Generative AI as a Catalyst for Business Model Innovation: Opportunities, Challenges, and Strategic Implications

Abstract

Generative AI is becoming a new business model innovation (BMI) engine in almost every industry, fundamentally transforming the way businesses create, deliver and capture value. Generative models can automate content production, assist with decision-making, and provide hyper-personalized experiences at scale, which, in turn, save time and money in experimentation and accelerate the development of new customer propositions, new business models and new revenue streams. Our experience, backed by empirical studies, points to the fact that companies are most willing to innovate on value creation activities (e.g., design, content and process automation) but struggle more significantly with reconfiguration of elements associated with the much less attractive innovation on value propositions and capturing mechanisms in particular for incumbent organizations. However, the impact of Generative AI also has significant negative consequences including data quality and governance concerns, algorithmic bias, threats to IP rights, regulatory uncertainty, and disruption of the workforce.