McKinsey & Company published new research that validates three key ideas.
Earlier this year, I wrote about three ideas that have been central to how I think about AI:
1\ Intelligence is now infrastructure.
2\ Don’t substitute. Reinvent.
3\ Every AI conversation is an operating model conversation.
This week McKinsey & Company published new research that validates these ideas.
Their conclusion is straightforward: companies are getting more value from AI when they move beyond applying AI to existing work and start redesigning the operating model around it.
McKinsey describes three stages:
1\ Enablement: provide employees AI tools
2\ Automation: use AI to improve existing workflows.
3\ Reinvention: redesign the operating model around what AI makes possible.
The difference is material.
Only 13% of the organizations in their survey qualified as “reinventors.” Yet 48% of executives in that group reported meaningful enterprise value from AI, compared with 24% among automation-focused organizations and 13% among enablement-focused organizations.
The practical implications are also telling. Reinventors are more likely to:
- Organize around products, customer journeys, and end-to-end processes
- Dynamically reallocate resources rather than rely entirely on annual planning
- Redesign entire workflows rather than automate individual tasks
- Organize talent around skills rather than static jobs
- Align incentives around collective outcomes
Yes, AI can make an existing process 10% better. But real value is unlocked ONLY when the operating model is reinvented around AI.
That is what I mean by “Don’t substitute. Reinvent.” And that is WHY I’ve argued that every AI conversation is ultimately an operating model conversation.
Intelligence is now infrastructure, and you can't simply bolt it onto an organization designed for a world where intelligence was scarce.
Salim Ismail calls it the “Organizational Singularity”: when organizations stop being built around hierarchy and start being architected around intelligence.
The AI conversation is moving in this direction.
From using AI to redesigning around AI. THAT is a much bigger opportunity.
Until next time,
Ram
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Ram Srinivasan
MIT Alum | Author, The Conscious Machine | Global Future of Work and AI Adoption Leader published in Business Insider, Fortune, Harvard Business Review, MIT Executive Viewpoints and more.
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