Transforming operations with AI integration: A comprehensive guide

*"Can't keep yourself the same if you want to become who you wish to be." - Max DePree, remixed.*

In this fast-paced digital age, the struggle to maintain a sustainable competitive advantage is a significant business conundrum. The increasing influence of AI and other technologies on work and life makes this challenge more critical than ever before. Many companies acknowledge this issue, but few manage to tackle it effectively. Research shows that despite most companies embarking on some form of digital transformation, only a third have managed to realize the anticipated benefits on average.

But when businesses get it right, the potential can be enormous. For example, in the banking sector, where digital and AI transformations have been ongoing for a decade, data shows that digital banks far outperform their counterparts. During the period between 2018 and 2022, digital leaders in retail banking saw substantial improvements in return on tangible equity, P/E ratio, and total shareholder returns, outpacing digital laggards. This financial outperformance is directly linked to digital excellence.

This performance was made possible by a deeper integration of technology across core business processes, leading to higher digital sales and reduced costs in operations and branches. Digital leaders achieved this by fostering collaboration between business, technology, and operations for digital innovation, by upskilling their organizations, and by creating a distributed technology and data environment that empowers numerous teams to innovate daily. This highlights the complexity of digital and AI transformations: companies need to excel in multiple areas.

To achieve this transformation, the leadership team must be willing to undertake the complex "surgery" necessary to transform their enterprise into a digitally capable one. They need to understand that simply implementing a system or technology isn't enough. They must commit to hundreds of technology-driven solutions, both proprietary and off-the-shelf, working together and continuously improving to create great customer and employee experiences, lower unit costs, and generate value. Scaling these solutions across the enterprise demands a fundamental rewiring of how a company operates. This means thousand of people across organizational units need to collaborate and work together to innovate digitally and constantly.

In working with over 200 large companies across various industries, we've identified the following critical enterprise capabilities as crucial for successful digital and AI transformations:

A Business-led Digital Roadmap: This involves aligning the senior leadership team around the vision, value, and roadmap for the transformation and reimagining of business domains to deliver outstanding customer experiences and lower unit costs.
Talent: Ensuring the organization has the right skills and capabilities to innovate and execute requires constant investment in upskilling and reskilling employees, as well as attracting digital talent.
Operating Model: Adopting a new operating model that can scale involves changing how a company operates to support agility, collaboration, and rapid decision-making. This often requires a shift from traditional hierarchies to more fluid, adaptable structures.
Technology: Making technology easier for teams to use for rapid innovation requires a focus on usability, user experience, and simplicity when selecting and implementing technology solutions.
Data: Continuously enriching data and making it easily accessible across the organization to improve customer experiences and business performance requires investment in data quality, data management, and data analytics.
Adoption and Scaling: Maximizing value capture by ensuring the adoption and enterprise scaling of digital solutions, and tightly managing transformation progress and risks requires a holistic approach to change management, including explicit change management strategies to support the adoption of new tools and practices.

No digital and AI transformation can succeed without a baseline of competence across all six capabilities, and these elements are interconnected, requiring integrated management. For instance, a good operating model needs the right talent, and excellent technology will have little impact if users don't adopt it. Established companies can outcompete and capture value, but only if they commit to the hard work of rewiring their enterprise.

In essence, it's about strategically transforming a company to become more agile, technologically advanced, data-driven, and client-centric, while also identifying and leveraging specific competitive advantages to differentiate itself in the market. Embracing these critical capabilities is crucial for companies that want to succeed in today's rapidly changing digital landscape.

The increasing influence of artificial intelligence and technology on business, particularly in finance, necessitates a strategic transformation towards becoming more agile, technologically advanced, data-driven, and client-centric.
To unlock the enormous potential of artificial intelligence and technology in business, companies must excel in multiple areas such as a business-led digital roadmap, talent, operating model, technology, data, and adoption & scaling, and integrate their management for a holistic approach.