Generative AI (GenAI) is set to revolutionize business. According to a 2023 McKinsey study, GenAI potentially adds $2.6-4.4 trillion to the global economy each year.
No wonder, companies across various industries are quickly adopting this technology, and significant private investments are flowing in, highlighting its incredible potential. I've seen companies applying GenAI in strategy, M&A, sales & marketing, operations, supply chain, and recruitment.
However, no single company can master all aspects of GenAI on its own. Only a few companies have the expertise needed to develop, deploy, monitor, and adjust the GenAI tools essential for success in this new era.
For everyone else, it may be time to seek help.
Normally, you would simply look for a 3rd party vendor who can provide you with the GenAI expertise. Unfortunately, addressing the GenAI capability gaps using traditional vendor arrangements won’t work. This is due to the unique challenges GenAI presents, such as its complexity, rapid changes, and the general lack of experience many companies have with it.
Therefore, capturing the full value of GenAI requires more than just the technology itself; it demands a change in how companies operate... particularly by forming strong partnerships with GenAI providers.
The Importance of Having GenAI Strategic Partners
To truly harness the power of GenAI, you need to go beyond traditional vendor relationships and foster strategic partnerships with the key providers. This involves:
Trust and Transparency: Building a GenAI program requires a high degree of trust and frequent communication. You need to share data and insights with your Partner-providers and align closely on development and management strategies.
Collaborative Solution-Developments: The most significant value from GenAI often comes from tailoring established capabilities to your company’s unique data. This requires an iterative, collaborative process between the company and the Partner-provider. Frequent touchpoints, in-person workshops, and co-innovation sessions help build trust and ensure alignment on priorities.
Coordinated-Roadmap: Partner-providers should offer visibility into their product roadmaps, allowing you to anticipate and influence future developments. This coordination ensures that various GenAI models and applications from different providers work well together.
Distributed Risks: Given the significant investments and risks associated with GenAI, you should distribute financial, technological, and operational resources and risks among your Partner-providers. Clear agreements on managing risks such as data privacy breaches and model biases are essential.
So, strategic partnerships are important. Therefore, you need to be careful when choosing your strategic partners. Consider the following criteria when choosing your strategic partners.
Criteria for Selecting Your GenAI Strategic Partners
Given the variety of components needed for an effective GenAI solution as well as the speed of change, we haven't yet seen a single provider that can offer everything.
As a result, you need to build a network of tech providers. Therefore, beyond the usual partnership criteria (such as service quality, costs, stability, etc), you need to consider also these 3 key criteria:
Compatibility: Your Partner-providers should adhere to industry standards and best practices for data exchange, API design, and software development. This ensures that different GenAI components can work together seamlessly.
Capability: Your Partner-providers should have a proven track record of handling increased volumes of complex traffic and user queries without compromising performance. It's important to pressure test pilot programs and ensure Partner-providers can commit to specific scalability milestones.
Modular-Adaptability: To minimize costs and speed up implementation, your Partner-providers should offer solutions that can be easily repurposed across multiple projects. This includes flexible, modular components and pre-trained models that can be adapted to various contexts.
Having strategic partners doesn’t mean you lose control of your technology. If you manage your partners effectively, you retain control over your GenAI.
Managing Your GenAI Strategic Partners
It's crucial for you to maintain control over these partnerships. You should:
Ensure Performance: Partner-providers compensation should be tied to measurable outcomes such as model accuracy, uptime, and user satisfaction. Clear exit clauses and data portability requirements are also important to maintain flexibility (not locked).
Ensure Flexibility: Adopt the industry standard practices (e.g., best practices in APIs, integration protocols, and data formats) to create a scalable GenAI infrastructure that can integrate different Partner-providers quickly. This includes containerization, automated testing, and CI/CD pipelines.
Ensure Transparency: Ensure Partner-providers include proper documentation and transparency during development. This way, you will maintain a clear understanding of your GenAI technology and not be dependent on your Partner-providers.
Ensure Vigilance: Due to GenAI's complexity, issues will arise. Therefore, robust monitoring and testing capabilities are needed to track performance and identify issues early.
Ensure Clarity: Define the existing IP that each party brings to the collaboration and how IP created during the partnership will be owned and managed. This helps prevent disputes and ensures proper recognition of contributions.
Of course, it is easier to manage your GenAI partners if you have a GenAI Partnership Strategy in the first place.
Developing Your GenAI Partnership Strategy
To kickstart their GenAI journey, you should have a GenAI Partnership Strategy. Follow these steps to develop one.
Gather Your Team: Form a team with key stakeholders from business, IT, legal, and procurement to develop the GenAI partnership strategy.
Define Your GenAI Partnership Strategy: Create a strategy for evaluating, onboarding, and managing new GenAI providers. This strategy should define strategic-partnership criteria, set performance metrics, and establish governance guidelines.
Implement Your GenAI Partnership Strategy: Assess your current technology providers and identify gaps, redundancies, or misalignments with the GenAI strategy. Decide which providers to maintain, upgrade to strategic partners, or phase out.
Monitor the Progress of Your GenAI Strategy: Appoint a dedicated relationship-manager with a solid understanding of GenAI technologies to oversee the entire GenAI ecosystem. He/she should coordinate activities among Partner-providers, monitor progress, and resolve issues.
Generative AI has the potential to revolutionize businesses and drive significant economic impact. And by fostering deep, strategic partnerships with GenAI providers and maintaining control over their GenAI strategy, you can unlock the full value of GenAI.
Let me know if you are interested in building your GenAI Partnership Strategy.
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