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Generative Artificial Intelligence (GenAI) in Business

My talk for the Indian School of Business (ISB) Emerging Leaders Program Cohort 9. In this talk, I discussed key issues around adoption of GenAI in business - benefits, opportunities and limitations. I also discussed how my research on Theory of Cognitive Chasms helps address some of these issues

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GenAI in Business DR. TATHAGAT VARMA EXECUTIVE FELLOW, INDIAN SCHOOL OF BUSINESS (ISB) “COGNITIVE CHASMS: A GROUNDED THEORY OF GENAI ADOPTION”
Disclaimer: Personal views!
GenAI: The New Shiny Penny?  Several Trillion $$$s of economic impact projected.  30% growth expected in 2024: Over $20bn VC funding in the first three quarters.  Capex of $1tn+ expected in the coming years!
Evolution of AI: Is “third time” a charm? https://www.americanscientist.org/article/intelligence-may-not-be-computable
The field of AI: continually evolving and rapidly growing. Also manufacturing serious hype since 1956! 1956 “Every aspect of learning or any other feature of intelligence can in principle be so precisely described that a machine can be made to simulate it.” – John McCarthy 1967 “Within a generation...the problem of creating 'artificial intelligence' will be substantially solved.” – Marvin Minsky 2016 “People should stop training radiologists...it is just completely obvious that within 5 years deep learning will do better than radiologists.” – Geoffrey Hinton 2019 “Next year, for sure, we'll have over one million robotaxis on the road” – Elon Musk
The healthy tradition continues…and so do the results!
Is it working?
And how’s the ROI?
But the show goes on…
GenAI Hype Source: Gartner, https://www.gartner.com/en/articles/hype-cycle-for-genai
What is Generative AI? Ability to create “new” content using simple prompts in English Content could include text, images, audio and video, etc. Utilizes advanced neural network architectures Leverages vast amount of existing data for pre-training
Types of Generative AI Generative Adversarial Networks (GANs): Two neural networks, the generator and the discriminator, compete against each other to create new outputs. Variational Autoencoders (VAEs): Good for exploring variations in data in a specific direction. Diffusion models: Create detailed and complex images by gradually refining random noise into structured images. Transformer models: Use a self- attention mechanism and a feed-forward network to identify and memorize patterns in data. Deep Generative Models (DGMs): A combination of a generative model and a neural network. Autoregressive models: Suitable for tasks such as language generation and image synthesis. Large Language Models (LLMs): Statistical models of language that estimate the probability of a sequence of words appearing within a particular context.
Popular Tools…growing daily! Text • Conversation: ChatGPT, Claude • Content: Jasper • Writing: Grammarly, Anyword • Email: Shortwave • Notes: Mem Image • Generation: Dall-E, Midjourney • Enhancement: Adobe Photoshop Audio • Voice Generation: Wellsaid, Respeecher, Altered, Murf • Voice Cloning: ElevenLabs • Music: Suno • Text-to- Speech: Speechify, Natural Reader Video • Generation: Runway • Editing: Descript • Social Media: Flicki • Digital Avatars: Synthesia • Content Marketing: Peech • Script to video: Visla Technology • Coding and debugging: Copilot • App building: Microsoft Power Apps, Wix, Framer, Pico
Key Benefits Productivity Automate tasks that are manual, boring, repetitive, dangerous Allow humans to focus on higher value-adding tasks Efficiency Reduce lead time, process overheads, wastage Optimize operational costs and improve bottomline Experiences Deliver personalized experiences Enhance creativity Innovation Design new products, services and experiences Improve topline and innovate the business model Decision-making Enhance decision- making based on data-driven insights Ability to incorporate pervasive emergent learning and achieve market-scale in near- real-time
Industries…virtually every industry! Healthcare: Diagnostics, Patient Care, Retail: Inventory management, Pricing, Virtual try- ons, etc. Entertainment: Scriptwriting, Animation, Office: Productivity solutions
Functions…literally every function! Customer Service Chatbots Marketing Content creation: Ads, Blogs, Creatives Personalized campaigns, Data Analysis, Culling insights, etc. Product Development Prototyping, Design Technology: automated coding and debugging People AI-driven individual learning journeys Hiring, career progression, etc.
Major Limitations Bias Accuracy Ethical Cost Data
Addressing the Limitations…a first-principles approach Human Learning Data Governance
Theory of Cognitive Chasms©
GenAI Value Spectrum Optimize (“10%”) •Task-level adoption and process-level “vertical scaling” lead to individual productivity hacks that might make no real impact for the firm, while process efficiency could improve the bottomline. Innovate (“1X+”) •Firm-level “horizontal scaling” across the entire value chain leads to business value realization and superior customer experiences that improve the topline better than the normal growth. Transform (“10X”) •Harness the power of data- informed algorithmically- supported “cognitive decision- making” to transform the business model and deliver exceptional human experiences that are order of magnitude superior. Evolve (“∞”) •Industrial and societal adoption lead to market disruptions and planet-scale solutions for social good when applied judiciously with appropriate human controls, but might wreak havoc when applied indiscriminately without adequate forethought and safeguards.
Theory - of - Cognitive Chasms© Coming in 2025… Follow updates at: https://www.linkedin.com/company/cognitivechasm
Recap Enterprise-wide Adoption: GenAI is a “general purpose technology”. To realize its full value, it must be seen as a “horizontal technology”, i.e., enterprise-wide adoption. Strategic Value Creation: Successful adoption must strategically integrate GenAI to a firm’s value chain and deliver tangible value to the firm. True value of GenAI lies in transforming the internal capabilities and business model of the firm. Transformation Roadmap: Theory of Cognitive Chasms provides a roadmap for firms looking at systematic change management while mitigating risks and delivering tangible value.