Mastering Prioritization: A Strategic Approach to Identifying and Pursuing Gen AI Opportunities

Introduction

The proliferation of GenAI has ignited widespread interest among executives, with 90% expressing enthusiasm for leveraging these innovations to tackle business challenges. Organizations, including mine, are very keen on harnessing this exponential technology to address issues where there was no solution or to identify a better solution. However, amidst a multitude of opportunities, discerning the most promising opportunity can be daunting, given limited resources including budget, skilled personnel, and the rapidly evolving nature of the technology itself. This article provides a prioritization framework, "Value vs Operational Readiness," to effectively identify and pursue high-value initiatives aligned with strategic goals and feasibility of the solution. Existing frameworks often fail to holistically consider the various levers of value and the challenges that come with implementing new technology, including technology readiness and the availability of skill sets, among others. This framework represents an improvisation on existing models, offering a simple yet powerful approach that I have personally utilized during my consulting career, yielding significant benefits for numerous clients.

Framework Overview

The "Value vs Operational Readiness" framework, as the name suggests, scores opportunities along two dimensions: Value and Operational Readiness. These dimensions are aggregated based on revenue, cost, or customer experience metrics that align with the strategic goals of the organization, against factors such as readiness of an organization to pursue an idea, effort required to execute an idea, and presence of strong executive buy-in. Each opportunity is scored along these metrics and aggregated to derive a score for both Value and Operational Readiness. Plotting these scores on a 2 x 2 matrix will result in identifying top opportunities that deliver high value and are ready for immediate execution, as shown below:

Framework Details

Following six steps will help you identify top opportunities for Gen AI starting from idea generation, selecting value and readiness metrics and scoring them:

Step 1: Idea Generation: One can leverage published articles covering various use cases provided by reputable sources such as McKinsey, PwC, KPMG, and others. However, it's worth noting that these ideas predominantly focus on foundational rather than transformational use cases, which may limit the potential for generating higher value. My preferred method is process analysis. While it may be time-consuming, this approach uncovers truly transformational opportunities that offer substantial value for your company. This method, which we teach in "Digital Transformation" at Berkeley, is a simple yet powerful technique for identifying digital transformation opportunities. It involves re-designing experiences by eliminating/re-organizing steps to uncover new digital transformation opportunities. For instance, consider the case of Uber or Lyft, which essentially function as "Taxi Hailing" apps, replacing the traditional process of calling a taxi company, waiting for a cab, and paying at the end of the ride. The innovative process introduced by these apps eliminates the need for phone calls, offers live tracking of the car (eliminating the need to call for status updates), and allows for one-time payment setup upon account creation. While many are familiar with traditional process mapping, one key distinction that aids in identifying opportunities suitable for digital transformation is the "Information Exchange" at each step and the source of information. Stay tuned for my next article, where I will delve into the details of this simple yet powerful methodology.

Step 2: Selection Criteria: Once you have generated and listed ideas, the next step is to identify the criteria you will apply to determine the top opportunities. Here are a few criteria to consider, which can be augmented with your own specific criteria for your company or industry, while eliminating ones that are not applicable.

Value Criteria:

• Incremental Revenue: Incremental revenue that this opportunity will generate.

• Cost Savings: he savings resulting from this opportunity over a certain period, including cost avoidance and productivity gains that could redirect resources to higher-value activities.

• Customer/Employee Experience: The impact on experience resulting in product stickiness, the ability to complete actions quickly, or increased customer/employee satisfaction. It could be argued that an increase in experience might result in incremental revenue; hence, consider the use case and applicability of this metric.

Readiness Criteria:

• Technology Readiness: The readiness of Gen AI technology to solve a problem. Consider current issues including hallucination, accuracy, and risk to determine the suitability of the opportunity.

• Skillset Availability: The availability of skilled resources to execute the job, either internally within an organization or from external sources.

• Organization Readiness: Assess how ready your organization is to adapt to this revolutionary idea. Will there be pushback from the majority? What is the culture like? Does it reward or punish failure?

• Executive Buy-in: Determine if the executives of a Business Unit or Line of Business are excited to implement this idea and if they are completely bought-in to provide the necessary support for success.

• Effort/Complexity: Evaluate the overall complexity of the solution and the effort required to enable it.

• Data Readiness: Gen AI and AI solutions are data-hungry. Assess if your data is readily available to be consumed or if you need to aggregate and transform the data, which could be time-consuming.

Step 3: Scoring of Opportunities: The next step is to assign scores to all identified opportunities. While we don't need to conduct an exhaustive analysis to determine exact revenue amounts or cost reductions, a ballpark estimate suffices. Identify core team members from Finance, Business Operations, Sales, and Technology to assist in scoring these opportunities. Some criteria can be scored by experts in their respective fields; for instance, Technology Readiness can be assessed by technology team members, while Incremental Revenue can be evaluated by Sales team members. Keep the scoring methodology simple. I prefer using a scale of 1 to 3: 1 for low score, 2 for medium, and 3 for high. For quantifiable metrics, provide high-level guidance; for example, revenue contribution below 0.5% is considered low, while above 1% is high. For non-quantifiable metrics, use relative scoring between opportunities. For instance, an opportunity with readily available data could be scored as having high readiness compared to one where data doesn't exist.

Step 4: Align to Strategic Goal: The critical next step is to align identified opportunities with the strategic goals of your organization. Your organization might be experiencing rapid growth and seeking opportunities to increase revenue, enhance customer experience, or focus on cost reduction as its primary objective. One effective method to prioritize opportunities that contribute more to these goals is by applying weights. For instance, if you want to prioritize revenue-enhancing opportunities, you could assign a weight of 2 to the Incremental Revenue criteria, effectively doubling the score received. For example: An opportunity scored as 3 (High) for the Revenue criteria would be adjusted to a score of 6, thus elevating these opportunities to the top of the list for consideration.

Step 5: Aggregate scores and visualize: Aggregate the weighted scores for each criterion and calculate a cumulative score for both the Value and Readiness dimensions for each opportunity. Plot these opportunities on a 2 x 2 matrix based on their scores. Opportunities that rank high in both value and operational readiness will be positioned in the top right corner of the matrix.

Final Step: The final step for us is to identify and pursue the top opportunities. However, I don't recommend blindly picking the top 3 opportunities based solely on scores. Instead, it's crucial for us to engage in discussions to align and finalize the top 3 choices. I gather all core team members for a meeting to facilitate a discussion around the results. During this meeting, we take a step back and critically evaluate the top opportunities. We challenge whether the top 3 opportunities are indeed the best options to pursue. We ask ourselves: Is everyone aligned with the choices? Is there a better opportunity ranked lower that we should pursue instead? This discussion is vital not only to validate the outcomes but also to ensure that the entire team is fully behind the decision to choose the top 3 opportunities. Managing change and ensuring alignment are essential steps if we want to realize the full potential of these opportunities.

Conclusion

The proposed framework offers a structured approach to prioritizing opportunities, integrating both value and operational readiness considerations. While not entirely objective, it combines scientific methodology with discussions to ensure alignment with strategic objectives and successful execution. By adopting this approach, organizations can effectively navigate the multitude of opportunities presented by Gen AI, optimizing resource allocation and maximizing ROI.