FIR 125: Stop RUINING YOUR BUSINESS with AI !!

Financial Investing Radio

In this episode, we take a look at why AI is ruining your business.

All right. Thanks for joining. So how is AI ruining your business? Well, certainly over the years, I've seen several ways the AI ruins your business today, I want to focus on one of them. So first, let's take a look at a report. It came from MIT Sloan Management Review. This was last year in 2020. And they were quoting a study by BCG. That's Boston Consulting Group. And here's what the result was the result of BCG study was that a mere 10% of organizations achieve financial benefits with AI. Holy smokes. That's that's quite the conclusion. So why do only 10% of businesses achieve financial benefits with AI?

Well, the ROI to AI gets wrapped up in at least two key areas. So the first is the technical foundation that's necessary to conduct AI. And second, the business problems on which AI is applied. So let's let's take a look at the first one. So what does it take to create a technical foundation? And how do many companies do this today? Well, first of all, one of the things that happens is they start hiring data scientists. And of course, you need data scientists in order to do that kind of work. So that's the first thing. The second is they begin doing AI model creation. Now, this is typically a multi month effort for these organizations. All right, moving on to number three, well, while they're building out their technical Foundation, they start deploying the AI model to something like Amazon or Azure, or Google or something like that, right.

And it turns out, that at this point, about 50% of the models actually don't even get deployed. All right, because so far, they haven't been able to find a good, a good application for that. So at that point, you're down to 50%. And then number four, now you start on working for user adoption, hey, let's get the people to actually start using it. And by this time, your model may be out of date, right? So needless to say, by the time you do all of this, right, you've invested hundreds of 1000s of dollars, if not actually millions of dollars. So again, where's the ROI? Well, that's one of the reasons why only 10% achieved some financial results, because you're putting all of that investment upfront on your business, right? That's very expensive way to do that. That's crazy. Don't do that, there's got to be a better way.

And there is, and I'll come back to that here in just a moment. But before we do that, let's look at the other reason why AI has ROI problems. So it has to do with the business problems on which AI is being applied. Now, as you know, as it turns out, the majority of organizations start running all of their machine learning algorithms, without clarity on the business problem on which they're focused. So what that means is, they're looking for highly accurate AI models that in fact, aren't actually going to work well for your business anyway. And that is, well, that's bad business. So the net result is, ai gets a bad rap, because sometimes as business people, we get too excited about eye candy, right?

And so as you know, there's got to be a better way and of course there is so here's a couple things to think about. Right? Instead of making those mistakes, and ruining your business with AI to address the first problem, right? So the first problem was, gosh, darn, this is expensive and holy smokes. You know, I'm buying expensive AI resources. As a small to medium business owner, you're not going to do that. So don't get caught up in the world of expensive resources or building out your AI team, or expensive AI tools. So if you do go that route, then getting the ROI from AI is quite difficult. As you know, one of the best business rules is to use leverage. So leverage the skills of people have already done it with the platforms that have been tried and true. Alright, so that's overcoming the first problem to address the second problem, which was, hey,

there's no focus on the business problem, right? It turns out that if you do this first, right, if you focus on the business problem first, it's actually the best thing to do. sounds cliche, sound sounds trite. Always start with the business problem. This actually influences the AI model development. So as you identify not only what's the business problem, but you also need to identify what parts of my business Am I willing to change?

Because it turns out the cultural piece to this is just as important. If not, if not more important, you might have a business problem. But if you can't figure out how you're going to get the people to make the adjustments to take the insights and make the changes, might as well not do it, right. So Furthermore, identify that your business is willing to make the change a Have I got the right business problem, be are willing to make the change. All right now go apply the AI resources, but don't go build out that dog on team, right. So if AI gave you some insights, and you were willing to make the business adjustments needed, now you're in a good spot to actually get some ROI from your business. So it's critical to identify the business problem first, and to do it in an area that you're willing to make a change. All right, then let that serve as input to your AI model development.

Now, I promise you, if you apply these two rules, then you'll be in the 10% of businesses that are getting ROI from AI. Now it turns out that, in another recent study, this one came out of McKinsey, that 20% of the large companies are now getting financial results from their sales activities with AI, so the number actually goes up. So think about that. So you'll actually go from the 10 to the 20%, right? So if you not only just applied in general across anything, but apply it to your sales related scenarios, focus on the business problem.

First, focus in areas where you're willing to change, don't go build all the resources out and the skills don't build out the team leverage teams that have already built this capability. If you do that. You will not only get ROI, but you'll actually leapfrog your competition. All right, and who doesn't want to be a frog right? All right, everybody. Thanks for joining and until next time, apply the two ROI rules for AI in your business.

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