RESEARCH REPORT
Generative AI-powered reinvention
APAC’s opportunity to outpace the competition
3-MINUTE READ
September 25, 2024
In brief
- Leading global businesses are embracing reinvention as key to rising levels of disruption, but APAC firms are lagging behind.
- Generative AI presents an opportunity for APAC companies to catch up and even leapfrog today’s Reinventors.
- In this perspective, we reveal five strategic imperatives to accelerate generative AI-driven reinvention.
Global firms embrace reinvention, but APAC risks falling behind.
Over the past four years, the APAC region has experienced significant and increasing levels of business disruption. Among the various challenges, technology has been the biggest disruptor by far. As firms navigate a rapidly evolving technological landscape, embracing generative AI has become a pivotal determinant of success. Companies in other regions have advanced quickly on this front, but those in APAC lag in their reinvention journey, held back by unique regional challenges.
119%
Technology disruption increased by 119% in 2023, rising to become the #1 cause of business change.
45%
of business leaders in APAC are not fully prepared for the accelerating rate of technological change.
5%
While companies in the West have increased their pace of reinvention, the percentage of Reinventors in APAC fell from 9% to 5%.
9%
Only 9% of APAC executives anticipate enterprise-wide adoption of generative AI in their organization.
Barriers to Generative AI adoption
APAC executives say that IT (64%) and marketing (56%) are the top use cases for generative AI. While these offer immediate productivity gains, the lack of a strategic, standardized evaluation of business value hinders full benefit realization.
47% of APAC leaders see technical debt as a barrier to reinvention and note the need for IT (64%) and data strategy (56%) updates for effective AI use. Addressing these foundational issues is crucial for establishing a reinvention-ready digital core.
APAC leaders feel unprepared to manage the changes AI brings. Nearly half admit they're not ready for rapid tech shifts, and just 31% say they have the skills to lead reinvention.
Concerns around generative AI risks—ethical (54%), legal (59%), and cybersecurity (65%)—are slowing its adoption in APAC, where 61% of executives worry more about adapting to tech advancements (61%) than their global counterparts (54%).
APAC firms are at a critical juncture where they must embrace bold, transformative steps with generative AI to significantly enhance their competitive edge.
Five critical imperatives for generative AI-powered reinvention
To overcome these barriers and accelerate the path to reinvention, APAC leaders must consider the following strategic actions.
1. Lead with value
Reinvention requires making bold, strategic bets based on a comprehensive assessment of potential business value. It’s essential to focus on AI initiatives that align with core business objectives. What’s needed is a comprehensive reinvention program, with generative AI integrated into multiple value levers.
In the APAC region, leaders understand that there is outsized value in integration —71% plan to combine these levers in an integrated and outcome-focused manner compared to 58% globally.
Key actions for leaders
2. Develop an AI-enabled, secure digital core
All organizations need an industry-leading digital core to make the most out of AI-powered transformations. But what that looks like will vary from company to company: it needs to be tailored with the right mix of cloud practices for agility and innovation, differentiated data and next-generation experiences—with security by design at every level. Such a digital core can drive efficiency and effectiveness, respond to the business’s new needs and quickly adopt and scale the latest technology innovations.
However, even as organizations look to enhance their digital core, they must balance existing technical debt with forward-looking investments. Our research shows that companies aiming to expand their generative AI capabilities should allocate approximately 15% of their IT budget to remediating technical debt as a “sweet spot” between current and future needs.
Key actions for leaders
3. Reinvent talent and ways of working
Productivity gains are just one benefit of generative AI; the real value comes from enabling the reinvention of work and enhancing uniquely human qualities like creativity. APAC leaders recognize the value of a people-centric talent strategy in adopting generative AI, with half of these respondents actively offering opportunities for workers to upskill or reskill in areas that complement AI technologies.
To effectively prepare for the impact of generative AI, leaders must focus on addressing the fundamental human needs of their workforce, including wellness, purpose, belonging and marketability. By doing so, they can create a sense of security and readiness as employees brace the inevitable impact of generative AI.
A people-centric approach, where generative AI is adopted responsibly and at scale, could unlock $4.5 trillion in economic value across APAC by 2038.
Key actions for leaders
4. Close the gap on responsible AI
Ninety-nine percent of APAC executives believe that responsible AI should be a key focus within the organization, and more than half (70%) are already working towards fully integrating responsible AI principles into their organization’s lifecycle within the next 18 months. To successfully implement an enterprise-wide responsible AI strategy, companies should make responsible AI pervasive and systematic in the enterprise.
Key actions for leaders
5. Drive continuous reinvention
Leaders cannot approach reinvention as a one-off effort undertaken every few years. Instead, they must build the capability to continuously reinvent.
Continuous reinvention is essential for staying competitive, but it doesn’t always require looking externally. One often overlooked source of innovation is the 'hidden gems' within a company. These internal assets—unique combinations of talent, processes and culture—have the potential to drive lasting, transformative change.
Identifying single factors with transformative potential is not enough; it’s crucial to ensure that the right combination of factors is systematically replicable and aligned with both organizational readiness and business needs. Here, CEOs play a pivotal role, cultivating hidden gems and cutting through the noise of competing priorities.
Key actions for leaders
Charting the path to reinvention
Combining technological advancements with human-centric strategies can help APAC firms thrive in the age of generative AI. By overcoming existing barriers and capitalizing on unique regional strengths—such as a strong focus on RAI principles and a higher commitment to establish new levels of performance relative to global peers—APAC companies can outpace their global competitors in the race for reinvention.