Gen)AI initiatives with overall strategy & inspire C-level to lead/invest 6
- 8. 7 'DEPLOY' Overview | 'DEPLOY' unlocks 10-15% productivity improvement and prepares organization for broader AI change What is 'DEPLOY'? Deploy efforts take the “toil” out of work; investments in early wins that prepare organizations for an AI-powered future How are companies using it? 'DEPLOY' tools in the market of companies employing GenAI solutions have 'DEPLOY' plays in motion1 ChatGPT Enterprise GitHub Copilot Microsoft Copilot Adobe Firefly 69% Knowledge management 67% Code development 62% Meeting summaries 55% Content drafts 48% Image/visual content generation 44% Research extraction and synthesis 33% Contract/SOW drafts 31% Calendar management 31% Invoice reconciliation Tech is being deployed across various workflows and everyday tasks, with a few standing out as the most common Q: How is your company deploying GenAI in everyday tasks today? (N=188)1 1. BCG Deploy, Reshape, Invent Survey 2023; 2. GitHub; 3. Microsoft; 4. BCG Henderson Institute; 5. Adobe Illustrative, non-exhaustive 60% "Personalized recommendations are now at the fingertips of all our developers. [With GitHub Copilot], they are coding faster, collaborating more effectively, & building better outcomes." – Engineering Manager at a leading technology company 10-15% productivity gains
- 9. 8 'RESHAPE' Overview | Companies are reshaping support functions with AI, then quickly moving on to transform core functions crucial to their industry What is 'RESHAPE'? Companies are elevating business impact by transforming functional workflows with AI 'RESHAPE' is … of companies employing GenAI solutions have 'RESHAPE' plays in motion1 Source: 1. BCG Deploy, Reshape, Invent Survey 2023 2. Responsible AI – the approach to developing and implementing AI in a legal and ethical manner; 2. BCG analysis and client experience 68% • Functional transformation leveraging AI and GenAI • Holistic and centrally coordinated effort • Complete re-imagination of how work gets done and who does it • Building underlying capabilities via strategic investments in core tech, people and RAI2 Companies across industries are reshaping beyond their support functions, expanding towards core functions Core functions (varies by industry) Support functions Supply Chain HR IT & Development Marketing in CPG R&D in BioPharma Underwriting in Insurance • Streamline talent sourcing & hit-rate of best candidates • Increase employee satisfaction with augmented HR services • Drive efficiency in tech ops & vendor spend model • Accelerate software development timelines • Drive efficiency in quality, customer service, and logistics • Reduce lead times in production and logistics • Improve product development (e.g., drug discovery, scientific research), quality, testing, and design generation • Deliver superior productivity, creativity, insights in less time • Enhance customer-centric delivery with hyper-personalized content and campaigns at scale • Improve overall response time by extracting information more quickly and accelerating summary & review processes • Enhance assessment accuracy Non-Exhaustive … …
- 10. 9 'INVENT' Overview | Select companies are inventing with AI, ushering in a new era of innovation & taking the lead in shaping the future of their industries What does 'INVENT' look like? How are enterprises reinventing themselves?1 88% 64% 52% 46% New customer value proposition for existing products or services New products or services New target customers New pricing/cost structure for existing products or services Source: BCG Deploy, Reshape, Invent Survey 2023; 1. Survey question: How will your company invent new business models with AI? Please select the type of new business models AI will generate at your company (N=142, companies pursuing Invent) What is 'INVENT'? 'INVENT' develops AI-native offerings that elevate customer value proposition and unlock new business models & revenue opportunities of companies employing GenAI solutions have 'INVENT' plays in motion 46% New customer experiences AI enhances businesses' ability to craft engaging, personalized customer experiences, driving greater loyalty, engagement, and brand advocacy New business models AI drives business model innovation by evolving & learning from existing operations, enhancing competitive advantage and enabling novel models New line of products AI empowers businesses to create data-driven, dynamic products, leveraging insights to enhance profitability and competitiveness [Our company] has always lived at the intersection of tech and creativity. Recent developments in AI represent an opportunity to take this convergence to the next level. We view AI [and GenAI] as an exciting new creativity tool to open avenues for imagination and explore premium product offerings that allow us to innovate with our clients and partners on a new frontier in media. – CEO at leading internet media company
- 11. 10 Biopharma $1B Value potential by 2027; 'Reshaped' multiple core functions, starting with Marketing, R&D, Manufacturing Financial Institution $1B+ Productivity program (cost, revenues, balance sheet optimization); Includes Engineering, Research, Investment Banking, Wealth Management, Risk Management Energy 4 hrs Productivity boost (per week) to support growth strategy Insurance 50% Reduction in time required for underwriting, driving top line growth Productivity improvement Cost transformation Top-line growth Boost productivity with 'deploy' & 'reshape' plays to level up the company, especially across heavily people-driven organizations 'Reshape' functions and leverage predictive AI to maximize productivity of assets and reduce costs Speed up time-to-market & drive revenue by 'reshaping' core processes, 'inventing' new offerings and full end-to-end transformations Consumer Goods 3pts+ Incremental sales through digital services Professional Services 6 hrs Productivity benefits (per week) through broad deployment across 30k users More detail on following pages *500+ basis points *250 basis points Across the 3 plays, leading companies are setting ambitious targets when embarking on AI transformation journeys Source: BCG Experience Non-exhaustive
- 12. 11 11 Example 1/2 | How a Biopharma company is reducing cost through AI transformation with a focus on reshaping multiple functions 20-30% agency cost reduction and improved engagement & campaign ROI 20-40% medical writer efficiency gain – 3-6 months saving in time-to-market 80% of reports approved with no edits – from 20 to 1-3 days Marketing & Sales Research & Development Commercial Source: BCG analysis and client experience Execution Vision Company-wide program under CEO and ExCo sponsorship Mandate to unlock value fast, by reshaping multiple functions, engaging all employees; position as pioneer in AI within sector Vision to transform via: 1. Productivity improvement (e.g. content summarization) 2. Work reduction via automating end-to-end processes 3. Improving employee engagement via reducing repetitive tasks 4. Competitive advantage via business model reinvention, cost advantage, capability building Adopted iterative approach and started with several pilots 1 Setup rigorous measurement with GenAI mirror processes 2 Developed lighthouse in Commercial function and then expanded to Research & Development and Marketing & Sales 3 4 Each wave focused on outcomes and operating model redesign (e.g., as-is content development insight-powered & always- on content development augmented/ assisted sales) Assessed portfolio of investments, projected ROI based on first impact; adjust accordingly 5 Value capture Deploy Reshape Invent Fill % represents level of emphasis for each strategic play Non-Exhaustive 11
- 13. 12 12 Example 2/2 | How a CPG company is driving topline growth by inventing new business model and reshaping functions with AI Global CPG seeking to reinforce its core competitive advantages through AI 1. Product superiority and speed to market 2. Marketing creativity and effectiveness 3. Direct and meaningful consumer connections Invested in AI capabilities over the last 7 years, through a mix of organic and inorganic moves Transformed its R&D and Marketing capabilities through Predictive and increasingly Generative AI, for formula success prediction, cycle time reduction, Marketing ROI optimization, content production automation at large scale Launched AI-powered digital services and virtual assistants to augment consumer experience, build direct connections, influence the consumer journey In parallel, set up an Enterprise-wide productivity lift effort with internal GPT $200M+ of incremental sales through digital services 15-25% improvement in marketing spend ROI Time to Market acceleration by 3-6 months Source: BCG analysis and client experience Deploy Reshape Invent Fill % represents level of emphasis for each strategic play Execution Vision Value capture 1 2 3 4
- 14. 13 13 Three pillars for successful (Gen)AI transformation Algorithms Build new algorithms and the science behind them 10% Technology & Data Deploy the tech stack and ensure the right data feeds into the right systems 20% People & Processes Drive change management and other processes related to people 70% The 10-20-70 Rule: Focus 10% of your AI efforts on algorithms, 20% on the underlying technology and data, and 70% on people and processes
- 15. 14 Algorithms (the ‘10’)/Tech & Data (the ‘20’) | Key AI trends for executives to keep in mind across algorithms, technology, and data Note: Trends as of June 2024; 1. Forbes: "Microsoft And OpenAI Partner On $100 Billion U.S. Data Center"; 2. CDO = Chief Data Officers AI models will continue to grow in size & capability in the next 3-5 years, offering an increasingly wide set of options to choose from when balancing performance needs & costs New tech stacks are required to support AI needs, driving companies to simplify legacy systems and adopt new AI platforms The value of Data increasing with AI, requiring companies to develop new capabilities to deal with unstructured data (i.e., knowledge) Recent trends: • Tech companies building AI factories (e.g., Microsoft $100bn data center investment1) • Autonomous agents performing tasks & making decisions without human oversight • AI being deployed on mobile devices Recent trends: • Enterprise system solutions launching GenAI features (e.g., Salesforce, Einstein) • New applications (e.g., Jasper, Writer) & platforms (e.g., Scale AI, Groq) emerging • Companies using GenAI to support system migration (via software automation) • Unstructured data becoming more valuable; increasing need to break “data silos” • External data becoming more valuable; need to develop data partnerships & ecosystems • Need for CDOs2 to help functions create & rank unstructured data across enterprise Algorithms 10% Technology Data 20% Non-exhaustive Non-exhaustive
- 16. 15 People & Processes (the ‘70’) | New roles, evolved operating models, & rigorous change management required for successful AI transformation Source: BCG Marketing Org & Op Benchmarks Emergence of new roles/departments AI-enabled performance management Changing skillset requirements Personalized training New roles will be created to unlock the potential of AI (e.g., Chief AI Officer) GenAI will automate some tasks, recommend next actions & improve knowledge management New observational data (e.g., conversation summaries) will make performance management more objective Employee Learning & Development will be tailored to individual needs & questions, and new training content around AI will emerge New operating models Changes in roles, responsibilities, and decision rights would bring about significant changes in operating models Extensive change management needs New talent needs, ways of working, and job responsibilities must be managed thoughtfully Organization & operating model Purpose, culture, & change management Talent & skills Greater productivity & redesigned work GenAI will automate many types of creative work (e.g., coding, writing) and enhance employee support (e.g., next best action) Revamped talent acquisition Greater access to candidate pool web scraping, auto-scheduling, and AI-based interviewing would greatly increase hiring efficiency 70%
- 17. 16 However, change is hard, and executives face challenges across the ‘10-20-70’ during their AI transformation Sources: BCG Experience; 1. 2023-24 BCG Build for the Future C-level (Gen)AI Survey(s), N = 735; 2. Across S&P 1200; Harvey ball fill represents the % of executives who ranked the challenge in the top 3 challenges when presented with a set of challenges for each of the categories. Of transformations fall short of expectations (in terms of time, budget, meeting ambition)1 With backdrop of $1T of wasted IT spend collectively2 Over 2/3 $1T Algorithms Tech & data People & processes Top challenges with AI transformations1 • Challenges prioritizing AI opportunities when compared to other company-wide concerns (e.g., cost reduction initiatives) • Issues with assigning a target ROI for identified opportunities • Insufficient (Gen)AI literacy throughout the organization • Lack of specialized (Gen)AI engineers in the market • Resistance, opposition, and fear about AI impacting jobs • Lack of accountability & measurement of set KPIs (e.g., adoption, value realized) • Challenges with implementing new processes and reimagining workflows • Trouble reaching sufficient accuracy and reliability of models • Difficulty ensuring security and compliance of the technology • Difficulty integrating new AI technology with existing IT systems • Lack of access to high-quality data for model training • IT cost constraints limiting sufficient investments into (Gen)AI • Difficulty realizing cost takeout/savings % of executives who reported as top challenge within each category 10% 20% 70%
- 18. 17 Core questions for CEOs to consider looking ahead • How do I empower my C-suite to stay up to date with the rapidly evolving AI landscape? • How do I think about whether to Build, Buy or Partner for the model(s) needed? Which model and model platform partnership(s) do I need to make to stay ahead? 10% Algorithms • What kind of (new) data capabilities do I need to leapfrog my competition? • How do I simplify my legacy systems to adopt new AI tech stacks and platforms? • I've invested significantly already. How do I control my costs & ensure a return going forward? 20% Tech & Data • How do I mobilize senior leaders to embrace & actively champion our (Gen)AI ambition? • How must our roles, departments, & operating model adapt to capture value from AI? • What are the best ways to fill the AI talent gap within my organization (e.g., upskill, reskill)? • How do I effectively manage change across my enterprise? How do I communicate our ambition and set the right expectations, while promoting trust and preventing misconceptions? 70% People & Processes Non-exhaustive Source: BCG Experience
- 19. 18 AI Transformation Overview | End-to-end transformation integrates strategy & multiple functional transformations while building requisite foundations (Gen)AI SETUP Articulate vision based on strategy Define value pools • BCG (Gen)AI Maturity Assessment • BCG Workforce Diagnostic Select priority opportunities across Deploy, Reshape, Invent PLAYS Build the business case INVENT new business models and products DEPLOY (Gen)AI in everyday tasks across the enterprise Transformation of function 1 Transformation of function 2 Transformation of function 3… RESHAPE critical functions ENTERPRISE FOUNDATIONS Make coordinated investments in core tech & data, people, and responsible AI Enable leaders and upskill Steer through central governance and measure impact via AI delivery office Drive adoption, engagement & culture change,leveraging behavioral science E2E CHANGE MANAGEMENT & DELIVERY In every business function: Build MVPs, re-design workflows and pilot to prove value… …while designing future state operating model Cascade changes and scale E2E Read about BCG's perspective on Responsible AI
- 20. 19 Getting started | Practical next steps for your AI journey Identify the largest opportunities for action & benchmark AI maturity against peers Assess the potential for total productivity impact across your workforce 1 Understand your starting point Select 3-5 functions/processes for 'DEPLOY', 'RESHAPE', & 'INVENT' plays Setup transformative efforts & resource adequately; target ~2-3x return on investment 2 Prioritize few high value initiatives 3 Optimize tech/digital costs in the first 6-12 months by centralizing resources, rationalizing legacy applications, and reducing third-party spend Prioritize & refocus portfolio on value creating initiatives Fund the journey 4 Build capabilities that will drive & sustain transformation (e.g., tech, people, RAI) Improve the quantity/quality of data – it will be a competitive advantage long-term Invest in foundational capabilities 5 Develop a structure that allows for broad but controlled experimentation Operate according to RAI framework while maintaining focus on prioritized initiatives Launch an AI governance structure 6 Embrace AI tools in daily work, upskill the workforce, & scale initiatives broadly Remember that this is a people transformation not a tech transformation Upskill & scale broadly
- 21. 20 20 BCG Experts | Key contacts for AI transformation Steve Mills Dylan Bolden Tauseef Charanya Dan Martines Amanda Luther NAMR Julie Bedard Sesh Iyer Djon Kleine Nipun Kalra Akira Abe Jeff Walters Romain de Laubier Marc Schuuring EMESA Nicolas De Bellefonds Jessica Apotheker Aparna Kapoor Julian King Dan Sack Andrej Levin Marcus Wittig Renee Laverdiere Matthew Kropp Beth Viner Vladimir Lukic David Martin Robert Xu APAC