After creating a lot of noise and making hulk-like promises, innovators & early-adopters are finally beginning to reap the benefits of AI. With the advancements in computing, algorithms and AI data models are becoming more revolutionary. In addition, the world is generating unimaginable quantum of data to power AI.
These advancements have contributed to three times more investment in 2016 – between USD 26 billion to USD 39 billion- than it did three years earlier. So, when CXOs face the daunting decisions on the next wave of investment, a look at where the investment is happening in the market becomes important. Here is an important piece of information should for consideration – Invest in Innovation and Not in Technology.
What does investment in Technology means?
For example, intelligent automation has created a hype in the IT market and companies across verticals are looking for use cases to adopt it. The only challenge, I see, in this approach is that mostly adoption of intelligent automation is seen as an IT initiative, implying that the problem statement it is used to solve is around improving IT efficiency and effectiveness. However, given the current digital disruptions & VUCA environment, almost 25%-30% of overall revenue is going to come from new business lines, & this requires innovation.
Investment in technology is equivalent to investment in solving current point (as opposed to end-to-end) challenges & issues (reducing tickets or automating the resolution process), faced on a day-to-day basis, and these are incremental in nature. For example, you have implemented a RPA solution to automate restarting of failed batch jobs. The RPA solution only does a restart of required services when all its dependencies are met. This RPA solution does not perform a RCA (Root Cause Analysis) and deter the jobs from failing in the first place or looks at the complete process holistically and takes care of end-to-end automation.
Hence, the mandate of CXOs should be to lower the investment in such technological advancements and invest the savings in disruptive business models and innovations
What does investment in Innovation means?
Many people (including CXOs) believe in the power of innovation. The challenge comes when companies, while trying to be innovative, try to define the complete value of innovation. It is evident that the value of innovation is hazy in their minds, leading to scheduling delays, poor investment strategies & non-alignment of leadership.
Investment in innovation means investment in building companies for the next 20-30 years (long-term focus) rather than the next 5-10 years (short-term focus). This involves focus on people, acquisitions, vision etc. For example, PayPal acquired Braintree focusing upon next gen commerce startups. This investment calls for a greater tolerance for short-term risks & failures in order to pursue the longer-term objectives.
To continue our IT processes as example, it is important that investment in intelligent automation is looked upon as a business process improvement. The focus now shifts from automation to elimination, i.e. how can we focus on making robust systems leveraging intelligent automation where the system can itself self-heal & no ticket gets raised.
What I understand is that CXOs are approaching intelligent automation as a source of not just IT productivity but also as a source of innovation in terms of doing things/getting things done & in a faster way. The only challenge to this approach, I feel, is the typical “budget constraint” & investment priorities not reflecting that investment (in innovation) portfolios. Unless, companies take that step, where they focus upon using technology as a fuel for innovation; innovators, early-adopters & new entrants are going to drive them out of business.
