How AI Will Double Innovation Speed in APAC in Two Years
Most business leaders and entrepreneurs today realise that artificial intelligence (AI) is essential for the growth and competitiveness of their organizations. In fact, the AI technology will allow the rate of innovation and employee productivity improvements in Asia Pacific to nearly double (1.9 times, to be precise) by 2021, according to business leaders in the Asia-Pacific (APAC) region.
These were some of the findings of a study from Microsoft and IDC Asia/Pacific, “Future Ready Business: Assessing Asia’s Growth Potential Through AI”, which surveyed over 1,600 business leaders and over 1,580 workers across 15 markets, including Australia, China, Hong Kong, Indonesia, India, Japan, Korea, Malaysia, New Zealand, Philippines, Singapore, Sri Lanka, Taiwan, Thailand and Vietnam. Among the industries polled included agriculture, automotive, education, financial services, government, healthcare, manufacturing, retail, services and telco/media.
Eight in 10 business leaders from companies with more than 250 staff agreed that AI is instrumental for their organization’s competitiveness, the study said. Despite this, only 41 per cent of organizations in the region have embarked on their AI journeys. Those organizations that have adopted AI expect it to increase their competitiveness 100 per cent by 2021.
“Today, every company is a software company, and increasingly, every interaction is digital. To be successful in this new world, organizations need to be a fast adopter of best-in-class technology; and secondly, they need to build their own unique digital capabilities,” says Ralph Haupter, president, Microsoft Asia. “AI is the defining technology of our time that significantly accelerates business transformation, enables innovation, boosts employee productivity, and ensures further growth. Economies and businesses that have yet to embark on their AI journey run a real risk of missing out on the competitive benefits that are enjoyed by leaders,” he adds, in the report.
Cultural Traits in an Organization to Support AI Journeys
Source: Microsoft and IDC Asia/Pacific's “Future Ready Business: Assessing Asia’s Growth Potential Through AI”.
For companies that have employed AI in their work, the top five business drivers to adopt the technology were better customer engagement (26 per cent of respondents named it as the No.1 driver), higher competitiveness (19 per cent), higher margins (18 per cent), accelerated innovation (15 per cent) and more productive employees (9 per cent).
Victor Lim, vice president (consulting operations), IDC Asia/Pacific, says, “Last year, organizations that have adopted AI saw tangible improvements in those areas in the range of 18 per cent to 26 per cent. They forecast further improvements of at least 1.8 times in the three-year horizon, with the biggest jump expected in accelerated innovation and competitiveness.”
Need for Success
According to the report, the success of a country’s AI journey is dependent on six dimensions. It says the APAC region needs to build upon its strategy, capabilities and infrastructure in order to accelerate its AI journey.
“Asia Pacific is not ready yet for AI. To succeed in AI race, markets in the region need to substantially improve their readiness. Organizations’ leadership should make AI a core part of their strategy and develop a learning agility culture. They have to continuously invest in this transformative technology for the long-term success, sometimes without immediate returns,” Lim says. “There is an urgent need for talents and tools to develop, deploy and monitor AI models, along with the availability of a robust data estate with the adequate governance.”
Business leaders who are adopting AI face three top challenges: a lack of thought leadership and leadership commitment to invest in AI, lack of tools and infrastructure to develop actionable insights, and a lack of skills, resources and continuous learning programs.
The study showed that to move ahead on their AI journeys businesses have to create the right organizational culture. More than half of the business leaders and workers surveyed believe that cultural traits that support AI journeys, such as risk-taking, proactive innovation, as well as cross-function partnerships among teams, are not pervasive today.
“Business leaders must now embrace a new culture, where innovation and continuous learning are core components of the organizational culture. It sets the stage for agility, adaptability and growth,” says Haupter.
When it comes to creating or replacing jobs, Lim adds, 18 per cent of business leaders believe that AI will produce new jobs, whereas 15 per cent feel that the technology will replace jobs. Interestingly, workers are more optimistic, with only 5 per cent expecting AI to replace jobs, while 13 per cent anticipate AI to create new ones, he says.
The study also found that workers are more willing to reskill than business leaders believe they are. Twenty per cent of business leaders say it may be too difficult for workers to develop new skills, while only 14 per cent of workers felt it was a challenge.
Haupter adds: “It is heartening to see that 84 per cent of businesses prioritize skilling and reskilling of workers in the future. They plan to invest as much, or even more, in human capital than in new technology. Even so, 64 per cent of business leaders have yet to implement plans to help their employees’ to acquire the right skills, which is worrying in today’s context. They must have the urgency to support the fundamental shift in training workers for the future.
“The jobs of today will not be the jobs of tomorrow, and we have already seen demand for software engineering roles expand rapidly beyond just the tech sector. However, building an AI-ready workforce does not necessarily mean an acute need for technological skills.”