By Anshuman Sengar
Artificial intelligence (AI) often conjures images of sophisticated robots and self-driving cars, yet it represents a powerful business capability. To unlock its full value, organisations must treat AI as a strategic business capability first, and as a technology second. Why is this distinction critical? Technology, no matter how advanced, is only as good as its alignment with business objectives, strategy, and competitive advantage.
Consider Moderna, a biotechnology firm whose strategic use of AI accelerated vaccine development during the COVID-19 pandemic. Moderna leveraged AI systems to rapidly analyse and optimise genetic sequences. Remarkably, the company designed its mRNA vaccine candidate within two days after the SARS-CoV-2 genome was published, dramatically speeding up vaccine production and deployment. By embedding AI into its core processes, from vaccine dosage optimisation to operational enhancements, Moderna effectively managed its resources, streamlined regulatory processes, and significantly shortened time-to market.
Netflix and AI
Another compelling example is Netflix. While technology powers its AI-driven recommendation engine, the real objective is business-driven: to boost customer engagement and retention. The effectiveness of Netflix’s AI capability lies in its ability to anticipate customer preferences, keeping subscribers engaged longer.
While there seems to be an on-going race to embed AI, there is also an increasing disappointment with the impact and value it has delivered. A major reason for this disappointment stems from the fact that many businesses rushed to deploy AI/Gen AI without thinking about the business and customer outcomes it wants to deliver. Global IT spending has been on an upward trajectory, with projections indicating it will reach $5.74 trillion in 2025, marking a 9.3% increase over 2024. Global Software spending has already grown by 50% compared to 2020 and expected to accelerate. However, this escalating expenditure doesn’t always translate to proportional value.
Productivity gains
Despite these substantial investments, productivity gains have been modest. Labour productivity in the U.S. has grown by close to 2% annually since 2022, which is relatively stagnant considering the scale of technology spending. This phenomenon, often referred to as the “productivity paradox”, highlights the disconnect between technological advancements and actual business outcomes.
To truly harness AI’s transformative potential, businesses must begin by clearly defining their strategic objectives and desired customer outcomes, rather than merely chasing technological advancements. Prioritise use-cases where AI can enhance customer experiences, drive operational efficiencies, or create competitive differentiation. Embedding this business-first mindset is essential for securing sustained competitive advantage in an AI-driven marketplace.
The author is partner and global leader of data and AI practice, Kearney. Views expressed are personal.