Using AI to Digitally Sugar Coat an Old Business

While many organisations are leveraging AI and other advanced technologies to optimise their existing systems and processes, a large proportion are only creating a better version of what already exists. In other words – a better version of the past.

Enhancing yesterday’s blueprint with incremental improvements is not the route to genuine transformation. Before the word “transformation: became a thing, this is what was known as “business change”. And the reality is that many so-called transformations are nothing more than small changes. And when it comes to AI, while such efforts can lead to gains in productivity and cost savings, they fall short of unleashing AI’s full transformative potential.

Instead of using AI merely to automate current workflows or fine-tune existing operations, organisations should consider how AI can fundamentally alter their business models and create new value propositions. This involves reimagining core processes, exploring innovative applications, and being bold enough to disrupt their own practices before competitors do. By doing so, businesses can not only stay relevant in the rapidly evolving market but also lead the charge in their industries, setting new standards and redefining the landscape.

As a business transformation consultant, I have seen firsthand the limitations of using AI solely for optimisation. While there are benefits to be gained, the true power of AI lies in its ability to drive radical change and innovation. Organisations need to shift their mindset from using AI as a tool for optimisation to viewing it as a catalyst for transformation. This requires a strategic vision, willingness to embrace change, and a commitment to continuous learning and adaptation. It’s about moving beyond the confines of current capabilities and imagining what’s possible when technology is leveraged to its fullest extent. By doing so, businesses can ensure they are not just improving on the past but actively defining the future.

The ERP Analogy

This reminds me of how some companies would implement new ERP systems but resist any significant changes to their business processes. They had an expensive new system, but very little changed in their business and there was no value realisation that a CEO, CFO, or other key stakeholders could get very excited about. As a business transformation consultant, I have often seen that merely upgrading technology without revisiting and overhauling underlying business processes leads to underwhelming results. True transformation requires a holistic approach that integrates technology with strategic process improvements. Without this synergy, organisations miss out on the full potential of their investments and fail to inspire meaningful progress.

Incremental vs. Transformational Changes

This can also happen when technology is used to merely make incremental improvements or automate tasks within the current framework, rather than leveraging it for business model transformation. It goes without saying that optimisation is good and necessary. But for many, that’s as good as it gets.

For instance, AI might be used to enhance efficiency in manufacturing processes, streamline supply chain management, or improve customer service interactions without altering the underlying business structure or exploring new business opportunities. While this can lead to improvements in efficiency and cost reduction, it may not necessarily position a company for long-term competitive advantage in a landscape where new business models will eventually disrupt the market. As a business transformation consultant, I firmly believe that organisations must look beyond mere optimisations and embrace bold, transformative changes. Incremental improvements can yield short-term gains, but true competitive advantage comes from rethinking and reinventing business models to align with future market dynamics. Only by daring to disrupt their own status quo can companies achieve sustainable growth and resilience in an ever-evolving business environment.

Learning from Visionary Leaders

Just imagine if Reed Hastings had opted to invest in optimising his profitable DVD business instead of building a new streaming business. Or if Howard Schultz had optimised the Starbucks coffee bean retail business, rather than investing in a new cafe experience. Or if Jeff Bezos had merely optimised his online bookstore processes instead of leading business model transformations that gave rise to their formidable e-commerce and cloud computing platforms. Just imagine if these leaders had limited their “transformation” to simply optimising what still worked at that time.

These leaders recognised the limitations of improving on existing models, even when they were still successful. They had vision that saw beyond what is simply working “in the here and now” and they chose to redefine or create entirely new markets. They demonstrated foresight and strategic acumen in steering their companies toward groundbreaking paths.

As a business transformation consultant, I have witnessed firsthand the profound impact that visionary leadership can have on an organisation’s trajectory. Leaders who dare to look beyond incremental improvements and embrace transformative change are the ones who drive true innovation and secure long-term competitive advantage. It is this willingness to challenge the status quo and explore uncharted territories that distinguishes transformational leaders from the rest. By fostering a culture of innovation and maintaining a forward-thinking mindset, organisations can unlock new opportunities and achieve remarkable success.

The Butterfly Effect

George Westerman’s quote over a decade ago is as relevant now as it was back then, which is; “When digital transformation is done right, it’s like a caterpillar turning into a butterfly. But when done wrong, all you have is a really fast caterpillar”. As a business transformation consultant, I have seen many organisations fall into the trap of simply speeding up their existing processes without fundamentally changing their approach. True transformation requires a complete metamorphosis, not just an enhancement of the status quo. Organisations must aim to become butterflies, embracing innovative strategies that lead to profound and sustainable change.

The Strategic Choice

If you were the CEO of a company with a 50,000 workforce and the Chairman announced that you could invest in achieving only one strategic business outcome in the next 24 months, would you opt to make faster caterpillars or butterflies?

From my perspective as a CEO and a business transformation consultant, the choice is clear: focus on creating butterflies. By investing in transformative initiatives that fundamentally redefine your business model, you position your organisation for long-term success and resilience. Incremental improvements may offer short-term gains, but only true transformation can ensure your organisation thrives in an ever-evolving market.