IS GENERATIVE AI WORTH THE INVESTMENT? WHAT LEADERS ARE SAYING

Will generative AI destroy humanity or make everyone rich and happy? Business leaders ask a different question: Can generative AI deliver a return on investment? CEOs are spending money to find out the answer. Virtually all--97 percent of leaders according to a KPMG survey released March 22 of 220 business leaders in U.S. companies with at least $1 billion in revenue--are investing in GenAI over the next 12 months. Some 43 percent of leaders plan to invest $100 million or more. Leaders gauge generative AI's ROI in different ways. Roughly half--51 percent--currently measure the technology's ROI through productivity gains, 48 percent track employee satisfaction, and 47 percent monitor revenue the AI chatbots help generate, noted the KPMG survey. To be sure, leaders are guarding against generative AI's business risks. To that end, they are investing in "data security, governance frameworks, and workforce preparedness to enable long-term business value," KPMG wrote. Business leaders seeking to fast-forward to the outcomes--e.g., which generative AI applications produce a significant ROI--could be frustrated. My forthcoming book, Brain Rush: How to Invest and Compete in the Real World of Generative AI, includes in-depth case studies of such applications. The highest-payoff generative AI applications do the following: They deliver a quantum value leap--enabling a big uptick in revenue and productivity--in a company's critical business processes They attract new customers and keep current customers buying They are difficult for rivals to replicate Below are two examples of high-payoff applications of generative AI that share many of these attributes. Bullhorn's president uses AI to better match candidates to jobs Bullhorn, a 1,520 employee Boston-based provider of "all the technology needed to place temporary workers" according to PitchBook, uses AI in many ways. Bullhorn's highest-payoff AI application helps the company's customers grow faster and boost productivity. In many cases, "basic generative AI doesn't add value in and of itself, but combined with more sophisticated use cases, there is definitely opportunity to drive holistic value," Bullhorn president Matt Fischer told me in a March 26 interview. "For example, you're not going to charge for one prompt, but once generative AI is integrated into the entire workflow, it becomes very valuable. We are monetizing machine learning to help recruiters match candidates to jobs more effectively," he added. Bullhorn's AI application analyzes the most successful temporary worker placements and uses the resulting model to help recruiting firms match candidates to jobs more effectively and efficiently. Because Bullhorn built its matching model using a large number of successful placements, the company's AI boosts recruiters' revenue and profitability and is difficult for rivals to replicate. "Our models are outcome-based--successful placements," said Fischer. "We track 54 vectors of more than 4.5 million successful job placements. We are planning to enhance this model with call transcripts, SMSs to candidates and clients, and emails." The model pays off for Bullhorn's clients. "Recruiters increase their placement rate from our model's recommendations--to 25 percent or 35 percent. We help reduce candidate acquisition costs by increasing the redeployment rate of talent at the end of their contracts from 5 percent to 30 percent. We increase recruiter productivity from submission to placement by 68 percent." To be sure, Bullhorn offers other generative AI applications that do not add to the company's revenue because all industry players are offering them. For example, Bullhorn provides generative AI Copilots to help recruiters draft customized communications. These communications help cut recruiters' time and increase their effectiveness. "Our clients recruit candidates, pitch the company on Johnny, and pitch Johnny on the company," Fischer told me. "Our Copilots help recruiters customize the email to the candidate and the opportunity and set the right tone. However, this service has become commoditized. We do not charge for it." Dynatrace's CEO encounters generative AI's upside and downside "A couple of preliminary killer apps will emerge for generative AI," according to my February 2024 interview with Rick McConnell, CEO of Dynatrace, a Waltham, Massachusetts-based provider of software observability services. One such killer app will be customer service. "I was trying to fix a billing issue with a cellular provider and the chatbot solved the problem fast," he noted. "The second one went so badly that I will never do business with the company again. I was trying to correlate the contact lenses I received with the prescription. The contact lens provider's chatbot couldn't get me a solution. After three different segments, I never got it resolved." Be sure your company's killer generative AI app is the kind that wins you customers for life. EXPERT OPINION BY PETER COHAN, FOUNDER, PETER S. COHAN & ASSOCIATES @PETERCOHAN