Executive
Perspectives

CEO’s Guide to Maximizing Value
Potential from AI in 2024
Introduction
July 2024

Introduction
We meet often with CEOs to discuss AI---a topic that is both captivating and rapidlychanging. After working with over 1,000 clients in the past year, we are sharing ourmost recent learnings in a new series designed to help CEOs navigate AI.
With AI at an inflection point, the focus in 2024 is on turning AI’s potential into real
profit. Here are some key questions CEOs often ask about getting value from AI:

In this BCG
Executive Perspective,
we will show you how
to leverage AI to createbusiness value• Where should my organization start?
• What are the highest value and opportunities where GenAI and AI can transform
my business and functions?
• How can I achieve short-term performance with AI and GenAI while building thenecessary capabilities in my organization?
• How can I build enthusiasm for AI across all levels of my organization and drive
adoption among front-line employees?
This document is a guide for CEOs to cut through the hype around AI andunderstand what creates value now and in the future. It explains current AI
adoption trends, the technology's capabilities, and how to use it for a complete
enterprise transformation.
1

Executive summary | CEO’s guide to maximizing
value potential from AI in 2024
The maturity of AI brought us to an exciting moment, where Generative AI is complementing Predictive AI, and goingwell beyond the hype in delivering superior value for organizations

The time to act
on AI is now

AI mature companies (~10%) are also the first to scale GenAI, further widening the gap vs. peers
AI technology is also evolving rapidly, from mature value sources ready to scale at the present time to exciting
innovations on the horizon
Companies are embarking on AI transformation journeys; setting ambitious targets both in top line and bottom line
Three strategic initiatives to drive value and achieve end-to-end enterprise transformation:

Three strategic
plays to create
value at scalewith AI

Executingsuccessfully• 'DEPLOY' utilizes off-the-shelf tools to boost workforce productivity by 10-15%, improve employee satisfaction,and generate excitement for broader AI change in the organization• 'RESHAPE' allows for re-imagination of functions through workflow re-engineering, to drive 30-50%
improvements in efficiency, effectiveness across affected functions• 'INVENT' leverages AI to expand revenue streams and "invent before getting disrupted" by introducing newoffers, services, and experiences to the market
To successfully deploy AI at scale and convert it into business impact, organizations need strong foundational
capabilities (e.g., talent, technological infrastructure, etc.) and a 10-20-70 approach in terms of level of emphasis
anchoring on algorithms (10%), tech & data (20%), and people & processes (70%)
Long-term competitive advantage will come from data, talent, and culture; the time to act is now, otherwise,organizations risk being left behind

2

GenAI is extending the value and excitement around AI
broadly, with leading adopters realizing superior outcomes

Companies with the highest AI maturity are further extending
their lead by scaling GenAI applications1…

~ 50%

~ 10%

companies

companies~ 40%

companies

Developing few focused MVPs to test value
from GenAITaking no action on GenAI yet

Majority have historicallylacked predictive AI project
execution capability

3-year

+2.6x revenue growth+38%

Piloting
No-action yet…and rewards are clear
for those further ahead in
AI journey2

Majority have historically piloted anumber of predictive AI projects, but
few have successfully scaled

Scaling

Are scaling 1 or more
GenAI applications
across functions/enterprise

Majority have historicallyscaled several predictive AI
initiatives in a few functions

Higher AI maturity

3-year
EBIT growth
3-year market+50% share growth+45%

Customersatisfaction score

Read What GenAI's Top Performers do Differently

1. BCG Build for the Future C-level GenAI survey, 2023/2024, N = 159; BCG Client Experience 2. BCG Company of the Future Survey 2022;
n=536; Comparison of 'Discovering' companies with none/limited AI solutions vs 'AI driven' companies with multiple at scale AI solutions3

AI technology continues to evolve rapidly; while value proofs
exist already, even more exciting opportunities are on the horizon
Non-Exhaustive

Established value sources

Emerging applications
Content generation
including text & image

Early experiments
Video/audio
content generation

New productdevelopment

Customer facing
chatbots
Commercial spend
simulation andallocation
Demandforecasting

Trend sensing,product refinement

Summarization &recommendations
from unstructured data

Independent
decision-making
without humanin the loop

Optimization:
operations, price,promotions,precision media
4

Three complementary strategic plays to maximize
value potential of AI
DEPLOYRESHAPEINVENT

Enhance efficiency with GenAI toolsthat streamline everyday businessprocesses reducing the need for
additional hires & daily operating friction

Elevate business impact bytransforming workflows with AI,
enabling multi-functional reshaping andend-to-end organizational transformation

Develop AI-native offerings thatelevate customer value proposition
and unlock new business models &revenue opportunities

Examples of 'Deploy'

Examples of 'Reshape'

Examples of 'Invent'• Meeting summary• Design and Engineering• Hyper-personalized customer experience• Code development• Marketing• AI-powered services/products• Calendar management• Customer Service• Data monetization across value chain• Invoice reconciliation• Technology• Insights and innovation platform

End-to-end transformation across all 3 plays
Combine multiple AI initiatives for an end-toend transformation

Read Turning GenAI Magic into Business Impact

Scale from functional transformation tocompany-wide transformation
5

Key principles and CEO imperatives for scaling strategic plays
DEPLOYGenAI in everyday tasks

AI outcomes
Tech
PeopleRisk/
Responsible AI
Operating model

CEO imperatives

RESHAPE
Critical functions

INVENT

New business models

10-15% productivity

30-50% efficiency, speed, andeffectiveness/ROI improvement

New revenue play

Off the shelf software (e.g., Copilot,
ChatGPT Enterprise)

Assembly of predictive & generative AI
systems; function-specific

Dedicated platform

Upskilling & adoption

Process redesign, workforce planning

Advanced design + AI

Technical risks

Operational risks

Client facing risks

IT/HR-led

Function-led

Incubation-led• Engage CFOs and CHROs (beyondCIOs), as champions• Shift dialogue from uses case/point
solutions to function
transformations• Be prepared to continuously test &adapt operational plans• Embed tools in existing workstreams
with role-specific features• Communicate capabilities & goals to
avoid unrealistic expectations• Upskill leaders & use persona-based
communication to facilitate change• Build a baseline, select priority
workflows, & run pilots• Maintain focus on providing
customer value vs technology
capabilities• Align (Gen)AI initiatives with overall
strategy & inspire C-level to6lead/invest

'DEPLOY' Overview | 'DEPLOY' unlocks 10-15% productivity improvement
and prepares organization for broader AI change
How are companies using it?
What is 'DEPLOY'?
Deploy efforts take the “toil” out of work;
investments in early wins that prepareorganizations for an AI-powered future

60%

of companies employing
GenAI solutions have
'DEPLOY' plays in motion1'DEPLOY' tools in the market
ChatGPTEnterprise
GitHub
Copilot

Microsoft
Copilot
Adobe
Firefly
Illustrative, non-exhaustive

Tech is being deployed across various workflows and everyday tasks,
with a few standing out as the most common
Q: How is your company deploying GenAI in everyday tasks today? (N=188)1
Knowledge management

69%

Code development

67%

Meeting summaries

62%
55%

Content drafts
Image/visualcontent generation
Research extraction
and synthesis

10-15%
productivity
gains

48%

Contract/SOW drafts

33%

Calendar management

31%"Personalized recommendations are now at
the fingertips of all our developers. [WithGitHub Copilot], they are coding faster,
collaborating more effectively, & building
better outcomes."

Invoice reconciliation

31%– Engineering Manager at a leading
technology company

1. BCG Deploy, Reshape, Invent Survey 2023; 2. GitHub; 3. Microsoft; 4. BCG Henderson Institute; 5. Adobe

44%

7

'RESHAPE' Overview | Companies are reshaping support functions with AI,
then quickly moving on to transform core functions crucial to their industry
Non-Exhaustive

What is 'RESHAPE'?
Companies are elevating business impact
by transforming functional workflows
with AI68%

of companies employing
GenAI solutions have
'RESHAPE' plays in motion1

Companies across industries are reshaping beyond their support
functions, expanding towards core functions

Supportfunctions• Holistic and centrally coordinated effort• Complete re-imagination of how work getsdone and who does it• Building underlying capabilities via strategic
investments in core tech, people and RAI2

• Streamline talent sourcing & hit-rate of best candidates• Increase employee satisfaction with augmented HR services

IT & Development• Drive efficiency in tech ops & vendor spend model• Accelerate software development timelines

Supply Chain• Drive efficiency in quality, customer service, and logistics• Reduce lead times in production and logistics…

'RESHAPE' is …
• Functional transformation leveraging AI
and GenAIHR

Core
functions(varies byindustry)

Underwriting in
Insurance• Improve overall response time by extracting information more
quickly and accelerating summary & review processes• Enhance assessment accuracy

Marketingin CPG• Deliver superior productivity, creativity, insights in less time
• Enhance customer-centric delivery with hyper-personalized
content and campaigns at scale

R&D
in BioPharma• Improve product development (e.g., drug discovery, scientificresearch), quality, testing, and design generation…

Source: 1. BCG Deploy, Reshape, Invent Survey 2023 2. Responsible AI – the approach to developing and implementing AI in a legal and ethical manner; 2. BCG analysis and client experience8

'INVENT' Overview | Select companies are inventing with AI, ushering in a newera of innovation & taking the lead in shaping the future of their industries

What is 'INVENT'?

What does 'INVENT' look like?

'INVENT' develops AI-native offerings thatelevate customer value proposition andunlock new business models & revenue
opportunities

46%

of companies employing
GenAI solutions have
'INVENT' plays in motion

How are enterprises reinventing
themselves?1
New customer value proposition
for existing products or services

88%

New products or services

64%

New target customers

52%

New pricing/cost structure
for existing products or services46%

New customer experiences
AI enhances businesses' ability to craft
engaging, personalized customer
experiences, driving greater loyalty,
engagement, and brand advocacy
New line of products
AI empowers businesses to create
data-driven, dynamic products,
leveraging insights to enhance
profitability and competitivenessNew business models
AI drives business model innovation by
evolving & learning from existing
operations, enhancing competitive
advantage and enabling novel models[Our company] has always lived at theintersection of tech and creativity.
Recent developments in AI represent
an opportunity to take thisconvergence to the next level. We view
AI [and GenAI] as an exciting new
creativity tool to open avenues forimagination and explore premium
product offerings that allow us toinnovate with our clients and partners
on a new frontier in media.
– CEO at leading internet
media company

Source: BCG Deploy, Reshape, Invent Survey 2023; 1. Survey question: How will your company invent new business models with AI? Please select the type of new business models AI will generate atyour company (N=142, companies pursuing Invent)9

Across the 3 plays, leading companies are setting ambitious targets
when embarking on AI transformation journeys
Non-exhaustive

Productivity improvement

Cost transformation

Top-line growth

Boost productivity with 'deploy' & 'reshape'
plays to level up the company, especiallyacross heavily people-driven organizations'Reshape' functions and leverage predictive
AI to maximize productivity of assets andreduce costs

Speed up time-to-market & drive revenue
by 'reshaping' core processes, 'inventing'new offerings and full end-to-end
transformations

EnergyInsurance

Financial Institution

50%

4 hrs

$1B+

Productivity boost (per week)
to support growth strategy

Productivity program (cost, revenues,
balance sheet optimization); Includes Engineering,Research, Investment Banking, Wealth Management,
Risk Management

Professional Services*500+
basis points

Reduction in time required for underwriting,
driving top line growth

Consumer Goods

Biopharma

6 hrs

$1B

Productivity benefits (per week)through broad deployment across 30k users

Value potential by 2027; 'Reshaped'
multiple core functions, starting with
Marketing, R&D, Manufacturing

3pts+

*250
basis points

Incremental sales
through digital services

More detail on following pages

Source: BCG Experience

10

Example 1/2 | How a Biopharma company is reducing cost throughAI transformation with a focus on reshaping multiple functions
VisionExecution

Company-wide program under CEO
and ExCo sponsorship

1

Adopted iterative approach and started
with several pilots

Mandate to unlock value fast, byreshaping multiple functions,engaging all employees; position as
pioneer in AI within sector

2

Setup rigorous measurement with GenAI
mirror processes

3

Vision to transform via:
1.
2.
3.
4.

Productivity improvement(e.g. content summarization)Work reduction via automating
end-to-end processes
Improving employee
engagement via reducing
repetitive tasks
Competitive advantage via
business model reinvention, costadvantage, capability building

45

Commercial

Developed lighthouse in Commercial
function and then expanded to Research &Development and Marketing & Sales
Each wave focused on outcomes andoperating model redesign (e.g., as-is content
development  insight-powered & alwayson content development  augmented/
assisted sales)
Assessed portfolio of investments,
projected ROI based on first impact; adjust
accordingly
DeploySource: BCG analysis and client experience

Value capture

Reshape

Fill % represents level of emphasis for each strategic play

InventResearch &Development

Marketing& Sales

Non-Exhaustive

20-30% agency cost
reduction and improved
engagement & campaign ROI
20-40% medical writer
efficiency gain – 3-6 months
saving in time-to-market
80% of reports approved
with no edits – from
20 to 1-3 days
11

Example 2/2 | How a CPG company is driving topline growth byinventing new business model and reshaping functions with AI
VisionExecution

Global CPG seeking to reinforce itscore competitive advantages
through AI

1

1.

Product superiority andspeed to market

2.

Marketing creativity andeffectiveness3.

Direct and meaningful
consumer connections

2

Value capture

Invested in AI capabilities over the last 7 years,
through a mix of organic and inorganic moves
Transformed its R&D and Marketing
capabilities through Predictive and increasingly
Generative AI, for formula success prediction, cycle
time reduction, Marketing ROI optimization,
content production automation at large scale3

Launched AI-powered digital services andvirtual assistants to augment consumer
experience, build direct connections, influence theconsumer journey4

In parallel, set up an Enterprise-wide
productivity lift effort with internal GPT

DeployReshape

Fill % represents level of emphasis for each strategic play
Source: BCG analysis and client experience

15-25% improvement inmarketing spend ROITime to Market
acceleration by
3-6 months$200M+ of incremental
sales through digital
services

Invent12

10%
Three pillars for
successful (Gen)AItransformation

20%

Algorithms
Build new algorithms and the sciencebehind themTechnology & Data
Deploy the tech stack and ensure the rightdata feeds into the right systems

The 10-20-70 Rule:

Focus 10% of your AI efforts onalgorithms, 20% on the underlying
technology and data, and 70% on
people and processes

70%

People & Processes
Drive change management and otherprocesses related to people

13

Algorithms (the ‘10’)/Tech & Data (the ‘20’) | Key AI trends for executives
to keep in mind across algorithms, technology, and data
10%

20%

Algorithms

Technology

Data

AI models will continue to grow in size
& capability in the next 3-5 years,
offering an increasingly wide set of
options to choose from whenbalancing performance needs & costs

New tech stacks are required tosupport AI needs, driving
companies to simplify legacy
systems and adopt new AI platforms

The value of Data increasing withAI, requiring companies to develop
new capabilities to deal with
unstructured data (i.e., knowledge)

Recent trends:

Non-exhaustive

Recent trends:

Non-exhaustive• Tech companies building AI factories (e.g.,
Microsoft $100bn data center investment1)• Enterprise system solutions launching GenAI
features (e.g., Salesforce, Einstein)• Unstructured data becoming more valuable;
increasing need to break “data silos”• Autonomous agents performing tasks &making decisions without human oversight• New applications (e.g., Jasper, Writer) &platforms (e.g., Scale AI, Groq) emerging• External data becoming more valuable; need todevelop data partnerships & ecosystems• AI being deployed on mobile devices• Companies using GenAI to support system
migration (via software automation)• Need for CDOs2 to help functions create & rank
unstructured data across enterpriseNote: Trends as of June 2024; 1. Forbes: "Microsoft And OpenAI Partner On $100 Billion U.S. Data Center"; 2. CDO = Chief Data Officers

14People & Processes (the ‘70’) | New roles, evolved operating models, &rigorous change management required for successful AI transformation

Organization & operating model
Emergence of new roles/departments
New roles will be created to unlock the potentialof AI (e.g., Chief AI Officer)

New operating models

Changes in roles, responsibilities, and decisionrights would bring about significant changes inoperating models

Greater productivity & redesigned work

GenAI will automate many types of creative work (e.g., coding,writing) and enhance employee support (e.g., next best action)

Purpose, culture, & change management
Extensive change management needs
New talent needs, ways of working, and job
responsibilities must be managed thoughtfully

Source: BCG Marketing Org & Op Benchmarks

70%

Talent & skills
Changing skillset requirements

GenAI will automate some tasks, recommend
next actions & improve knowledge management

Revamped talent acquisition

Greater access to candidate pool web scraping,auto-scheduling, and AI-based interviewing would
greatly increase hiring efficiency

AI-enabled performance management
New observational data (e.g., conversation summaries)
will make performance management more objective

Personalized training
Employee Learning & Development will betailored to individual needs & questions, and new
training content around AI will emerge

15However, change is hard, and executives face challenges
across the ‘10-20-70’ during their AI transformation
Top challenges with AI transformations1

Over 2/3
Of transformations fallshort of expectations(in terms of time, budget,meeting ambition)1

Algorithms

10%% of executives who reported as
top challenge within each category• Trouble reaching sufficient accuracy and reliability of models• Difficulty ensuring security and compliance of the technology• Difficulty integrating new AI technology with existing IT systems

Tech & data20%

• Lack of access to high-quality data for model training• IT cost constraints limiting sufficient investments into (Gen)AI• Difficulty realizing cost takeout/savings$1T
With backdrop of $1T
of wasted IT spend
collectively2• Challenges prioritizing AI opportunities when compared to other company-wide
concerns (e.g., cost reduction initiatives)• Issues with assigning a target ROI for identified opportunities

People &processes

70%• Insufficient (Gen)AI literacy throughout the organization• Lack of specialized (Gen)AI engineers in the market• Resistance, opposition, and fear about AI impacting jobs
• Lack of accountability & measurement of set KPIs (e.g., adoption, value realized)• Challenges with implementing new processes and reimagining workflows

Sources: BCG Experience; 1. 2023-24 BCG Build for the Future C-level (Gen)AI Survey(s), N = 735; 2. Across S&P 1200; Harvey ball fill represents the % of executives who ranked
the challenge in the top 3 challenges when presented with a set of challenges for each of the categories.

16

Core questions for CEOs to consider looking ahead
Non-exhaustive

10%

Algorithms

20%

Tech & Data

• How do I empower my C-suite to stay up to date with the rapidly evolving AI landscape?
• How do I think about whether to Build, Buy or Partner for the model(s) needed? Which modeland model platform partnership(s) do I need to make to stay ahead?
• What kind of (new) data capabilities do I need to leapfrog my competition?
• How do I simplify my legacy systems to adopt new AI tech stacks and platforms?
• I've invested significantly already. How do I control my costs & ensure a return going forward?
• How do I mobilize senior leaders to embrace & actively champion our (Gen)AI ambition?

70%

People &Processes

Source: BCG Experience• How must our roles, departments, & operating model adapt to capture value from AI?
• What are the best ways to fill the AI talent gap within my organization (e.g., upskill, reskill)?
• How do I effectively manage change across my enterprise? How do I communicate our ambitionand set the right expectations, while promoting trust and preventing misconceptions?
17AI Transformation Overview | End-to-end transformation integrates strategy& multiple functional transformations while building requisite foundations
DEPLOY (Gen)AI in everyday tasks across the enterprise(Gen)AI SETUP
Define value pools• BCG (Gen)AI Maturity Assessment• BCG Workforce Diagnostic

RESHAPE critical functions
In every business function:

Build MVPs, re-design workflows and pilot to

Articulate vision based on strategy

prove value…

…while designing future state operating model

Select priority opportunities acrossDeploy, Reshape, Invent PLAYSTransformation of function 1
Transformation of function 2

Cascade changes and scale E2E

Build the business caseTransformation of function 3…

INVENT new business models and products

E2E CHANGE MANAGEMENT & DELIVERY
Enable leaders and upskill

Drive adoption, engagement & culture change,leveraging behavioral science
Steer through central governance and measure impact via AI delivery office

ENTERPRISE FOUNDATIONS
Make coordinated investments in core tech & data, people, and responsible AI
Read about BCG's perspective on Responsible AI

18

Getting started | Practical next steps for your AI journey

1

Understand yourstarting point Identify the largest opportunities for action & benchmark AI maturity against peers

2

Prioritize few highvalue initiatives

 Select 3-5 functions/processes for 'DEPLOY', 'RESHAPE', & 'INVENT' plays

3

Upskill & scale broadly

4

Fund the journey Assess the potential for total productivity impact across your workforce Setup transformative efforts & resource adequately; target ~2-3x return on investment
 Embrace AI tools in daily work, upskill the workforce, & scale initiatives broadly Remember that this is a people transformation not a tech transformation
 Optimize tech/digital costs in the first 6-12 months by centralizing resources,
rationalizing legacy applications, and reducing third-party spend Prioritize & refocus portfolio on value creating initiatives

5

Invest in foundational
capabilities

 Build capabilities that will drive & sustain transformation (e.g., tech, people, RAI)

6

Launch an AI
governance structure Develop a structure that allows for broad but controlled experimentation

 Improve the quantity/quality of data – it will be a competitive advantage long-term Operate according to RAI framework while maintaining focus on prioritized initiatives
19

BCG Experts |Key contacts
for AI
transformation

NAMR
Dylan
BoldenVladimir
Lukic

David
MartinAmandaLutherMatthew
Kropp

Sesh
Iyer

Julie
Bedard

Beth
Viner

Djon
Kleine

Steve
Mills

Dan
Martines

Renee
Laverdiere

Tauseef
Charanya

EMESA

APAC

NicolasDe Bellefonds

Jessica
Apotheker

Marc
Schuuring

Jeff
Walters

Romain deLaubierDan
Sack

Andrej
Levin

MarcusWittigJulianKing

AparnaKapoor

Akira
Abe

Nipun
Kalra

RobertXu

20