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HomeThe CEO’s Guide to Generative AI

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    • Generative AI is unlike any technology that has come before. It’s swiftly disrupting business and society, forcing leaders to rethink their assumptions, plans, and strategies in real time.
    • To help CEOs stay on top of the fast-shifting changes, the IBM Institute for Business Value (IBM IBV) is releasing a series of targeted, research-backed guides to generative AI on topics from data security to tech investment strategy to customer experience.
    • This is part 21: Enterprise operating model.

Generative AI is unlike any technology that has come before. It’s swiftly disrupting business and society, forcing leaders to rethink their assumptions, plans, and strategies in real time.

To help CEOs stay on top of the fast-shifting changes, the IBM Institute for Business Value (IBM IBV) is releasing a series of targeted, research-backed guides to generative AI on topics from data security to tech investment strategy to customer experience.

This is part 21: Enterprise operating model.

Generative AI is unlike any technology that has come before. It’s swiftly disrupting business and society, forcing leaders to rethink their assumptions, plans, and strategies in real time.

To help CEOs stay on top of the fast-shifting changes, the IBM Institute for Business Value (IBM IBV) is releasing a series of targeted, research-backed guides to generative AI on topics from data security to tech investment strategy to customer experience.

This is part 21: Enterprise operating model.

Change the rules of the game

Old paradigms have become exactly that. Old. 

As generative AI invites people to integrate technology into everything they do, siloed, top-down decision-making has become a barrier to innovation. Hierarchical structures and linear processes that once drove success are now a recipe for sluggishness. And failure. 

But CEOs can’t just let go of the reins. Instead, they must reimagine workflows and decision-making processes to make the most of gen AI without throwing their organization into disarray.

This will require rethinking the operating model—and giving people the power to drive grassroots transformation. Rather than using gen AI to make the same old processes faster, people need to define how gen AI will reconstruct their job roles and the workflows they’re part of. To spur this culture shift, CEOs must envision an open operating model that facilitates seamless data exchange, collaboration, and co-creation across the organization and the ecosystem. They also must empower people with the tools and training they need to succeed—and ensure leaders have the expertise to guide them through the transition.

Good governance is central to this process. If employees are going to drive digital transformation, the operating model must incorporate guardrails that keep the organization safe from human error and bias. This includes robust governance frameworks, auditing mechanisms, and feedback loops that detect and correct issues before they create unintended consequences.

It’s time for CEOs to flip the old hierarchy on its head. They must give teams the freedom they need to innovate without allowing daily work to devolve into a free-for-all. By thoughtfully breaking down functional silos and democratizing decision-making, CEOs can create the agile, adaptive, and interconnected op models that are essential to embrace gen AI with speed and scalability. All while keeping chaos in check.

IBM Institute for Business Value research has identified three things every leader needs to know:
1. Generative AI is disrupting your operating model. 
2. Scaling generative AI is everyone’s job.
3. Don’t expect to build a new op model perfectly on the first try.
And three things every leader needs to do right now:
1. Reboot how your organization operates.
2. Empower people to drive transformation.
3. Make innovation at scale your North Star for op model transformation.
Additional content

Meet the authors

Anthony Marshall

Connect with author:


, Senior Research Director, Thought Leadership, IBM Institute for Business Value


Cindy Anderson

Connect with author:


, Global Executive for Engagement and Eminence, IBM Institute for Business Value


Christian Bieck

Connect with author:


, Europe Leader & Global Research Leader, Insurance, IBM Institute for Business Value


Brian Goehring

Connect with author:


, Associate Partner and Global AI Research Lead, IBM Institute for Business Value

Download report translations


    Originally published 16 September 2024


    default alternate image text
    This chapter is available in the latest edition of the IBM Institute for Business Value's book, The CEO's Guide to Generative AI.
    1. Agility
    + Generative AI
    What you need to know
    Generative AI is disrupting your operating model

    You can’t run tomorrow’s business with yesterday’s operating model. And business leaders know it. Over the next three years, 79% of executives expect gen AI to have a major impact on core elements of their enterprise op model.

    When staying the course is no longer an option, what’s a CEO to do? It starts with rethinking your approach.

    Initially, leaders leaned toward harnessing the power of gen AI through centralized structures and deployment processes that align with the centralized decision-making processes already in place. But centralized control is rarely consistent with open innovation—which is essential to transform workflows with gen AI.

    That’s why centralization is giving way to hybrid approaches to deploying gen AI, including the “hub and spoke” model that is common in mature IT organizations. 
In this approach, a central hub team is responsible for developing, training, and maintaining gen AI models, while decentralized, cross-functional spoke teams focus on deploying, integrating, and customizing the models to meet specific business needs—such as developing new product features and functionality or increasing employee productivity. 

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    Today, 63% of executives say they’re deploying gen AI using a hub-and-spoke model or another type of hybrid approach for their early use cases—with 12% saying their gen AI operating model is fully decentralized. Now they need their enterprise operating models to reflect this shift. 

    By balancing standardization and control with the need for flexibility and adaptability in different business contexts, CEOs can accelerate progress. Rather than trying to shoehorn new ways of working into an outdated organizational structure, they must encourage the evolution of roles, workflows, and decision-making rights to drive the adoption of gen AI—and fuel future revenue growth.

    What you need to do

    Reboot how your organization operates

    Explore hybrid generative AI deployment models, such as the “hub and spoke” approach, and update your operating model to enable a hybrid approach to decision-making. Provide gen AI-powered tools, along with governance frameworks and guardrails, that give people the freedom to rethink their roles safely. 

    • Rip up the playbook. Start the conversation by defining what you want to achieve, then explore how gen AI can get you there. Push teams to redesign operations and workflows to take advantage of the new opportunities gen AI creates.
    • Put customers first—no exceptions. Adopt an operating model oriented toward services, products, and platforms. Track performance gains and assign operational value to gen AI-enabled workflows. Establish a governance model that creates transparency around how gen AI is used in in service provisioning, product development, and across the platform and ecosystem. 
    • Accelerate decision-making. Build on the bedrock of existing AI capabilities and governance structures to help teams pivot quickly and build momentum as new opportunities arise. Support and encourage exploration with incentives, contests, and employee performance goals.
    2. Collaboration
    + Generative AI
    What you need to know
    Scaling generative AI is everyone’s job

    As gen AI frees people to focus on higher-value tasks, roles are evolving faster than executives can update the org chart. The automation of routine tasks is putting greater emphasis on skills like creativity and critical thinking—and bringing a broader set of leaders into the gen AI conversation. 

    While 46% of executives still say IT oversees gen AI investment decisions, more than half of organizations have delegated these decisions elsewhere. AI and analytics functions, CEOs, and business functions are the most common primary decision-makers after IT. In this vein, 65% of executives say collaboration between finance and technology functions is critical to their organization’s success.

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    Executives also say lack of collaboration is a significant barrier, with 40% of C-suite leaders citing it as the biggest obstacle to driving innovation within their organizations. To overcome this challenge, organizations must evolve their operating models to enable a cross-enterprise approach to gen AI adoption. 

    This means teams can’t make decisions in isolation. Technology, finance, and business leaders must actively break down silos and foster a culture of collaboration and coordination to unlock the full potential of gen AI. By establishing clear goals and objectives for gen AI initiatives, as well as a roadmap for implementation that is aligned with business strategy, leaders can accelerate progress and keep teams in lockstep.

    But a plan is only as good as its execution. That’s why culture change must be a central part of rethinking the op model. While 64% of CEOs say succeeding with AI will depend more on people’s adoption than the technology itself, 61% also say they’re pushing their organization to adopt gen AI more quickly than some people are comfortable with.

    To quell concerns, leaders will need to be the first to elevate their expertise. Once they have a clear vision for how gen AI will transform the organization, they must paint a picture of what the future will hold and how they expect employee roles to evolve. They should also outline what skills people will need to be successful in this new landscape—and provide a clear path for developing them. 

    Trainings should include hands-on, immersive experiences that bring the benefits of gen AI to life, letting people see how it can make their jobs easier and advance their careers. Companies that offer the right education, incentives, and governance can get people comfortable quickly—while those that don’t risk losing out to the competition. 

    What you need to do

    Empower people to drive transformation

    Foster a collaborative culture of shared responsibility, inclusivity, and proactive engagement. Evolve the operating model to facilitate the creation of interdisciplinary teams better equipped to ideate innovative products and solutions and overcome the obstacles to scaling generative AI.

    • Don’t let leaders pass the buck. Encourage collective ownership of gen AI initiatives. Give executives and managers the education they need to become internal gen AI experts. Create a participatory culture that encourages tackling the challenges of gen AI head-on, rather than avoiding them out of fear of failure. 
    • Demolish siloed thinking. Establish cross-functional roles, from AI ethicist to data curator to content orchestrator. Encourage knowledge-sharing by building teams that bring together product, engineering, and AI expertise to develop and deliver gen AI-enabled products and platforms. 
    • Spur culture change with a clear vision and shared imperatives. Outline enterprise-wide milestones, timelines, and resources required for successful gen AI implementation. Set measurable goals and objectives, such as productivity gains or cost savings, and hold all teams accountable for meeting them. 
    3. Innovation
    + Generative AI
    What you need to know
    Don’t expect to build a new op model perfectly on the first try

    There’s no single way to win with generative AI. How CEOs transform their organization’s operating model will depend on its existing business architecture, talent pool, and ways of working.

    That’s why finding the best way forward will require broad and ongoing experimentation. Leaders must redesign the operating model—which is much more than just an org structure—for both innovation and scalability from the outset. This will involve testing new approaches, processes, and technologies to see which work best. 

    Flexible and adaptable AI systems are critical to this process, as they allow organizations to test and refine their approaches in a rapid and iterative manner. This, in turn, enables organizations to identify and address any potential obstacles or challenges early on, reducing the risk of costly and time-consuming problems that can hamstring deployment. And these issues are widespread. In 2023, 54% of executives said their organizations halted gen AI projects after the pilot phase. 

    By recognizing that innovation and scalability are intertwined, leaders can design an operating model that fosters collaboration, experimentation, and continuous learning as AI systems evolve. However, there are several major obstacles that can hinder an organization’s ability to advance gen AI. Executives say concerns about data accuracy or bias (45%), insufficient proprietary data available to customize models (42%), and inadequate gen AI experience (42%) are three of the top barriers.

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    To overcome these obstacles, organizations must be willing to invest in the development of new skills and capabilities and partner with other organizations to access in-demand expertise. They must also build greater transparency, accountability, and trust into the process. While the path to successfully scaling gen AI will be marked by uncertainty and iteration, adopting an operating model that enables experimentation within guardrails accelerates progress responsibly. 

    What you need to do

    Make innovation at scale your North Star for op model transformation 

    Design an operating model that fosters innovation across your ecosystem by building bridges and enabling rapid adaptation in lockstep with partner organizations. Integrate governance as a core component, emphasizing collaborative innovation as a shared responsibility across teams. Create clear accountability from inception to implementation.

    • Unite teams to ignite growth. Emphasize that innovation through collaboration is a shared responsibility. Encourage and empower all team members to actively contribute to and take ownership of innovation efforts—down to the tiniest details of day-to-day workflows.
    • Forge an unbreakable chain of accountability. Initiate AI governance from the conceptual stage and sustain it throughout the AI solution’s lifecycle. Set clear funding requirements, appoint accountable leaders, and create AI centers of excellence to ensure continuous alignment and drive enterprise success. 
    • Weave data and AI into an innovation tapestry. Develop a flexible IT architecture that disaggregates models, tools, infrastructure, and applications to ensure seamless integration and cost efficiency. Use a composable data and generative AI platform to power your innovation engine. 

    The statistics informing the insights in this report are sourced from three proprietary surveys conducted by the IBM Institute for Business Value in collaboration with Oxford Economics. The first surveyed 5,000 global executives about their perspectives on generative AI broadly from January to March 2024. The second surveyed 2,500 global CEOs about business priorities and enterprise transformation from December 2023 to April 2024. The third surveyed 200 US-based executives on their perspectives regarding AI model optimization in June 2024. Insights from the published IBM IBV 2024 CEO Study: 6 hard truths CEOs must face are also referenced.


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    Additional content

    Meet the authors

    Anthony Marshall

    Connect with author:


    , Senior Research Director, Thought Leadership, IBM Institute for Business Value


    Cindy Anderson

    Connect with author:


    , Global Executive for Engagement and Eminence, IBM Institute for Business Value


    Christian Bieck

    Connect with author:


    , Europe Leader & Global Research Leader, Insurance, IBM Institute for Business Value


    Brian Goehring

    Connect with author:


    , Associate Partner and Global AI Research Lead, IBM Institute for Business Value

    Download report translations


      Originally published 16 September 2024


      default alternate image text
      This chapter is available in the latest edition of the IBM Institute for Business Value's book, The CEO's Guide to Generative AI.
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