What's Happening?
Nick Harding, CEO and co-founder of Fifty One Degrees, argues that most AI business cases are mismeasuring the true value of artificial intelligence. He contends that a significant majority of CEOs, specifically 56% according to PwC’s Global CEO Survey,
have not seen higher revenue or lower costs from AI. Harding suggests that companies are primarily focusing on using AI to make existing work cheaper or faster, such as drafting emails in half the time or summarizing calls in seconds. While these savings are real, he believes they place a ceiling on returns. The biggest gains, according to Harding, come from using AI to eliminate work altogether, a concept he terms the 'Upstream Check.' This involves moving checks that were traditionally performed at the end of a process to the beginning, thereby preventing unnecessary work from ever starting.
Why It's Important?
This perspective is crucial for U.S. businesses and the broader economy as it challenges conventional thinking about AI implementation and return on investment. If companies continue to focus solely on incremental efficiency gains, they risk underutilizing AI's transformative potential. By shifting focus to eliminating entire workflows, businesses can achieve more substantial cost reductions and operational improvements. This approach could lead to significant competitive advantages for early adopters, while those who lag may find themselves burdened with inefficient processes. The 'Upstream Check' concept, exemplified by Fluro's credit application process, demonstrates how re-evaluating process design with AI in mind can lead to dramatic improvements in conversion rates and resource allocation, impacting various industries from finance to manufacturing.
What's Next?
Businesses are encouraged to re-evaluate their core processes to identify points where expensive work occurs before a critical check that could invalidate the entire case. The next step involves determining whether these checks are rules or judgments and assessing the cost-benefit of moving them upstream. Quick wins can be achieved by moving 'late rules' earlier, while 'late judgments' may offer even greater value. Companies will also need to decide how to utilize the capacity freed up by AI-driven process elimination—whether for growth initiatives or cost-cutting. This shift in perspective will likely drive a more strategic and impactful adoption of AI across various sectors, pushing companies to rethink their operational frameworks rather than just optimizing existing ones.
Beyond the Headlines
The re-evaluation of AI's value proposition extends beyond mere economic efficiency; it touches upon organizational culture, risk management, and the future of work. The 'Upstream Check' concept implies a fundamental redesign of business processes, which can be challenging for organizations accustomed to traditional workflows. It also raises questions about the role of human judgment versus AI in critical decision-making, especially in complex scenarios. Furthermore, the ethical implications of AI-driven early declines, such as in credit applications, need careful consideration to ensure fairness and prevent algorithmic bias. The long-term impact could be a more agile and responsive business environment, but it also necessitates a workforce equipped with new skills to manage and leverage these advanced AI systems effectively.
