How understanding advanced AI adoption can lead to compounding value.
In a recent McKinsey report on the best underlying ideas for adopting AI, the consulting firm introduced the idea of the “More Law”. In summary, the More Law is the idea that being a digital leader in AI strategies that are unique and advanced compounds competitive advantage over time.
The data point they present to back up their claim is pretty convincing. In the banking sector, digital leaders saw 40-70% growth in digital sales, while “digital laggards” saw only 8-17% growth in sales.
The data point we want to dive into today describes the difference between those businesses that ascribe to the “More Law” and those that do not. As McKinsey explains, the gap between those at the top of the digital game and those at the bottom has expanded by 60% over the last three years.
What practices lie inside of that widening gap? How are companies gaining compounding value from those practices and stretching their digital advantage over competitors?
Moore’s Law and Inherent Technological Growth
As most reading this will know, Moore’s Law is the idea that the capacity of computing power will double every year. Today, the laws of physics have rendered Moore’s Law obsolete, but adopting a similar idea of pace inherent in technology to AI is essential for understanding long-term adoption strategies in your business.
In the years post-widespread computer adoption, Moore’s Law reminded executives to stay ahead with the technological advantages that were constantly changing the pace of innovation and potential competitive advantage their companies could possess.
The “More Law” is a similar guidepost. AI capabilities change rapidly, and the companies that are at the top of the widening digital divide are creating AI infrastructures nimble enough to advance apace.
In practice, this can look different from leader to leader, but the basic options stem from one of two ways. 1) Go with an outside provider of AI and leave the prerogative to advance to the experts in their field who are working on AI changes writ large. 2) Create proprietary AI processes and hire in-house or third-party AI consultants who specialize in bespoke data and AI solutions for your company.
The More Law in Practice
As Moore’s Law dictated computer hardware would advance every year, companies needed to decide if they would repopulate an entire physical infrastructure at that pace, expanding their speed and service capabilities or adopt a rolling update schedule that worked within the confines of third-party hardware. There was no option to create bespoke computer systems that could simply be updated in-house every year with the latest circuit board.
This is where the More Law of AI offers significant advantages and options for advanced digital leaders. The ability to create in-house AI that can change without ripping and replacing entire systems is the More Law in action.
There are solutions today that exist as a plug-and-play option for using AI in your company. However, these solutions are a one-size-fits-all option for industries writ large and won’t necessarily expand your competitive advantage if they are widely adopted. If they fall behind in advancement or fail, your company will be left with the same rip-and-replace option that traditional hardware provides.
The companies stretching their competitive advantage are taking the new path offered by AI: bespoke solutions that enhance your unique value offering to customers and answer specific challenges your team is facing.
“More” in this setting means thinking past the basics and considering how AI can be adapted to fit your specific datasets, your specific customer behaviors, enhance your unique features customers love, and overall integrate within your systems in a way your competitors have yet to adopt.
McKinsey lays this out plainly in a recent analysis of digital leaders’ AI capabilities: “Leaders implement digital and AI by investing in a holistic set of hard-to-copy capabilities.”
The idea of hard-to-copy is the engine that makes the More Law run. Differentiating yourself in the market means creatively identifying ways AI can make the customer experience frictionless and enhance the capabilities of your team.
If you go with a popular, out-of-the-box solution like simply using a ChatGPT plugin, you are by default choosing to rely on a broader solution that may catch you up with other competitors, but cannot launch you into the lead. As the gap widens for the leaders, you’ll miss out on the compounding growth they’re experiencing and the compounding value of AI that grows with your organization.
The Bottom Line
We learn from digital leaders that thinking about AI as just another software addition or just a new computer you get every few years is misguided. Instead, leaders are thinking about how they can uniquely integrate AI into their unique infrastructure to expand their capabilities and set them apart from other providers.
If you want to adopt the “More Law” in your own AI practices, your organization will need help identifying creative solutions that are unique to what you offer in the market and what your unique customers need from you.
Are you ready to grow the gap between you and your competitors with AI solutions that set you apart from the pack? Learn more from our team about the customized AI plans to help your business become a digital leader.