By Victor Assad, Managing Partner for InnovationOne, LLC
It is essential to use a people-oriented approach to implementing AI to keep the human emotions and work front and center in the change. A people-centric approach involves the impacted employees and clients in the design of digitizing workflows and processes.
AI strategies fail when the people impacted by the changes are not included in the planning. Their fear of the change and the consequences for them grows. Then they actively oppose and reject the AI implementation or simply let it fail from inaction.
AI is now a business imperative.
It is critical to get AI implementation right. According to NewVantage Partners executive survey, 90 percent of Fortune 1000 companies are investing in AI and increasing those investments. And 92 percent are reporting measurable business benefits from their current AI use.
Still, only 26 percent of companies say their AI initiatives have actually moved into widespread production. Why? The company’s culture rejects the change. Executives say culture is the greatest impediment to AI success, 11 times more than technology limitations, according to the NewVantage Partners executive survey. And the cultural challenges have actually gotten worse, with 92% of executives citing cultural factors this year vs. 81% in 2018.
Other research has also established a strong link between AI implementation success and cultural acceptance (or people-orientated) of AI.
McKinsey Inc’s Research on AI Implementation and Culture.
After surveying thousands of executives about how their companies use and organize for artificial intelligence and advanced analytics, McKinsey found that only eight percent of firms engage in core practices that support the widespread adoption of AI.
McKinsey reports that AI faces formidable cultural and organizational barriers. Many executives view AI as a plug-and-play technology with immediate returns. While some companies have success with individual projects after investing millions of dollars, others have struggled to move the pilot initiatives into companywide programs.
The problem is that executives fail to align the company’s culture, structure, and ways of working to support broad AI adoption.
Boston Consulting Group Research
The Boston Consulting Group (BCG) in 2018 discovered that companies that invested in their cultures were much better at implementing AI. The Boston Consulting Group assessed roughly 40 digital transformations and found that the proportion of companies reporting breakthrough or strong financial performance was five times greater (90 percent) among those that focused on culture than those that neglected culture (17 percent).
According to the BCG report:
“The case for fostering a digital culture is even more powerful if we look at sustained performance: nearly 80 percent of the companies that focused on culture sustained strong or breakthrough performance. Not one of the companies that neglected to focus on culture achieved such performance.”
The authors of the McKinsey report list steps to use a people-oriented approach to implementing AI. Below are their top steps to take:
- Explaining Why. Leaders have to provide a vision that rallies everyone around a common goal. Workers must understand why AI is critical to the business and how they’ll fit into a new, AI-oriented culture. In particular, they need reassurance that AI will enhance rather than diminish or even eliminate their roles.
- Anticipating Unique Barriers to Change. Some obstacles, such as workers’ fear of becoming obsolete, are common across organizations. But a company’s culture may also have distinctive characteristics that contribute to resistance. For example, suppose a company has customer-relationship managers who pride themselves on being attuned to customer needs. In that case, they may reject the notion that a machine could have better ideas about what customers want and ignore an AI tool’s tailored product recommendations.
- Budget as much for integration and adoption as for technology. In one of McKinsey’s surveys, nearly 90% of the companies engaged in successful scaling practices had spent more than half of their analytics budgets on activities that drove adoption, such as workflow redesign, communication, and training. Only 23% of the remaining companies had committed similar resources.
- Balancing feasibility, time investment, and value. Pursuing initiatives that are unduly difficult to implement or require more than a year to launch can sabotage both current and future AI projects. Organizations needn’t focus solely on quick wins; they should develop a portfolio of initiatives with different time horizons. Automated processes that don’t need human intervention, such as AI-assisted fraud detection, can deliver a return in months. In contrast, projects that require human involvement, such as AI-supported customer service, are likely to pay off over a longer period.
AI is a business imperative. Your AI implementation does not have to be upended by culture. Follow the McKinsey steps recommended above and use a people-orientated approach to implementing AI.
About InnovationOne®, LLC.
InnovationOne®, LLC helps organizations worldwide build a culture of innovation and make it sustainable. InnovationOne® uses a scientifically developed assessment to measure, benchmark, and improve your company’s culture and capability to innovate and enjoy better outcomes and financial results. Companies scoring in the top quartile of our InnovationOne Culture Index© reported higher financial performance than bottom quartile performers by 22 percent. Our latest research shows that R&D Labs can improve their performance by 20 to 30 percent with higher innovation culture scores. Measure and ignite your culture of innovation.