Revolutions don’t happen overnight, particularly with technology. For nearly 70 years,electricity was primarily a tool for operational efficiency. Then Henry Ford reimagined his business around this power source, scaling production dramatically. That was the real revolution.
Similarly, we are at a pivotal moment with artificial intelligence (AI). Today, we are running AI-enabled organizations. While this is valuable, it is just the beginning. Leaders should look beyond short-term, tactical gains to focus on harnessing AI to future-proof their business by driving genuine strategic transformation. This will happen when we move from using AI to enhance individual tasks to deploying it to amplify team performance and uncover entirely new value propositions in the marketplace.
Organizational adoption of AI is growing rapidly. According to a McKinsey survey published in March this year, 78% of businesses globally use AI in at least one function; this represents a steady rise from 72% just a few months earlier, and 55% in 2023. While adoption estimates vary, the upward trajectory is consistent, and this adoption also represents significant investment. And yet, most organizations are failing to extract the greatest value from their AI, stuck instead in an AI efficiency trap – using it for functions including customer service, fraud management, as digital personal assistants, or for inventory management or content production.
But savvy leaders are driving a far more ambitious agenda to future-proof their businesses by using generative AI (GenAI) to rethink and redesign existing systems and processes.
Consider the launch of ChatGPT in late 2022, when the immense potential of GenAI was evident, but the hurdles to enterprise use – accuracy, brevity, and consistency – were also significant. Today, we are moving beyond chatbots and text generators to a more profound and broader opportunity to build AI systems that understand context, intent, and workflow. In this new paradigm, context-aware AI uses enhanced perception and reasoning abilities to transform our interactions and unlock new forms of collaboration. Ram Bala, Associate Professor of AI and Analytics at Santa Clara University’s Leavey School of Business, Natarajan Balasubramanian, Albert & Betty Hill Endowed Professor at the Whitman School of Management at Syracuse University, and I explore how this can be done in our new book, The AI-Centered Enterprise.
“Imagine a context-aware AI system sitting at the heart of your organization, fundamentally rewriting how work gets done.”
Imagine a context-aware AI system sitting at the heart of your organization, fundamentally rewriting how work gets done. Classic organizational structures, traditional roles, and established processes all become fluid and adaptable. By building AI systems that understand both the content and intent of unstructured human input, we position organizations for sustainable competitive advantage. Organizations can build customized tools that adapt to individual users’ thinking patterns and their collaborative workflows by augmenting baseline Large Language Models (LLMs) with techniques like prompt engineering, retrieval-augmented generation (RAG), knowledge graphs, and agentic systems.
To navigate this radical shift across multiple levels of organizations, follow the 3-Cs framework:
Select the right AI tools for your specific needs. Crucially, people at all levels of your organization need to understand that this is not purely or even primarily an IT function; the people who will ultimately use these systems must drive the selection and design process.
Map your enterprise’s entire value creation network and identify where AI can deliver the highest strategic impact. Detail which activities in the enterprise’s value creation network will be affected by your implementation plan. Understand the strategic impact, defining which tasks and processes will be accomplished with AI.
Systematically address the adoption challenges that will inevitably arise by combining an understanding of the technical capability of the context-aware AI tool with the strategic impact of the intended organizational applications.
Organizations that act now to transform will define the next era of business. AI is already reshaping your industry. The only question is: Will you be leading that transformation, or will you be left behind?
1 – Figure out where you stand today.
Are you using AI for enablement? That’s great. Are you already using AI within teams and altering processes? Think beyond the improvement of individual efficiency to organizational transformation.
2 – Set priorities.
Audit your systems and narrow down which can be redesigned around context-aware AI.
3 – Prepare your people.
The bottleneck is not going to be technology; it will be human. Start now with upskilling and reskilling your teams.
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