Three levels of AI adoption
We’ve come to a point where it’s no longer controversial to say that AI will change the nature of work and how our organisations are structured. What that means in practice, and what both the benefits and consequences are, is typically vague and unhelpful. In this week’s edition of the Versapiens blog, I’ll explore three levels of AI adoption we’re seeing, what they mean for your company and how to think about them.
Level 1: Productivity Capture
For organisations being proactive in their approach to AI and automation, this is the most common approach. Productivity capture occurs when your existing team adopt new technologies to do their jobs faster and more effectively, delivering better results or reducing completion time of tasks. Usually, this means that growth targets can be hit without investing in new talent, which boosts profitability and shareholder returns. The gains are immediate, there’s little disruption and because there’s no need for wholesale reorganisation, friction is minimised.
There’s a hidden trap in productivity capture that most are missing. When hiring slows, especially at a junior level, a “talent debt” is created that will eventually need to be paid. Productivity goes up in the short term, but as people progress in their careers, there’s no succession pipeline behind them. When AI and automation make the job easy, new hires don’t learn the fundamental skills they need to assess quality, identify and solve problems or develop new approaches. As a result, they’re not ready to move into more senior positions. An individual company can go into the market to hire when this happens, but if the technology trends are industry-wide, the talent just doesn’t exist. The volume of activity keeps increasing, but without people who can review and evaluate, the ability to translate that activity to results is throttled. At that point, it takes years to repay the talent debt.
If your company is adopting more tech, keep an eye out for human bottlenecks. When your most common reason for delays is waiting for sign off or approval from a senior person, you may be falling into the productivity capture gap. The key action to take when this occurs is to look at how work is processed and approved, providing support and training to those at the chokepoints. It’s also crucial to create a pipeline and development pathway for new talent.
Level 2: Expansion of Scope & Vision
Normally, if a business successfully navigates level 1, they find themselves faced with a question: “If we can do so much more now than we used to be able to, shouldn’t we be aiming higher?” It seems logical to say yes - it’s sensible to push harder and further when you’re capable of more.
This line of thinking can create huge amounts of value for customers, stakeholders and partners. Leaders can use their newfound capabilities to provide radically improved experiences to their customers which justify higher prices, reduce the cost of delivery or both. As the flywheel begins to spin, investors demand that the extra capital is deployed to drive further growth, so instead of slowing hiring, as in level 1, the organisation starts increasing headcount, with each hire augmented by technology.
The danger here is that the pace of expansion combined with the level of automation in the organisation leads to fragility and lack of understanding. When things go wrong, the systems are so complex that it’s difficult to identify why, or so untouched by human hands that no-one knows what happens under the hood. New hires, onboarded with the intention of operating the automated system, lack the ability and contextual knowledge to tell when things don’t look right.
If you see that employees don’t understand the underlying principles of the business, or they’re unable to solve edge case problems independently, you’re running the risk of building an organisation that can’t adapt. Investing in fundamental training and skills development is the answer here. As in level 1, if you don’t train your people to know why things are done the way they are, you’re taking on a talent debt that will be difficult to repay.
Level 3: True Adoption and Reorganisation
Very few companies that I’ve seen have reached level 3 - it’s the most disruptive and challenging level of AI adoption to navigate. In levels 1 and 2, technology augments and expands the already-existing offerings, processes and functions of the company, but at the level of true adoption, technology leads to a fundamental shift in the shape of the organisation. New roles and functions are created, products and services are enhanced and new ones are launched, and work flows differently.
The amount of change management needed for true adoption means that most companies shy away from it, unwilling and unable to suffer 12-18 months of chaos for the long-term reward of a better future. Because the technologies that enable this kind of transformation are so new, there’s a different talent problem to tackle - experience just doesn’t exist, so any new hire needs significant onboarding. For this kind of reorganisation to be worthwhile, there needs to be a seriously compelling vision that justifies it, and a commitment to see it through all the way.
If you’re considering a level 3 shift, the big question is, “is it worth it?” For most organisations, the answer will be no. If your company is already successful, there’s major risk attached to reshaping it, and if you abandon the project once it’s started, you may end up with a broken business. The argument for level 3 adoption is that eventually, if you don’t do it, someone will outcompete you - but it’s difficult to say for certain when that will happen. Unless you have absolute clarity on the outcome you’re pursuing and the resolve to suffer the pain of change, a poorly-executed level 3 shift is much more likely to kill your company than a competitor is.
Wherever you are in your adoption of AI, automation and other technologies, make sure you’re stopping to consider “why” before you push on. I speak to a lot of companies who feel they “should do something” with AI, but they’re unclear on what it is or what the benefit will be to customers, investors and other stakeholders. This is backwards thinking. The technologies available to us now enable new products, services, business models and organisations, but there must be intent and purpose behind them. Otherwise, you’ll invest money, time and effort in things that may or may not move your business forward.
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