How To Develop An AI Implementation Strategy For Your Business

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Even though it’s widely expected that the Federal Open Market Committee will not cut U.S. interest rates this week, all eyes are on the upcoming meeting. After all, the last week has seen rate cuts coming from the Bank of Canada and the European Central Bank, leading some in the U.S. to wonder when our turn is coming.

The domestic indicators don’t look that great, as far as rate cuts are concerned. May’s job growth was much stronger than expected, with 272,000 new workers added to payrolls last month—far more than consensus analyst predictions of 180,000. And while more workers is good from one viewpoint, it isn’t the best news for those hoping for rate cuts. If companies are adding jobs, there’s no overriding need to use an interest rate cut to stimulate the economy. But the unemployment rate is slowly ticking up, hitting 4% in May—an increase from 3.9% in April and from 3.7% a year ago.

Rate cuts in Canada and the EU both came as inflation fell. Canada, which lowered its benchmark rate from 5% to 4.75%, made the decision after seeing inflation fall to a three-year low of 2.7% in April. And the ECB saw inflation in the Euro zone drop to 2.4%, so it brought its main lending rate down from 4% to 3.75%.

In the U.S., headline inflation isn’t too far away from that in Canada and the EU. In April, it was at 2.7%, which is higher than the Fed’s 2% target for rate cuts. And because it’s higher, many believe the Fed won’t budge on interest rates, even though the pace of inflation has been slowing.

Of course, Forbes senior contributor Simon Moore writes, the rate cut decision isn’t the most important thing coming out of this week’s Fed committee meeting. The committee will provide a forecast for economic policy for the rest of the year, and Fed Chair Jerome Powell will host a press conference to talk more about what is to come. Powell and the committee will likely have a lot to talk about. After all, May’s inflation data is slated to come from the Bureau of Labor Statistics on Wednesday morning, as the Fed committee’s two-day meeting wraps up.

Regardless of interest rates, implementing AI is a top priority for many businesses. Accenture looked at where many are in terms of investing in generative AI and adding it to their operations in its recent Pulse of Change report. I spoke to Jack Azagury, group chief executive for Strategy & Consulting about the results and how prepared businesses are for AI. An excerpt from our conversation is later in this newsletter.

STOCK MARKET NEWS

Last week was huge on the stock market, largely thanks to Apple and Nvidia. Both companies saw their valuations cross $3 trillion on Wednesday. Apple had previously crossed the $3 trillion mark, but hasn’t been at that valuation since January. Nvidia met it for the first time—and became the world’s second most valuable company. The frenzy around these two tech companies pushed the S&P 500 and the Nasdaq Composite to records on Wednesday, and they also helped lift other tech stocks, including Taiwan Semiconductor, ASML, Microsoft and Meta.

The Apple and Nvidia rallies were both driven by anticipation. Apple’s Worldwide Developers Conference begins this week, and many expect to see the company showcasing big steps forward into AI-enabled technology. While developments in AI would be exciting, investors are most interested in seeing how ingrained the technology will be in new models of iPhones. More AI tech on the phone could mean more trade-ins and higher new phone sales, which have been lagging in recent months.

Nvidia’s share price jumped to a record $1,224 at Thursday’s market open based on a Bank of America analyst report increasing the price target for the stock to $1,500 per share. It may take a long time to hit that price, however. After markets closed on Friday, Nvidia executed a 10-to-one stock split, in which each existing share was split into 10. The move doesn’t change the chipmaker’s market cap or impact holdings of existing investors, but it lowers the price for new shares (though they are also for a smaller portion of the company).

FROM THE HEADLINES

It’s been three years since he was last active on social media, but drawing an audience of more than 600,000 to a noon Friday livestream on YouTube, Roaring Kitty is living up to his screen name. Keith Gill, the person behind the meme stock ringleader, talked up his faith in GameStop, saying he’s a “believer” in the retailer. Gill told people watching his stream that he holds a $160.4 million position in the store, and investing in the brick-and-mortar video game reseller is a bet on its management’s ability to transition it to something more attuned to modern markets.

Thanks to Gill, GameStop’s stock has skyrocketed in the last month, with its share price up more than 75% in the last 30 days. He led the GameStop frenzy of 2021, and his return to social media helped drive interest in the stock again. While Gill probably hasn’t broken any securities laws—recent cryptic memes posted on his X account ignited initial interest in the stock, but he didn’t direct anyone to do anything in particular to manipulate the price—experts say he’s likely done enough to spur scrutiny from the Securities and Exchange Commission, writes Forbes senior reporter Brandon Kochkodin. At the very least, E-Trade—the platform Gill has used for GameStop transactions—is considering kicking him off.

NOTABLE NEWS

There are far fewer female CEOs leading companies on the S&P 500, but they make more money than the men, according to a study by Equilar and the Associated Press. Women CEOs’ median pay in 2023 was more than 8% higher than their male counterparts, writes Forbes senior contributor Kim Elsesser. While this study shows some areas where women have broken through the glass ceiling, it also highlights places where they have not. The salary of AMD’s Lisa Su, who is the highest paid S&P 500 female CEO, is $30.3 million—less than 20% of the compensation for Broadcom’s Hock E. Tan, the highest paid CEO. And less than 7% of all S&P 500 companies are led by women. Elsesser writes that research has shown women tend to work harder to outperform expectations, showing managers that they have more potential for advancement. This may explain why female CEOs are being paid more: They’ve had to prove themselves as exceptional every step of the way to the top.

TOMORROW’S TRENDS

Accenture’s Jack Azagury On Developing An AI Implementation Strategy

Implementation of generative AI is a top priority for businesses. Accenture spoke to 2,800 C-suite executives about their priorities for tech investment and implementation as part of their most recent Pulse of Change survey. A total of 85% plan to invest more in AI, and the same percentage expect to achieve return on investment for the technology this year. I talked to Jack Azagury, group chief executive for strategy and consulting, about the results and how executives are moving toward AI implementation. This interview has been edited for brevity, clarity and continuity.

Of the leaders who are looking to capitalize on generative AI, only 13% say they are extremely confident that they have the data strategy and the digital capabilities to do what they want to do. What does that mean?

Azagury: When we look at 2023, it was year one of gen AI. What most companies did, and rightly so, they did a lot of use cases. They did ideations and came up with hundreds of ideas and then funneled them and got 50 or 60 use cases and they’re implementing the use cases. The purpose of that, for the most part, is to test the technology, get comfortable with how it works with confidentiality, privacy of information, understand its potential. It’s generating some benefits, but for the most part, it’s really around testing the technology in pockets of the organization.

What we see now is about 10% to 15% of companies are going into version two in 2024. They’re looking to not just trial, but deploy it at scale. Take a few processes end-to-end. This is not just about trialing technology. It’s about, how do we completely redefine the process? Gen AI has the ability to cut through all the silos in the organization to completely redefine a process.

Those clients are going into what we call true reinvention: a real business case, a talent strategy to back it because people’s roles are going to change—the number of people you need for certain tasks, free them up for other tasks. You need new skills. People need to be trained to prompt these models.

It’s a whole new muscle to completely reinvent, and that’s where we believe things need to go. How do you fundamentally reinvent the enterprise? Start with a few processes and drive a step change in performance—not 5% or 10%, but 20%, 30%, 40%, 50% improvement in the throughput, the quality, the output, the performance for that process.

We have a concept we call the digital core: your infrastructure and cloud. Cloud infrastructure, your data, your AI layer, your systems of records, your systems of engagement, the cyber security that wraps around all of it. Reinventing that digital core now has to be a core part of your competitive advantage. It is no longer, ‘We have great technology, but our strategy’s over here’. The strategy requires an agile digital core that you can experiment, you can drive change in pace, you have that flexibility.

What we’re finding is the most important layer right now for gen AI is that data layer. When we work with C-level executives, it’s the one they’re least confident in. Companies are now realizing data is what powers all these LLMs. What data do we need? Where is it stored? Do we have democratized data across the enterprise or is it siloed? How do we access it? And now you have the extra either complication or benefit, that you can access unstructured data, manuals, chats, conversations, phone calls with customers, chats with customers, operating procedures, email. All of that, which was never part of the data strategy—you couldn’t use it. Right now for gen AI, the data layer is the most important, and it is the least mature for most organizations. That’s where companies are putting in the effort now to really leverage the power of gen AI.

There is so much that businesses need to do in order to take advantage of AI. What kind of advice do you have to executives right now who very much want to use it, but are overwhelmed with what they have to do to get ready?

The first advice is: You’ve done 20, 30, 50 pilots. It’s time to pick one or two areas. Start with the customer or the employee in mind, and completely transform. Focus on two, three areas and really reinvent the whole thing. The pilots are interesting, but it’s now time to focus on a few areas.

Second piece of advice: on the talent. You need a talent strategy, and that starts with a much greater level of dedication. It’s not just about doing two days on the West Coast. Put in training. Get your team educated. Understand the technology. Prepare to immerse your team in the technology, training and skilling.

The third piece is: Embed responsible AI from the beginning, and start to build that framework at a detailed level in the organization.

Right now, you said there’s about 10% to 15% of companies that are really getting into AI. Where do you see things in 12 months?

The technology is going to continue to improve exponentially. We see a new large language model pop up every few weeks. So understanding where the technology is going is critical, and we should not underestimate the pace at which this technology and these models are going to improve in performance. Staying close to technology, having the right discussions, staying informed is critical.

You want to have a flexible strategy. You may use one LLM today, tomorrow you’re probably going to use two or three. And you’re going to use different LLMs for different purposes, for different categories of questions and problems, different levels of performance, different sustainability profiles.

The intent is there. That 10% to 15% is going to increase significantly. Companies are going to keep deploying the technology. Everybody’s very focused on their P&L, on their balance sheet, on their customer sat[isfaction], on their sustainability focus. That 10% to 15% is going to increase significantly, just because the intent is there. Eighty-five percent of companies are going to spend more time and energy on gen AI.

FACTS + COMMENTS

The summer travel season is in full swing, and the International Air Transport Association said that 2024 is likely to be a record year.

$996 billion: Estimated revenues the world’s airlines will make in 2024. IATA Director General Willie Walsh said that of these revenues, airlines make a 3% margin.

4.96 billion: Number of people expected to travel by air this year, which the group said is a new record

‘The human need to fly has never been stronger’: Walsh said about the estimates

STRATEGIES + ADVICE

After coming under fire for on-campus speech and protests about Israel’s war in Gaza earlier this academic year, Harvard University issued a new policy on its preferred corporate social voice, an example of how CEOs are expected to comment on social issues.

Your company’s reputation is vital for its success. Here are some ways you can work to improve it.

VIDEO

QUIZ

Two powerhouse women control the music industry—and have outsized influence on pop culture, fashion and the definition of female business moguls. Combined, how much are Taylor Swift and Beyoncé worth?

A. $1.5 billion

B. $800 million

C. $2 billion

D. $2.5 billion

See if you got the answer right here.