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How startups can thrive in the generative AI era

Written by Christopher Lewin Published on   6 mins read

Good talent strategies and business models can give startups an edge in the age of generative AI.

Generative artificial intelligence is transforming industries everywhere, from content creation and data analysis to software development and beyond—with widespread implications for the future of work. As organizations race to scale their AI deployments, investments in this technology are expected to increase nearly fivefold from 2022 to 2030.

To leverage generative AI effectively, instead of being disrupted by it, businesses need to take the leap in rethinking business models and customer experiences.

While larger companies have more resources to invest in generative AI in terms of funding and historical data, they still risk falling behind to barriers such as insufficient understanding, lack of talent, and concerns about risk. On the other hand, startups can redefine customer and user journeys with AI from the get-go, potentially giving them an edge since they are unencumbered by legacy systems.

Amidst this rapid transformation, companies would do well to assess the applicability of generative AI in their business models, keeping in mind its impact on the next generation of the workforce.

The disruptive potential of generative AI in startups

Generative AI has had far-reaching impacts since its advent, increasingly democratizing data and information through open-sourced communities. When strategically harnessed, it can bridge the gap between business ideas and revenue. For example, in the process of software development, AI can synthesise product requirements, convert prompts to code, as well as audit for bugs. This can vastly accelerate the development life cycle.

Additionally, startups can use generative AI to carry out tasks that would previously require months of training, such as answering technical questions and interacting with customers in a humanlike manner. This enables resource-strapped startups to minimize their staffing needs while scaling operations.

Generative AI also has the ability to speed up the ideation and prototyping phases of content creation while optimizing existing designs. Instead of manually compiling results from search engines, startups can also use this technology to conduct research and summarize information through conversational interfaces.

Amid this AI-led transformation, startups and scaleups with lifeblood in innovation will likely have a competitive edge and play an increasingly disruptive role across the Southeast Asia region.

Differentiating use from value

Despite the hype, generative AI is not a one-size-fits-all solution. Leaders need to understand the technology to leverage it in ways that will add business value.

Deloitte’s “Generative AI in Asia Pacific” report, which surveyed 11,900 individuals based in the Asia Pacific, unpacks the extent and timing of generative AI’s impact—the “bang”—and how soon industries could be affected—the “fuse.” This was analyzed through two lenses: first, in terms of timing, by examining which industries showed signs of early adoption, and second, in terms of impact, estimated by the number of occupational hours within those industries that are exposed to ten potential applications of AI.

The results show that the finance, education, professional services, and information and communications technology industries should anticipate a “short fuse, big bang” scenario characterized by impactful change in the near term, as AI is adept at certain tasks that can greatly impact the value chain, business activities and job roles in these industries.

For instance, finance professionals can leverage generative AI to explain a higher labor expense than forecasted. It can scrutinize details on a more granular level by considering factors such as geography, operational performance, and more. In education, the role of a teacher can be elevated through AI tools that can function as assistants, carrying out tasks like enrolment, onboarding, class scheduling, and more, freeing up time for teachers to interact with students.

To unlock real value, leaders should start off by identifying their organization’s unique selling propositions. From this, they can explore how AI could bolster their competitive advantage by identifying specific pain points their businesses face and employing generative AI to help resolve these areas.

Startups that are able to differentiate the mere use of generative AI from its value will have a competitive advantage over their counterparts.

In addition, as AI adoption evolves, organizations need to consider moving beyond off-the-shelf solutions to develop tailored applications. According to Deloitte’s “State of Generative AI in the Enterprise” report, many businesses still rely on off-the-shelf solutions, with 68% of them using standard applications and 56% relying on publicly available large language models (LLMs) for their tasks. Meanwhile, only 23% of those surveyed used industry-specific software applications and 32% made use of private LLMs.

Reliance on standard, off-the-shelf solutions is consistent with the current early phase of generative AI adoption, which is primarily focused on improving the efficiency and productivity of existing activities. However, as use cases for generative AI become more specialized, organizations should be prepared to develop solutions tailored to more specific purposes.

How generative AI can redefine work

Across the Asia Pacific, generative AI is said to save users more than 11 billion hours a week, freeing up time to learn new skills and improving job satisfaction. However, Deloitte found that only half of employees believe they are fully leveraging the potential of generative AI.

An overabundance of caution by businesses could be preventing employees from improving their understanding of generative AI’s full capabilities. 22% of employees across the Asia Pacific work with entities that forbid or restrict the use of generative AI. In fact, several large electronics and e-commerce corporations have banned its use due to concerns about sharing their proprietary data with third-party AI platforms.

To mitigate these concerns, firms can tap on the expertise of trusted partners and vendors to establish a robust governance framework to manage risks and ethical issues, as well as to adopt AI platforms with strict controls on access and data collection. With these guardrails in place, organizations are better placed to offer widespread yet controlled access to generative AI tools, enabling employees to familiarize themselves with new technology while mitigating concerns about trust and data protection.

Another piece of the puzzle is equipping employees with relevant and useful information about AI. For firms that try to develop comprehensive training material or courses for employees, the fast-evolving nature of generative AI applications means these resources will quickly become outdated. Thus, developing shorter training sessions with practical examples, and even real-world case studies, can be more effective to help employees learn better.

Talent strategy in the era of “Generation AI” 

Apart from equipping current employees with AI knowledge and tools, startups should plan their talent strategy while bearing in mind the new generation of AI-savvy talent making its debut in the workforce.

These individuals—whom Deloitte has dubbed “Generation AI”—are young adults, up to the age of 24 years old, who have grown up with AI-powered technologies and are leading their adoption.

As the newest entrants to the working world, Generation AI is set to reshape the workforce, and employers need to adapt by harnessing their potential. Students and employees are leading this shift across the Asia Pacific, as a majority of students (81%) and employees (62%) use the technology.

With 76% of students surveyed in the Asia Pacific agreeing that generative AI significantly influenced their career decisions, the impact of generative AI will be felt by businesses that fail to adapt. For instance, talent new to the workforce may be drawn to rival businesses open to empowering them through utilization of AI tools.

Within the region, developing economies in Southeast Asia represent a bright spot in terms of AI-ready talent. According to Deloitte’s report, there are more “digitally native” people in Southeast Asia (excluding Singapore) as compared to developed economies. In fact, generative AI users in Southeast Asia are also more likely (61%) to be taking proactive actions, compared to an average of 49% across the Asia Pacific, to research the basics of generative AI, advance their programming skills, and undertake formal study.

With a burgeoning population and a pool of AI-ready talent, Southeast Asia is a promising landscape for startups looking to scale their business with this technology.

This also signals the importance of appealing to young and tech-savvy talent. While startups tend to struggle with attracting talent in their early stages, they could appeal to prospective young employees by emphasizing their agile adoption of AI and other exciting new technologies, on top of their commitment to delivering innovative solutions.

As generative AI continues to evolve, organizations need to be flexible and empower talent to truly harness its potential. Organizations, large and small, are charting the way forward by incorporating generative AI into their business strategies, while coming to terms with its governance and infrastructure. Startups should act quickly to seize this window of opportunity while managing the risks, so as to leapfrog their competitors and set themselves apart amidst an increasingly crowded market.

About the author: This article is authored by Christopher Lewin, AI and data capability leader at Deloitte Asia Pacific. With over 15 years of experience as a Deloitte practitioner, he specializes in delivering AI, data, analytics, and automation solutions to clients across various industries such as banking, insurance, telecommunications, and energy and resources. His work involves the integration of AI and Generative AI to automate clients’ value chains, unlocking insights and optimizing their operations.


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