Defining Your AI Strategy: The Mars One Step Approach

Table of Contents

1. Introduction
2. Identifying Use Cases for AI in Your Organization
3. Prioritizing Use Cases: Agile Value Modeling
   1. Mapping Potential Investments
   2. Determining Value and Effort
   3. Plotting Use Cases
4. Balancing Your Portfolio: The Three Horizons Approach
   1. Horizon 1: Short-Term Investments
   2. Horizon 2: Medium-Term Investments
   3. Horizon 3: Bold Ideas
5. Building Your AI Strategy: Connecting the Dots
   1. Connect Horizon 3 to Horizons 1 and 2
   2. Red Flags of Disconnected Investments
6. "Getting to Mars One Step at a Time": The SpaceX Approach
7. Continuous Cycle of Agile Value Modeling
8. Conclusion

"Defining Your AI Strategy: Getting to Mars One Step at a Time"

In this article, we will explore how to define your AI strategy using the Agile Value Modeling framework. We will discuss the process of identifying use cases for AI in your organization and then prioritizing them based on their potential value and effort required. We will also introduce the concept of balancing your portfolio of AI investments using the Three Horizons approach. Finally, we will explore the importance of connecting your long-term bets with your short and medium-term investments to create a strategy that provides value to your business today.

Introduction

Welcome to an episode of AI in Business 101! In this article, we will delve into the process of defining your AI strategy. We will take inspiration from space exploration and the mission to colonize Mars, using the concept of "getting to Mars one step at a time" to guide our approach. Just like SpaceX, we will explore how to connect our long-term vision with short and medium-term investments to create a successful AI strategy.

Identifying Use Cases for AI in Your Organization

Before we can define our AI strategy, it is crucial to identify the use cases for AI within our organization. In a previous episode, we discussed how to uncover as many use cases as possible. The goal is to explore all potential areas where AI can add value, whether it be through revenue generation, cost savings, or broader factors such as acquiring new users or improving brand Perception.

Prioritizing Use Cases: Agile Value Modeling

Once we have identified the various use cases for AI, we need to prioritize them to define our AI strategy. This is where the Agile Value Modeling framework comes into play. This framework, utilized by Microsoft, allows us to map the potential investments based on their value and effort.

Mapping Potential Investments

In the Agile Value Modeling framework, we map the use cases on a Chart based on their potential value and effort required. The potential value can be measured in terms of revenue generation, cost savings, or broader factors such as user satisfaction or brand perception. The effort required can include monetary investments, time needed for implementation, skills readiness, data dependencies, and risks associated with AI implementation.

Determining Value and Effort

By determining the value and effort associated with each investment, we gain a clear understanding of the potential impact and the resources required. We can then use these measurements to plot the identified use cases on the chart. This visual representation allows us to analyze how balanced our portfolio of AI investments is and identify three key areas known as horizons.

Plotting Use Cases

Once we have plotted the use cases on the chart, we can easily analyze the distribution and balance of our AI investments. The chart helps us identify three horizons:

1. Horizon 1: Short-Term Investments - These are investments aimed at improving existing business processes or enhancing products. They provide immediate value to the organization.
2. Horizon 2: Medium-Term Investments - These investments focus on expanding the existing business by introducing new products or entering new markets.
3. Horizon 3: Bold Ideas - Horizon 3 investments are visionary and target completely new markets or aim to redefine the business models. These can be considered as moonshots for the organization.

Balancing Your Portfolio: The Three Horizons Approach

Achieving a balanced approach is essential when defining your AI strategy. Investing only in Horizon 1 projects may result in short-term gains but could lead to missed opportunities for long-term growth. Likewise, focusing solely on Horizon 3 projects may hinder competitiveness in the current market. It is crucial to have a balanced portfolio across all three horizons.

Horizon 1: Short-Term Investments

Horizon 1 investments focus on enhancing existing business practices and products. These investments are aimed at improving operational efficiency, introducing new capabilities, and maximizing the value derived from current products or services.

Horizon 2: Medium-Term Investments

Horizon 2 investments look into the future and aim to expand the organization's business. This can involve developing new products or services that complement the existing offerings or entering new markets. The goal is to grow the organization's market share and explore new revenue streams.

Horizon 3: Bold Ideas

Horizon 3 investments are characterized by bold ideas and radical innovation. These ideas target new markets or redefine the organization's business models. Horizon 3 investments represent moonshots, pushing boundaries, and exploring groundbreaking possibilities.

Building Your AI Strategy: Connecting the Dots

To build an effective AI strategy, it is crucial to connect the dots between your different horizons. It means aligning your long-term bets (Horizon 3) with your short and medium-term investments (Horizons 1 and 2). This approach ensures that your moonshots provide value to the business today while laying the foundation for future growth.

Connect Horizon 3 to Horizons 1 and 2

By connecting your Horizon 3 investments to your Horizons 1 and 2 investments, you create a strategic pathway. This pathway allows you to leverage the value generated by the short and medium-term projects while advancing towards your long-term vision. It ensures that each step you take contributes to the overall goal of your AI strategy.

Red Flags of Disconnected Investments

On the other HAND, investments that are not connected to your long-term bets pose a red flag. It may indicate a lack of alignment between your short and medium-term projects with your overarching strategy. To ensure the success of your AI strategy, it is essential to evaluate your investments and eliminate any disconnected or misaligned projects.

"Getting to Mars One Step at a Time": The SpaceX Approach

The concept of "getting to Mars one step at a time" is best exemplified by SpaceX's mission to colonize Mars. While colonizing Mars is their Horizon 3 goal, they know that waiting for that to happen is not a viable strategy. Instead, they focus on delivering Horizon 1 and 2 technologies that are critical for their ultimate mission.

One of the key technologies SpaceX developed is the vertical landing of rockets. This technology allows rockets to land on Mars and return to Earth, a crucial step in the journey to Mars. By monetizing this technology today through satellite launches, SpaceX creates value for their business while continuing their moonshot mission.

Continuous Cycle of Agile Value Modeling

Defining your AI strategy using Agile Value Modeling is not a one-time process. It is a continuous cycle that involves ideating new scenarios, prioritizing investments, and refining your strategy over time. As your organization evolves and the AI landscape changes, staying agile and adapt to new opportunities and challenges is critical.

Conclusion

In conclusion, defining your AI strategy requires a thoughtful and balanced approach. By using the Agile Value Modeling framework and drawing inspiration from SpaceX's mission to Mars, you can create a strategy that connects your long-term vision with short and medium-term goals. Remember, building an AI strategy is a continuous cycle that requires ongoing evaluation and adjustment. By staying agile and leveraging the potential of AI, you can unlock new opportunities and drive your organization's success.

Highlights:

• Understand how to define your AI strategy using the Agile Value Modeling framework.
• Learn how to identify use cases for AI within your organization.
• Prioritize your use cases based on their value and effort required.
• Achieve a balanced portfolio of AI investments using the Three Horizons approach.
• Connect your long-term bets with short and medium-term investments to create an effective strategy.
• Take inspiration from SpaceX's mission to Mars and "get to Mars one step at a time."
• Embrace a continuous cycle of ideation, prioritization, and strategy refinement.