A New Model for Understanding How Generative AI Will Impact Your Organization

November 27, 2023

This is a excerpt from the new Corporate Buyers’ Guide to LLMs, published earlier this month by GAI Insights. In producing the report, the analyst firm interviewed consultants and vendors, as well as chief technology officers, chief digital officers, chief innovation officers, and other company leaders at 40 prominent organizations.

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This case study is excerpted from the new Corporate Buyers’ Guide to LLMs, published by GAI Insights. See below for info about purchasing the report.

There is an enormous amount of discussion in the media today around the potential long-term impact of GenAI. To best understand GenAI, we suggest looking at it through bifocal lenses. Looking through the top part of the lens, one sees the big, looming issues, such as accuracy, privacy, and bias. Firms such as Accenture and Goldman Sachs have written reports on the potential impact of GenAI on “knowledge workers” by industry and potential economy-wide job losses and societal risks. While this dialogue is important, we have heard repeatedly that it is not helpful to executives and board members. That is why we also recommend looking at GenAI through the bottom half of the bifocal lenses to find the immediate opportunities and threats.

Why is GenAI Different? Because it is a Power Tool for WINS Work

Our case studies based on our growing global community of 3,000 practitioners point to a new category of work, more precise and actionable than “knowledge work.” We call it WINS work, where tasks, functions, and possibly your entire company or industry depend on manipulating and interpreting Words, Images, Numbers, and Sounds (WINS). Heart surgeons and chefs are knowledge workers, but not WINS workers. WINS workers are software programmers, accountants, marketing professionals, and many more

WINS = Words, Images, Numbers and Sounds

Think of GenAI as a power tool for WINS work. Would you hire a carpenter without a skilled saw or a roofer without a nail gun today? Every WINS task, sub-process, and end-to-end process within your enterprise, and in many cases, the entire enterprise, should be evaluated for potential leverage with GenAI.

How Urgent is it to Pay Attention to GenAI?

We believe the easiest way for companies to proceed is to ask themselves two simple questions:

• How much of our cost base is made up of WINS work?
• How digitized are the WINS inputs today?

An analysis of the level of digitization in various industries and their percentage of cost in the WINS work.

Industries with a high percentage of cost in WINS work and that are highly digitized are “In the crucible” and must understand and embrace GenAI immediately. The crucible includes the software industry, entertainment business, professional services, financial services, education, and others. Think of it like the demise of portrait painting. The camera made capturing of a likeness much easier and cheaper. Some portrait painters still exist, but they are few and far between. Coding and software development, script writing and film production, tax filing, and accounting will likely be under significant pressure. They may or may not become automated, but just as you’d never hire an accountant today who didn’t use Excel, so too, an accounting firm in the future without their own GenAI capability will be less common, if not non-existent.

Moderna has just recently required that all employees be trained in GenAI tools. They believe it is a fundamental skill to drive WINS worker productivity, even though their product is a molecule or treatment intervention.

Companies that are “Holding a lever” can gain an advantage in cost, time, and quality even if their cost base is not heavily weighted toward WINS work and their product or deliverable falls within WINS and is digitized. For example, Moderna has just recently required that all employees be trained in GenAI tools. They believe it is a fundamental skill to drive WINS worker productivity, even though their product is a molecule or treatment intervention. In our GenAI learning community, we have found GenAI is excellent for tasks such as supporting bid preparation when responding to a Request for Proposal. Speed of sale is a critical performance variable, and even those firms with few WINS workers could benefit by winning new work. Many selling, general, and administrative expenses functions, critical aspects of R&D, and even end-to-end product development and supply functions can leverage GenAI.

The “Next in line” category in our framework may allow us to take tasks that are not digitized today and digitize them to create opportunities. For example, many leading home décor companies are investing in what they are calling their digital front door, enabling customer engagement in the identification and purchase process. GenAI will allow new levels of customization to help customers take action to envision home furnishings in much more realistic and imaginative ways, leading to a better experience
and greater customer uptake.

For companies that are “In the balcony,” we see low digitization and limited WINS work as characteristic of the value creation process today. These are industries with high amounts of low-skilled labor, or when high skill is involved, and the nature of the skill is more in creating a physical product or service. The figure below gives a sample of industries in each of the four quadrants.

Examples of industries in each of the four quadrants.

Unlike many capital expenditures and technology spending that takes several years to see a return, GenAI, even at this early stage, can be accretive to earnings before interest, taxes, depreciation, and amortization (EBITDA) within the year it is adopted, in many cases, because the near-term productivity boost is so compelling. These initiatives may birth strategic investment opportunities to create defensible assets or competitive “moats.”

Making the Business Case, Task by Task

To make our advice even more concrete and actionable, our GenAI community of more than 3,000 GenAI users has helped us identify where practical applications are finding traction. Customer- facing functions, like sales support, customer service, and marketing, are clear targets for GenAI.

The technology/software function is being transformed, with more than 90 percent of software programmers already using GenAI, and the CEO of GitHub predicting that GenAI is already writing a large percentage of new code. Human resources functions are using GenAI for everything from writing job descriptions to assisting in candidate or worker evaluation. Finance teams are using GenAI to improve the accuracy of their forecasting and budgeting models.

Below is a hypothetical P&L statement. The hypothetical firm generates $1,000 in sales and has $100 in profit before taxes. We identified a group of incremental improvements, all of which we have documented case studies for, with each providing a hypothetical 10% improvement in different parts of the business. Together, these efforts add up to a 90 percent potential increase in profit. We know this is merely a technical calculation, and the actual value only comes with the hard work of execution, but we want to point out that there is significant real-world potential. We encourage our readers to be very tangible in their hopes for improvement because, as we’ve pointed out, it’s rare to have a leading-edge technology provide potential profit improvement in the near term.

A hypothetical P&L statement for accelerated impact of GenAI adoption on a firm’s revenue.

A Productivity Revolution

The WINS framework helps you gauge GenAI’s urgency for your business. To get a better sense of where to start, consider some recent case examples, and the hypothetical P&L statement above. We are witnessing a productivity revolution in 2023, owing to GenAI advancements. Our extensive research into early productivity demonstrates the value of a well-focused initiative. Our learning community offers numerous practical use cases that deliver tangible benefits. By examining the P&L statement, one can visualize GenAI’s potential to drive significant competitive advantage for firms committed to comprehensive transformation.

This article is an excerpt from The Corporate Buyers’ Guide to LLMs, a report published by GAI Insights in November 2023. InnoLead members receive a 50 percent discount on the report purchase price using the code below. (This code will only be visible if you are signed in as a member.)

InnoLead members: enter the discount code InnoLead50 to receive 50 percent off the report purchase price.