Session 7: Global Strategy and AI

Question 1

Why system change takes times?

Answer 1

It takes a while for the systemic change of a new tecnhology to become apparent.

Question 2

What happened when a technology emerges?

Answer 2

People initially apply it narrowly

Question 3

How can we make sense of AI through analogies?

Answer 3

• AI is a general-purpose technology with wide applications
• Similar to the Internet, it takes time to unlock its full potential
• Major technologies require organizational change & innovation to be fully leveraged

Question 4

What is the strategic impact of AI and automation?

Answer 4

Customer-facing side:
* New product & service features
* New business models
* Changes in the market ecosystem

Internal operations:
* Automation & augmentation of business processes
* Internal coordination & organization
* Changes in the supplier ecosystem

Personal tools for knowledge work (e.g., ChatGPT)

Question 5

What is the difference between the fear of automation and the prevalence of augmentation in AI?

Answer 5

Fear of automation:
* Long-standing worry about technological unemployment due to AI automating human work.

Prevalence of augmentation:
* Most generative AI applications augment human work rather than replace it.
* Professionals still control AI-enhanced processes due to:
* AI’s error-proneness and potential hallucinations
* Common use of chatbot interfaces like ChatGPT

Question 6

What are Custom Chatbots?

Answer 6

Generative AI that have access to database of relevant documents and knowledge

Examples: McKinsey chatbot Lili, customer support chatbots

Question 7

What are AI agents?

Answer 7

They are a small piece of software that looks out for some triggering event and then feeds a customized prompt and data to a generative AI model, and saves the output in a relevant database.

Question 8

What is batch processing?

Answer 8

Using generative AI to extract desired information systematically from a large number of documents & synthesize findings

Focus on systematic analysis and replicating things humans could do but don’t have the time to do

Question 9

What are some common tensions in AI adoption?

Answer 9

• Few killer use cases vs. Little AI everywhere
• Supporting existing work vs. Redesigning processes
• Centralized AI governance vs. Decentralized investments
• Developing own AI solutions vs. Buying ready-made services

Question 10

What are the **key factors **organizations need to focus on to succeed with rapidly evolving generative AI?

Answer 10

• Agility: Be ready to learn, experiment, and change.
• Realistic Expectations: Brace for capability disappointments.
• Value Creation:Combine AI with traditional software and human expertise.
• Organizational Learning:
   – Develop individual skills and knowledge.
   – Establish shared ways of working.
   – Adapt organizational processes and structures.