Received: 23 June 2022 Revised: 20 November 2022 Accepted: 2 January 2023

DOI: 10.1002/aaai.12076

ARTICLE

An AI decision-making framework for business value

maximization

Naveen Gudigantala1 Sreedhar Madhavaram2 Pelin Bicen3

1 RobertB. Pamplin School of Business

Administration, University of Portland,
Portland, Oregon, USA
2 Jerry
S. Rawls College of Business
Administration, Texas Tech University,
Lubbock, Texas, USA
3 Department of Marketing, Sawyer
Business School, Suffolk University,
Boston, Massachusetts, USA
Correspondence
Naveen Gudigantala, Robert B. Pamplin
School of Business Administration,
University of Portland, Portland, OR
97203, USA.
Email: gudigant@up.edu
Abstract
This article addresses a key question of why businesses are failing to maximize
business value from their artificial intelligence (AI) investments and proposes
a strategic decision-making framework for AI decision-making to address this
problem. We suggest that a firm’s business strategy must drive AI-driven business
outcomes and measurements, which in turn should drive the AI implementation
decisions. Very often, we find that businesses fail to successfully cast business
problems into AI problems. To bridge this gap, we propose that firms use a perfor-
mance management system such as objectives and key results (OKRs) to ensure
that the business and AI goals & objectives are well defined, tightly aligned, and
made transparent across the company, and the AI efforts are approached in an
integrated manner by the different parts of a firm. We use McDonald’s use of
AI initiatives as a business use case to demonstrate support for our AI decision-
making framework. We argue that using the business strategy as a primary driver
will enable firms to solve the right problems using AI, turning it to be a source
of technology innovation and competitive advantage.

INTRODUCTION their AI investments (Bean 2021). Indeed, most non-tech

Fortune 500 companies are stuck in pilot purgatory when
Artificial intelligence (AI) is beginning to transform many it comes to AI (Aaser, Woetzel, and Russell 2021). Studies
industries and is expected to contribute $15.7 trillion to the discussing the impact of AI on firm value have been rare
global economy by 2030 (Pumplun, Tauchert, and Heidt and have found mixed results. Lui, Lee, and Ngai (2022)
2019; PWC, 2019). This will facilitate the processing of large studied the impact of AI on firm value by studying the
scale and unstructured data in real-time, and by generating public listings of AI investments by 62 firms. They found
predictive insights that enhance business decision making that the stock prices of firms declined on average by 1.77%
(Albrecht, Rausch, and Derra 2021). While usage rates of on the day of the announcement. This finding suggests the
AI-related technologies are less than 5% among the 583,000 low confidence investors have in the ability of the firms
US businesses surveyed in 2018, the pace of AI-related to successfully implement AI efforts. Further, Mishra,
investments is picking up among the leading fortune-1000 Ewing, and Cooper (2022) confirmed with their findings
companies with 92% of the sample surveyed reporting that US-listed firms are in a state of impending transfor-
accelerated investments in data and AI (Bean 2021; Zolas mation with regard to AI. Despite growing enthusiasm
et al. 2021). However, more than 90% of the same sam- for AI’s potential, executives in a variety of industries
ple report that they are struggling to derive value from suggest that the technology is tricky to deploy and the
This is an open access article under the terms of the Creative Commons Attribution-NonCommercial-NoDerivs License, which permits use and distribution in any medium,
provided the original work is properly cited, the use is non-commercial and no modifications or adaptations are made.
© 2023 The Authors. AI Magazine published by Wiley Periodicals LLC on behalf of the Association for the Advancement of Artificial Intelligence

AI Magazine. 2023;44:67–84. wileyonlinelibrary.com/journal/aaai 67


68
initial payoffs are equivocal (Bergstein 2019; Haenlein and
Kaplan 2021; Lui, Lee, and Ngai 2022). Even within the
business functional areas where AI is expected to make
a huge impact, a majority of the companies have not yet
moved beyond the AI evaluation stage, and fewer than
one in five have implemented AI in any particular core
process (IBM 2021).
Prior research speculates many reasons why AI invest-
ments are not yielding value due in part to a lack of
expertise, inadequate technological infrastructure, high
levels of perceived complexity, and dubious outcomes
(Bean 2021; Bergstein 2019; Meakin et al. 2021). In fact,
these factors may lead to satisficing—sub-optimal decision
making—that can impede AI-enabled strategic cognition
and capability learning in organizations (Simon 1957; Win-
ter 2000). Despite the slowness of AI implementation suc-
cess, many organizations continue to see a great promise in
AI. The availability of big data, coupled with advancements
in computer processing and AI research, have afforded
organizations a unique opportunity to use AI to infuse
their products, lower product and service costs, optimize
their business processes, and serve their customers bet-
ter (Lee and Shin 2020). Firms developing specialized AI
capability are beginning to see the positive financial per-
formance (Mikalef, Fjørtoft, and Torvatn 2019). Mikalef
and Gupta (2021) surveyed 143 firms and found that AI
capability is positively associated with both organizational
creativity and financial performance. At this intersection
of the promise of AI and the current trends showing the
challenges involved with the realization of AI investments
lies an important question for organizations: how can
AI be used effectively and optimally to improve business
outcomes?
The question this article addresses is, why are businesses
failing to derive the full value from their AI investments?
In this article, we argue that to derive value out of AI
technologies, organizations must be effective and optimal
with their decision making on AI. This is only possible
through good understanding of AI technology and clarity
concerning how AI can solve business problems. The goal
of this paper is to provide a prescriptive, decision-making
framework for value maximization of AI investments and
initiatives. Our framework provides a helpful roadmap to
conceptualize the role of AI technologies in supporting
organizational goals. Our framework suggests that a
firm’s business strategy must drive AI-driven business
outcomes and measurements, which in turn should drive
the implementation decisions. We also propose using a
performance management system such as objectives and
key results (OKRs) to ensure that the business and AI
goals and objectives are tightly aligned and transparent
across the company, and the AI efforts are approached
in an integrated manner by the different parts of a firm.
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AI MAGAZINE
Organizations can use our framework to make deci-
sions on identifying and choosing relevant AI projects,
implementing them, and continuously measuring the
value they create to finetune these efforts.
RATIONALE FOR THE AI
DECISION-MAKING FRAMEWORK
There is a wide-spread recognition among businesses that
AI will be integrated into most of the enterprise applica-
tions in the next three years, but the competitive advantage
from AI may only depend on how creatively and respon-
sibly organizations use AI (Hupfer 2020; Lui, Lee, and
Ngai 2022). Given this context, a strategic decision-making
framework for effective and optimal AI is important for
many reasons. First, it is not the AI technologies them-
selves, but how they are applied to solve the organizational
business problems that makes a difference to value cre-
ation. The strategic decision-making framework for AI
investments and initiatives provides a clarity of purpose
concerning how AI can be used to maximize value. Second,
what problems an organization solves is dictated largely by
their business strategy and the desired business outcomes.
Therefore, there must be a tight integration between the
business strategy and AI initiatives in achieving busi-
ness goals. Finally, not every company’s capabilities are
the same. Therefore, if a company’s strategy reflects a
vision/goals that is/are beyond the reach of their current
capabilities to implement the necessary AI technologies,
then the company must consider several alternatives to
acquiring or building these capabilities to reach their
business outcomes. Therefore, a strategic decision-making
framework for AI investments and initiatives—in addi-
tion to providing a roadmap for identifying, implementing,
and evaluating AI projects which are tightly connected
with their business strategy—offers clues for the trade-offs
necessary to acquire/build AI-related capabilities.
Our review of prior research on AI frameworks suggests
that the research so far has been limited to organiza-
tional decision-making structures, ethics frameworks, AI
principles for society, and AI frameworks for account-
ability. Shrestha, Ben-Menahem, and Von Krogh (2019)
conceptualized a framework which provides insights on
how to optimally combine human decision-making with
AI decision-making to improve the quality of organiza-
tional decision-making. The three structures they suggest
are: full human to AI delegation, hybrid between human
and AI, and an aggregated human-AI decision-making.
Lysaght et al. (2019) propose an ethics framework for
big data in healthcare, in which they identify relevant
values to be used by clinical decision-makers to bal-
ance between the potential harms created by algorithmic

AI MAGAZINE
FIGURE 1 A strategic decision-making framework for artificial intelligence (AI) investments and initiatives.
bias and using AI to generate public health benefits.
Floridi and Cowls (2019) conceptualized a unified AI
framework consisting of five principles for AI in society.
Their framework aims to establish ethical principles for the
adoption of AI for benefiting society. The five principles
they suggest are beneficence, non-maleficence, autonomy,
justice, and explicability. Berscheid and Roewer-Despres
(2019) propose a framework for accountability in AI-based
decision-making systems. Their framework aims to make
developers and clients of AI systems jointly responsible
for the creation and use of AI systems. They suggest the
creation of AI-validation document by developers and a
deployment disclosure document (DDD) by clients. Their
rationale is that the creation of such documents repre-
sents a formal regulation system for the development
and use of AI systems. However, none of these frame-
works focuses on how to make decisions to maximize
investments from AI and our paper contributes in this
area.
THE STRATEGIC DECISION-MAKING
FRAMEWORK FOR AI
For this paper, we define AI as “a system’s ability to
interpret external data correctly, to learn from such data,
and to use those learnings to achieve specific goals and
tasks through flexible adaptation” (Haenlein and Kaplan
2019, p. 5). Scholars have variously described AI as either
disruptive or revolutionary because of its immense poten-
tial to alter society’s way of functioning. AI is considered
a disruptive technology because it has “. . . the potential
of creating vast changes in the way we behave and go
about our daily activities. Disruption is a fact of life
that continually occurs whenever new inventions and
processes enter the marketplace” (Girasa 2020, p. 4). Prior
researchers have placed AI in the category of “revolution-
ary” because of their ability to change the dynamics of
the techno-economic paradigm of a society (Coccia 2021).
AI is a broader domain that includes machine learning
(ML) and deep learning as a subset, and the scope of
this paper mostly concerns systems that implement this
subset (termed hereafter as AI/ML technologies) (Lee
and Shin 2020). We present our strategic decision-making
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69
framework for AI investments and initiatives in Figure 1.
The goal of our framework is to help organizations max-
imize value from their AI. To achieve this objective, our
framework suggests that organizations must have clarity
about their business strategy. Once clear, the business
strategy drives the development of AI-driven business
outcomes and measurements, which in turn direct AI
model implementation decisions. Finally, rigorous focus
on measuring the value from AI initiatives will help orga-
nizations evaluate the effectiveness of AI deployments
and offer feedback on improvements needed. In this
framework, the decisions a firm has to take flow linearly
from top-down and are boundary-spanning and interde-
pendent. We describe the elements of our AI framework
in more detail below.
Business strategy
Within the framework, a company’s first decision is to clar-
ify their business strategy. Competitive business strategy is
about being different which means deliberately choosing a
different set of activities to deliver a unique mix of values
(Porter 1996). An effective business strategy intends to take
a firm from where they are currently to where they intend
to go in a certain timeframe.
A well-defined strategy has three components—goal,
scope, and a firm’s competitive advantages. For instance,
Edward Jones, a St. Louis-based brokerage firm has a suc-
cinct strategy statement: Jones aims to “grow to 17,000
financial advisers by 2012 [from about 10,000 today]
by offering trusted and convenient face-to-face financial
advice to conservative individual investors who delegate
their financial decisions, through a national network of
one-financial-adviser offices” (Collins and Rukstad 2008).
In contrast, Google appears to change their strategy from
being the world’s information organizer to becoming a
provider of tools to help individuals increase their knowl-
edge, health, happiness, and success (Rosoff 2019). It is
possible that some businesses have well-defined strategies
and others do not, but in general, the executives are driving
their firms’ efforts in a certain direction. These larger goals
form the locus for AI-related decision-making (Collins and
Rukstad 2008).

70
Why is a well-crafted business strategy important for AI
initiatives? A strategy enables a company to identify its
path and clarify its competitive differentiated positioning,
make trade-offs, and create a fit among activities (Porter
1996). For instance, if a company chooses to pursue growth,
profitability is prioritized less. Similarly, if a firm decides to
focus on institutional clients, they may ignore retail cus-
tomers (Collins and Rukstad 2008). In addition, a firm
can identify and build the necessary resources to develop
competitive advantages (Barney 1991).
Knowing the strategy and understanding the trade-offs
are important for an organization to identify and imple-
ment a well-focused inventory of AI initiatives that are
well-aligned for actualizing the business strategy. Prior
research organized AI systems into seven types (Martínez-
Plumed, Gómez, and Hernández-Orallo 2021). The first
AI type is based on knowledge representation and reason-
ing. Also known as rule-based AI, these systems embed
human expertise with a knowledge database to automate
decision processes. An example of this AI is IBM Watson
Health. The second type of AI is learning-based, in which
computers learn in a statistical or numeric fashion. Predic-
tive models using ML to understand human behavior (e.g.,
fraud, loan risk, etc.) represent one example of learning-
based AI. The third type of AI is focused on communication
between humans and machines through natural language.
An example of this AI type is a natural language-based sys-
tem (natural language processing [NLP]) to monitor social
media to analyze customer reviews. The fourth type of AI
is related to perception, wherein computer systems inter-
pret data from sensors to perceive the environment around
them. An example of this type of AI is a facial recognition
system. The fifth type of AI specializes in planning wherein
the system is concerned with the realization of strategies or
optimization solutions to be executed by agents. Planning
algorithms in logistics have been around for some time
whereas similar algorithms have achieved much success
in chess, Go, and poker. The sixth type of AI specialization
is in physical interaction or robotics. Driverless cars and
robotic vacuum cleaners fall in this area. The seventh type
of AI focuses on social abilities wherein collective intelli-
gence emerges out of cooperation from a decentralized but
self-organized group of agents. An example of such AI is a
recommender system wherein group intelligence emerges
from collaboration.
A well-articulated business strategy can help a company
make an appropriate decision on which type(s) of AI
systems to invest in. When Lundstams, a Swedish-based
waste management company articulated its strategy to
be focused on sustainability, it chose to use robotic-based
AI systems to automate and advance its waste sorting
operations. The use of an AI system enabled Lundstams
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AI MAGAZINE
to increase their efficiency by 20X compared to manual
processing and saved them approximately 20,000 euros
per month in terms of recycling efficiencies (Zenrobotics
2022).
AI-driven business outcomes and
measurements
The next step in our framework concerns AI-driven busi-
ness outcomes and measurements. In this step, it is
important for businesses to ask: What business outcomes
are important? How can we measure them in the context
of an AI initiative? Business outcomes flow from the busi-
ness strategy. A well-defined business strategy usually has
clearly established goals. The subsidiary goals are derived
from the major goals. Achieving business value means
achieving these business outcomes (Fountaine, McCarthy,
and Saleh 2019; Hunter and Westerman 2009). Having a
clear idea of business outcomes is essential for three rea-
sons. First, knowing business outcomes lets stakeholders
know what success looks like in business terms. Sec-
ond, it helps in identifying the appropriate AI projects to
achieve these outcomes. Third, after the AI projects are
implemented, a company can measure and evaluate if the
intended benefits are achieved.
Organizations have experimented with many goal set-
ting frameworks to facilitate the execution of a business
strategy into implementation by keeping the focus on goals
consistent throughout all levels of a company. Manage-
ment by objectives (MBO) and OKRs are a few examples
of the frameworks used by organizations in this regard
(Greenwood 1981; Doerr 2018). It is beyond the scope
of this paper to discuss the merits and disadvantages of
these frameworks, but for illustration purposes, we use the
OKR framework. This framework is used by many com-
panies such as Google, Spotify, Walmart, The Guardian,
etc. (Castro 2018). OKR stands for objectives and key
results. Objectives describe what is to be achieved. They
intend to be significant, concrete, and action-oriented,
but not necessarily measurable. The key results specify
how to achieve the objectives. They should be designed
to be quantifiable, verifiable, time-bound, and realistic
(Doerr 2018). For instance, consider a fictitious firm whose
business strategy’s objective is to gain the largest market
share in a region. To measure the objective, the com-
pany could define some key results as: (1) launch a new
product, and (2) acquire 100,000 new customers for prod-
uct X (Castro 2018). This company level OKR can next
cascade to functional level OKRs. For instance, the sales
and customer service function could take key result 2
(related to acquiring new customers) as their objective

AI MAGAZINE
FIGURE 2 An exemplar of OKRs as a performance management system for AI initiatives. AI, artificial intelligence; OKR, objectives and
key result.
and define multiple key results under that objective as the
following:
Key result 1: Improve net promoter score (NPS) from 8
to 9.
Key result 2: Increase e-commerce conversion rate from 4%
to 5%.
Key result 3: Maintain customer acquisition costs under
$20.
Similarly, other functional areas such as marketing,
human resources, operations, data science, and IT could
similarly define their OKRs in line with the company’s
OKRs. While the process of OKR building is nuanced,
the idea here is to establish a system of goals and mea-
sures (also known as a performance management sys-
tem) that aligns all AI activities within the company
with their business strategy. Such a system creates an
ideal support to the implementation of our AI decision-
making framework for extracting value from AI initiatives.
Please see Figure 2 which could be used as an exemplar
of OKRs as a performance management system for AI
initiatives.
∙ AI questions
Given the OKRs a company intends to achieve, the AI
initiatives should be focused on how best to help a firm
reach its goals. As a company gets to work on achieving
key results, many business problems unfold. Some of these
problems may be best addressed by AI/ML models. How-
ever, these business problems must be first translated into
AI questions. This is important because not every busi-
ness problem may be solved by AI. It is also important to
understand what questions AI can handle and what it can-
not (Ng 2018). Second, having clear AI questions can lead
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71
to identifying the appropriate AI algorithms and technol-
ogy to implement. Following up on our earlier example,
for the objective “improve net promoter score from 8 to
9,” some helpful AI questions include: “how can a net pro-
moter score be predicted?” and “what factors best predict
net promoter score?” Some business problems are easier
to translate into AI questions than others. In this context,
a close collaboration between sales & marketing domain
experts and AI/ML engineers becomes essential. The key
decisions in this regard are: What business problem(s) can
be solved by AI? How can a business problem be translated
into AI questions?
∙ Key performance indicators (KPIs)
A KPI is a “high-level measure of system output, traf-
fic or other usage, simplified for gathering and review on
a weekly, monthly or quarterly basis” (Gartner 2021). KPIs
are important for several reasons. First, KPIs allow firms
to track progress toward goals set by frameworks such as
OKRs (Kohavi, Tang, and Xu 2020). In fact, prior research
suggests that companies that make use of KPIs earn a 2.95%
higher return on assets and a 5.14% higher return on equity,
yet less than 25% of firms have such processes in place
(Proctor and Smith. 2017). Second, the KPIs themselves
may be used sometimes as variables to be optimized within
the AI/ML models. Interested readers can refer to Gart-
ner’s business value model, which defines hundreds of key
metrics used by businesses (Kandaswamy and Furlonger
2021).
From our earlier example, if a company has an objec-
tive to improve the NPS from 8 to 9, naturally the company
must keep track of this metric. Also, to create an AI/ML
model, the NPS variable can serve as a response variable

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(or traditionally referred to as a dependent variable in
regression models). Also, NPS can be potentially used in
modeling in other relevant AI contexts such as customer
retention, sales opportunity index, customer interaction
index, etc. (Proctor and Smith 2017). In addition, advanced
AI/ML models which are sufficiently trained may uncover
novel KPIs that might be undiscoverable by the AI teams
on their own (Kiron and Schrage 2019).
Furthermore, it is possible to evaluate business out-
comes with AI metrics. For instance, when building a
model to predict the NPS, in addition to simply predicting
an NPS number, we may measure the relative importance
of different predictors of NPS that may be estimated as
their regression coefficients in a regression model. Using
variable selection methods, we could also ascertain the rel-
ative impact of each predictor on the response variable and
consequently zeroing on a fewer number of factors that
businesses may be able to act on. Similarly, if a business is
concerned about the retention rate as the key business out-
come, in addition to using a classification model to predict
probability, we can use measures such as the AUC score
(area under the curve) for evaluating different models and
lift ratios for performing ranking analysis. Such analyses
using AI metrics can provide insights into the interplay
between various business factors and business outcomes,
in addition to helping a firm predict a variable of interest
and selecting a subset of customers who are most likely
to contribute to a business outcome (Shmueli, Bruce, and
Patel 2016).
For the purposes of our framework, the important
decisions businesses need to make are: What KPIs can con-
tribute to answering an AI question? What business and AI
metrics can track the performance of the AI model?
Implementation decisions
The key decisions in implementation involve data and
governance, models and their implementation, technology
tools, and people skills. We discuss each of these below.
∙ Data and governance
The implementation of AI/ML models need data. Once
a business decides what AI question(s) to answer and what
metrics to use, the next set of decisions concerns: What
constitutes the relevant data for this problem? How can
this data be acquired and made available? How can a com-
pany ensure the data used is devoid of bias and meets the
personal data protection standards imposed by the relevant
regulatory frameworks?
Using customer information for making decisions is
not a new strategy, but the emergence of cloud and new
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AI MAGAZINE
technologies allows companies to quickly process and
make sense of vast amounts of data (Hagiu and Wright
2020). For instance, when Netflix entered the content
business, it made use of its data on twenty-seven million
U.S. subscribers and 33 million subscribers worldwide. By
using subscribers’ viewing history, searches, and ratings,
Netflix decided to create a successful U.S. adaptation
of the British show House of Cards (Laney 2020). The
AI applications can use large volumes of data, but they
increasingly are able to use both the structured inputs such
as sales data, inventory data, web browsing metrics, etc.,
and the unstructured inputs such as audio, video, images,
text data coming from social media, blogs, IoT devices, etc.
(Canhoto and Clear 2020; Paschen, Pitt, and Kietzmann
2020). While big data and AI offer a unique promise, the
possibility of creating a unique advantage increases when
the data is valuable and proprietary. For instance, the
firm Mobileye sells its advanced driver-assistance (ADAS)
systems aimed at providing collision-prevention and lane
warning systems to many car manufacturers. Because their
systems are used by a large number of users, the system
raised its accuracy to 99.99% giving the company a unique
advantage (Hagiu and Wright 2020). Therefore, it is impor-
tant for businesses to think critically about how data used
in AI applications can create and maximize unique value.
To get the data component of the AI initiatives right,
organizations must pay attention to a few important
aspects. First, the data needed by AI/ML teams often exist
in different IT systems in several formats making it dif-
ficult for AI/ML teams to access the necessary data in
time (Campbell et al. 2020). Second, many AI/ML engi-
neers exhibit an inherent preference for doing model work,
but not the data work. This may lead to data cascades—
compounding events leading to a negative downstream AI
system’s performance from data issues (Sambasivan et al.
2021). For example, poor data practices at the upstream
processes led to IBM’s cancer treatment AI’s reduced data
accuracy and a similar issue led to the inaccurate predic-
tions of Google flu trends’ AI system (Sambasivan et al.
2021). Third, consumers and regulators are increasingly
showing concerns about data privacy and accountability
issues. Both General Data Protection Regulation (GDPR)
and California Consumer Privacy Act (CCPA), in addition
to a slew of local state laws, make it mandatory for firms
to maintain high standards regarding privacy (Hamilton
and Sodeman 2020). Given these imperatives, organiza-
tions must make important decisions about the processes
and governance mechanisms related to data. Based on our
AI decision-making framework, identification of impor-
tant business problems and the associated KPIs and AI
metrics is critical for identifying the needed data.
Continuing with our earlier example, to create an
AI/ML model to predict the NPS, data scientists first need

AI MAGAZINE
F I G U R E 3 Data versus AI/ML methods typology (adapted
from Ramesh 2017). AI, artificial intelligence; ML, machine
learning.
to identify relevant data. While domain knowledge and the
context in which a company operates is important, data
scientists can also look at the previous research done in
this area to identify relevant variables. For instance, for
modeling NPS in a mobile telecom industry, researchers
identified nine customer experience attributes related to
tariff plan, network voice data, network plan data, billing,
etc. (Markoulidakis et al. 2020). Once relevant data is iden-
tified in this manner, firms can turn their attention to the
next step of our framework.
∙ Models and implementation
Once a business identifies the AI question, KPIs, and
the appropriate data, the next decision is: What AI/ML
model(s) needs to be developed? The AI question, the
type of data and the structure of data serve as criti-
cal inputs to selecting an appropriate AI/ML model. Lee
and Shin (2020) categorize machine-learning algorithms
into supervised, unsupervised, semi-supervised, and rein-
forcement learning methods. We limit our discussion to
supervised methods, where a model is built for an out-
put variable (Y) using a set of input variables (X’s). Some
of the popular supervised methods include linear regres-
sion, logistic regression, naïve Bayes, K-nearest neighbors,
neural networks, etc. (Shmueli, Bruce, and Patel 2016).
We provide a typology in Figure 3 for selecting an ML
method based on data type and data structure (Ramesh
2017). When an organization has structured data and the
data size is small (e.g., a hundred to a few thousand
rows), they can make use of statistical analysis such as
classical regression for creating basic prediction models.
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73
Dashboards, used for display of visualization, are not only
an essential part of business intelligence used for report-
ing purposes, but are also used to display results from
ML models for explainability purposes. Techniques such
as basic text mining can be used for unstructured data
with a small data size. Particularly, applications related
to labeling a document as belonging to a class are suit-
able for this type of analysis (Shmueli, Bruce, and Patel
2016). When the data size is big (e.g., millions of rows or
more) and when the data is structured, many ML models,
such as linear regression, support vector machines, logistic
regression, including deep learning methods such as arti-
ficial neural nets can be employed. Finally, when the data
size is big and the data is unstructured, models related to
advanced deep learning, NLP, and natural language under-
standing (NLU) can be employed (Wilson and Daugherty
2020). While working with dashboards and basic statisti-
cal analysis requires moderate expertise, applying AI/ML
methods which work with unstructured and/or big data
requires advanced skills.
To implement an AI/ML model, a business needs to
make a few key decisions. First, how accurate must an
AI/ML model be before it is considered for implemen-
tation? Accuracy measures how well the AI/ML model
predicts the output variable, and different AI contexts
may require different AI/ML accuracy metrics. Consumers
demand higher prediction accuracies for cancer detection
and object detection for self-driving cars, while lower pre-
diction accuracies may be tolerable for a voice-controlled
virtual assistant (Agarwal, Gans, and Goldfarb 2018). Sec-
ond, is it important for businesses to interpret how an
AI/ML algorithm works for users and regulators? For
instance, financial firms are held accountable under the
Equal Credit Opportunity Act (ECOA) to provide a reason
to consumers for denying a credit-card application. Use of
AI/ML models which are not interpretable in such con-
texts could be problematic. On the other hand, consumers
may not care about the inner workings of a chatbot as long
it serves their needs well (Han 2021; Lee and Shin 2020).
Third, how can the loop be closed between an AI/ML
model’s predictions and decisions? For instance, the diag-
nostic measures provided by the cancer detection AI/ML
models for a tumor are often probabilistic such as: “66%
benign, 30% malignant, 4% no disease.” After an AI/ML
model generates its predictions, additional judgment may
be necessary to make a decision on whether or not to
send the patient for a biopsy. Should the AI/ML system
make that decision or should humans be involved? (Agar-
wal, Gans, and Goldfarb 2018). Delegating these decisions
solely to the AI/ML teams may not be a good idea for
businesses.
For the example presented in this paper on creating an
AI/ML model for predicting NPS, the AI/ML analysts may

74
not have to create a model from scratch. Often, related
research is available in published outlets. In some con-
texts, the AI/ML analysts could reuse the models to apply
it in their organizational context instead of trying to rein-
vent the wheel. For instance, Markoulidakis et al. (2020)
published a logistic regression-based algorithm to improve
the NPS predictions, and their method showed significant
improvement over prior methods. Once the NPS model
is developed, the next question is how to use it. In sur-
veys, only about 15%–20% of customers provide data on
the NPS measure. Therefore, the NPS prediction model
can be used to predict the NPS scores for the remaining
customers. The model’s results can also aid in identify-
ing factors that can be leveraged for improving customer
experience (Parthasarathy 2021).
∙ Technology tools and people skills
The next implementation decisions in our framework
concern the type of technology tools needed for AI deploy-
ment and the type of people skills needed. Implementation
of different types of AI/ML models may necessitate dif-
ferent technology tools and computing resources. While
structured data management relied on traditional rela-
tional DBMS and data warehouses, new digital platforms
are emerging to support AI/ML applications. Examples
of these platforms include open-source frameworks and
libraries for ML models (e.g., Google TensorFlow), applica-
tion program interfaces (APIs) for services such as vision,
speech, language, search (e.g., Google’s Cloud Translation
API), drag-and-drop models to develop, test, and deploy
AI models (e.g., Azure ML Studio), and pretrained models
for users to deploy in their contexts (Rai, Constantinides,
and Sarker 2019). However, surveys suggest that compa-
nies with a strong base in core digital technologies (cloud,
mobile, and web) and advanced technologies (big data
and advanced analytics) are more likely to adopt and inte-
grate the next generation of AI platforms (Bughin and
van Zeebroeck 2018). In another survey by Brock and von
Wangenheim (2019), it was found that firms with stronger
digital skills anticipated higher AI-induced impact com-
pared to firms with weaker digital skills. Additionally,
leaders in AI deployment tend to develop AI/ML applica-
tions in-house as opposed to buying them, and they also
employ more AI specific talent, such as data engineers,
data architects, and translators (Balakrishnan et al. 2020).
For instance, companies such as Capital One planned to
hire a large number of tech workers with many of them
expected to specialize in AI. The company recently com-
pleted shifting its data, applications, and IT systems to
Amazon Web Services and wants to strengthen its ability
to leverage the integrated cloud data using AI-focused hir-
ing (Castellanos 2021). However, lack of competent people
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AI MAGAZINE
and difficulty in hiring are consistently showing up as bar-
riers faced by organizations in their AI deployment efforts
(Wiggers 2021). Therefore, managers need to be mindful of
using novel hiring practices to attract the best talent.
Continuing with our prior example, if the company’s
AI/ML team decides to try out several AI/ML and deep
learning models, then making decisions on what technol-
ogy tools are needed will become important. Decisions
concerning which standard AI tool frameworks to use,
how frequently AI models need to be updated, how to track
AI-model performance, how to create production-ready
pipelines, whether a high-performance computing cluster
is needed for AI workloads, etc. become important (Balakr-
ishnan et al. 2020). Additionally, how to structure teams
for developing the models, whether to involve members
from other functional areas, and how to explain the find-
ings to the internal and external stakeholders also become
pertinent.
∙ AI project evaluation
The next decision in our framework requires organiza-
tions to evaluate AI projects for the benefits they confer
to the organizations. A process for accurate measure-
ment of benefits and communicating them to sponsors
and stakeholders is important to realize how AI initiatives
contribute to business performance (Hunter and Wester-
man 2009). In a survey conducted by Mckinsey, 22% of
respondents say that more than 5% of their revenues were
attributable to the use of AI, whereas 48% of them reported
revenues of less than 5% from AI. Revenue increases
were reported to be more common than cost decreases
(Balakrishnan et al. 2020).
In measuring benefits from AI projects, organizations
must make an important distinction between hard and
soft benefits. If a benefit can be measured in financial
terms in a way that relates to a profit and loss (P&L) state-
ment, then it is considered a hard benefit. However, a
soft benefit can only be measured in terms of operational
terms and may not contribute directly to the P&L state-
ment (Hunter and Westerman 2009). Organizations must
measure both the hard and soft benefits. Continuing with
our example, how to relate the NPS prediction model to
improved customer experience and eventually to increased
sales becomes an important question. Managers first need
to determine what the NPS model suggests as key vari-
ables to manipulate to improve the NPS. If the NPS model
suggests “live chat support” as one of the key determi-
nants of NPS score, then the managers must examine the
current response times. For instance, if the current aver-
age response time for live chat is 8 min, then through a
data science A/B experiment, they could manipulate the
live chat times for a sample of customers to examine its

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effect on NPS. In this manner, managers could improve
certain business processes to increase NPS. Also, using pre-
dictive models, managers could link NPS score to sales. For
instance, a regression model developed by the firm shows
that an increase of 10% in NPS is associated with a 3%
increase in sales. Using such model predictions, managers
could translate the soft benefits into financials (Hunter
and Westerman 2009). Also, it is important to tie the mea-
surement of AI benefits to the key results identified in
section “AI-driven business outcomes and measurements”
(improve NPS from 8 to 9). At the end of the year, man-
agers can report to what extent the key results from AI
are achieved. Table 1 summarizes the decisions a com-
pany must make using our AI framework and why such
decisions are important for an AI initiative.
A USE CASE ON McDonald’s USE OF AI
In this section, we discuss McDonald’s use of AI in line
with the framework presented in this paper. We con-
ducted a strengths, weaknesses, opportunities, and threats
(SWOT) analysis on McDonald’s to understand the reason-
ings behind McDonald’s business strategy and the use of AI
to exploit business opportunities. Formed in Illinois in 1956
and incorporated in Delaware in 1965, McDonald’s is one of
the globally recognized brands with operations in 119 coun-
tries. Approximately 36,000 out of their 39,000 restaurants
are franchised. The core strengths of McDonald’s lie in
the distinct capabilities that facilitate/build high customer
satisfaction scores on their menu items and their high
brand value (Mergent 2022). The weaknesses in McDon-
ald’s operations lie in the challenge of lacking/weaker
capabilities for navigating the complexity of operating a
huge network of franchises, quickly responding to con-
sumer preferences in a wide variety of geographic areas,
and coordinating their supply chains (Mergent 2022). The
opportunities lie in growing their customer numbers. As
of 2017, in their nine largest markets, McDonald’s had a
15% share of the 89 billion annual visits to Quick Service
Restaurants (Mergent 2022). The threats lie in the intense
competition that the Quick Service Restaurant industry
faces and the changes in consumer preferences. The SWOT
analysis clearly suggests capabilities that McDonald’s pos-
sesses or needs to build to match for opportunities for
growth and the use of AI as a tool to accomplish such goals.
In 2017, McDonald’s launched its new business strategy
called the Velocity Growth Plan, which aimed to achieve
growth through increased guest counts. The strategy is
customer-focused in that its outcomes include retaining
existing customers, regaining lost customers, and con-
verting casual customers into committed customers. To
operationalize this new strategy, (McDonald’s corportion
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75
2018) focused on three D’s: (1) enhancing digital technolo-
gies to elevate customer experience, (2) making delivery
more convenient, and (3) making customer experience
faster at drive-thru (Markoulidakis et al. 2020).
Although enhancing digital technologies is essential for
any company, McDonald’s kept their focus firmly on con-
sumer experience. Daniel Henry, the CIO of McDonald’s
suggested, “when you’re a product-obsessed organization,
you think about the consumer before the technology.
Technology by itself means nothing” (McKinsey 2020).
McDonald’s decided to spend $6 billion dollars on the
“experience of future” project which included store remod-
eling to include touch screen ordering systems, digital
menu boards, and a global app and mobile ordering sys-
tem (Klein 2018). These digital innovations, in addition
to providing conveniences for quick ordering and deliv-
ery for customers, offer another important advantage for
AI: customer-specific order data. This data is essential
for offering personalized recommendations for customers.
When Apple and Google started allowing people to opt out
of tracking when using apps, it threatened companies’ abil-
ity to get the first party data. Therefore, in August 2021,
McDonald’s rolled out a customer loyalty rewards program
with an eye to get customer data directly (Sebastian 2021).
In line with their business outcomes, one of the AI
projects McDonald’s recently started addressed the ques-
tion: “how do we offer the best personalized recommen-
dations for our customers?” In 2019, McDonald’s acquired
Dynamic Yield, an Israeli-based company with expertise
in AI. Dynamic Yield specializes in using AI/ML tech-
nologies to increase personalization and improve customer
service. As opposed to static menu boards, McDonald’s
started using digital menu boards powered by AI/ML algo-
rithms, which display food items based on the time of
the day, weather, current restaurant traffic, and trending
menu items. They can also suggest additional items to
a customer based on the initial selections (McDonald’s
Corporation n.d.). In terms of business outcomes, only
McDonald’s is privy to internal data concerning the value
generated by these projects, but the initial data appears
promising. McDonald’s former CEO, Steve Easterbrook,
suggested that the use of recommendation algorithms
built into the drive-thru menu boards have resulted in
larger orders (Yaffe-Bellany 2019). McDonald’s first quarter
results for 2021 also beat analysts’ expectations with a rev-
enue of $5.12 billion as opposed to an expected $5.03 billion
(Lucas 2021).
While KPIs such as order size, customer visits, rev-
enue, etc. can be reliably measured, it is not always easy
to measure some strategic KPIs McDonald’s intends to
use such as, “guest satisfaction” and “whether McDon-
ald’s is a family destination which appeals to parents.”
McDonald’s uses a lagging indicator such as “visits by

76
TA B L E 1 Decisions to make in the AI framework.
Decision to make
What is our business strategy?
What are our AI-driven business outcomes and
measurements?
What are our implementation decisions?
How do we measure value from AI projects?
AI, artificial intelligence; KPI, key performance indicator; ML, machine learning.
families with kids under the age of 13” and a leading indi-
cator “a place I’m happy to bring my children” to get
a pulse on their family destination outcome (Kiron and
Schrage 2019). While customer surveys shed some light
on these outcomes, they may be prone to selection bias.
The use of ML methods such as sentiment analysis, which
uses online customer reviews data (e.g., Twitter posts),
offers an additional source of insight. Recent research
which performed sentiment analysis on six major quick-
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AI MAGAZINE
Why is the decision important for an AI initiative?
Strategy provides a direction for a destination a company wants
to reach, and AI can help a company get there on a timely
basis.
Business outcomes: knowing business outcomes lets
stakeholders know how success looks like in business terms.
AI questions: AI questions translate business problems into AI
problems.
KPIs and AI measures: KPIs help translate business goals into
quantifiable definitions and metrics. They also help firms keep
track of their success or failures. AI metrics such as AUC,
accuracy rates, lift ratios, R-squared, and MAPE are helpful in
evaluating predictive models and ascertaining which of the
model’s performance measures is helpful in meeting business
goals.
What data is needed? What governance mechanism must be in
place?
Organizations carry vast amounts of data. Organizations should
make available the data that is purposeful in answering the AI
questions. The governance mechanisms help provide quality
data for AI/ML projects and help meet regulatory and privacy
guidelines.
What AI/ML models to build? How are they to be implemented?
Not every model is equal in terms of their difficulty or the value it
adds. Careful selection of AI/ML models is important for
solving problems and at times for explaining how the model
works.
Also, implementation of models requires a deep understanding
of how they must be integrated into business process and how
the employees must adapt to the new changes.
What technology tools to use?
Different AI/ML algorithms may need different technology tools.
Knowing the possible options helps decide between buy versus
outsource choices.
What skills we need?
Different types of AI projects need different types of people skills.
The skills could be both technical and business-related in
nature. Hiring competent AI resources is critical to AI project
success.
Establishing a process with a focus on measuring value from AI
projects, communicating results to the internal and external
stakeholders, and tying the results to actions is important.
service-restaurants (QSRs) using Twitter data suggests that
McDonald’s outperformed the other restaurants in terms
of positive sentiment (Nawaz et al. 2018).
Another AI project piloted by McDonald’s intends to
answer the question: “Can we use machines to understand
and converse with customers to take orders?” McDon-
ald’s is testing AI-enabled automated voice order-taking at
10 drive-thrus in the Chicago area. This system is aided
by the technology provided by Apprente, a voice-based

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technology company acquired by McDonald’s in 2019.
Chris Kempczinski, the CEO of McDonald’s, suggests that
the system is about 85% accurate. Kempczinski mentioned
that they had to concurrently train human assistants
because as soon as there was a question or an issue with
the AI system, the employees immediately stepped in. This
caused the system to get less overall data points. The CEO
believes that it might take about 5 years for this system to
be ready to scale up. As for the technologies and skills,
Kempczinski suggested that instead of building internal
capabilities for these advanced technologies, they may rely
on acquisitions and partners to implement and scale such
types of technologies (Ruggless 2021). In fact, McDonald’s
created an internal division called McD Tech Labs, and
appointed the co-founder of Apprente as the VP and the
firm’s employees as its core team. McDonald’s plans to
expand Tech Labs by hiring additional engineers, data
scientists, and other technologists (Dallke 2019). As for
data governance issues, although McDonald’s suggested
that they take data security seriously by paying attention
to the GDPR and the CCPA (McKinsey 2020), they were
recently hit with a lawsuit by an Illinois customer who
alleged that McDonald’s had collected his voice data with-
out consent when he ordered through the voice-enabled AI
system. The lawsuit alleges that McDonald’s collection of
voiceprint information without customer consent is in vio-
lation of the Illinois’ Biometric Information Privacy Act,
or BIPA. This lawsuit is a stark reminder that any short-
comings in data governance efforts of organizations will
be quickly exposed as they move towards implementing AI
technologies (Maze 2021). We summarize how the differ-
ent elements of our AI framework have been incorporated
in McDonald’s use case in Table 2.
DISCUSSION
In this paper, we make a case for organizations to adopt
a strategic decision-making framework for AI investments
and initiatives to successfully deploy their AI projects.
We provide the framework in terms of a flow chart in
Figure 4 as an aid for managerial decision-making. As our
framework shows, AI initiatives cannot be isolated from
a firm’s business strategy, and a tight alignment is impor-
tant between the business and AI efforts. In the absence of
such a cohesive strategy, AI projects may lead to satisficing
(looking for a needle sharp enough to sow with) instead of
optimizing (looking for the sharpest needle in the stack)
outcomes toward value maximization from AI to achieve
business goals. When companies focus on the operational
effectiveness of AI without a well-thought and well-crafted
competitive business strategy, AI implementations and
results are highly likely to fail (Porter 1996).
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77
Second, the challenge of developing a clear business
strategy is often primarily an organizational one and
depends on effective leadership. With so many forces at
work making choices and tradeoffs difficult in organiza-
tions, a clear intellectual framework to guide business
strategy is a necessary counterweight. Therefore, the
top leadership must be actively involved with the AI
projects to set the goals, identify business problems, and
to assess the value from such efforts. Third, even though
technology plays an important role, AI projects require
closer collaboration across functional areas. When the
models identify key predictors, and suggest interventions,
implementing such changes may require close collab-
oration among different business units. Finally, we see
that the big tech firms are spearheading the AI efforts.
Many of these firms deal mostly with unstructured data,
and by using their strengths in software development and
rapid innovation, they have created many AI tools and
frameworks. The other businesses do not necessarily have
to invent AI tools, but they must find ways to strategically
apply these systems to their businesses. This is where
firms must be ready with their business strategy and
outcomes and identify important business problems to be
solved by AI. Then through effective and optimal strategic
decision-making on AI investments and initiatives, they
are better prepared to reap the benefits of AI. Firms with
no prior exposure to AI can use our framework and start
with a pilot project. Once they start realizing the value
from AI, they can ramp up their AI investments and
initiatives.
One of the important questions concerning the manage-
ment of innovations, such as AI projects discussed in the
article, is how firms sustain their competitive advantage in
markets. In this context, the study of sources of technolog-
ical breakthroughs is important. Past research by Coccia
(2017) suggests that the recognition of unsolved problems
and a strong drive to find solutions induce the emergence
and development of radical innovations. We agree with
this view and suggest when AI, applied to challenging and
unsolved problems, has the potential to innovate and cre-
ate competitive advantages for firms. The second source of
innovation could come from radical innovations adopted
in research labs by high-skilled scientists who experiment
and innovate with freedom (Coccia 2016). In the context
of AI, this could mean an AI pilot project by an inter-
disciplinary team to freely explore and innovate to find
solutions to important strategic problems. Such freedom to
explore, we believe, will aid the insight discovery process
in AI contexts and may positively contribute to organiza-
tional performance. A related question in this context is,
why should organizations persist with disruptive technolo-
gies such as AI? Prior research by Coccia (2020) suggests
that disruptive technologies, similar to the AI efforts
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78 AI MAGAZINE

TA B L E 2 Mapping AI decision-making framework to McDonald’s case.

Element of AI framework Example from McDonald’s case
Business strategy Velocity Growth Plan represents McDonald’s business strategy. It
aims to achieve growth through increased guest count,
convenience, and satisfaction.
AI-driven business outcomes and measurements Business outcomes
Higher guest count, larger order size, easier delivery, family
destination which appeals to parents.
AI questions
• How to personalize customer orders?
• How to recommend products based on what customers already
added to their order?
• How to dynamically modify digital menu board based on the
time of the day, weather, current restaurant traffic, trending menu
items, etc.?
• How to automate conversational chatting with customers to take
their orders?
KPIs
Guest count, order size, order amount, revenue, guest satisfaction,
visits by families with kids under the age of 13, family friendliness,
accuracy of orders processed by AI voice-agent, etc.
AI measures
Accuracy rates of automated order-taking, Relative importance of
different predictors in predicting what customers order on a
drive-thru menu, etc.
Implementation decisions Data and governance
McDonald’s in-store kiosks, global mobile apps, online orders collect
individual information. McDonald’s suggests they pay close
attention to data regulation frameworks such as the GDPR and
CCPA. They are planning on using customer loyalty program to
compensate for possible lack of first party data when Google and
Apple allow users to block providing data to apps.
Technology tools
McDonald’s has invested heavily in digital technologies, mainly in
kiosks, global app, digital menu boards incorporating
recommendation systems, and a pilot project on AI-enabled
speech recognition system for order taking.
Modeling and implementation
McDonald’s use of recommender systems in their digital dashboards
and the pilot test of AI-enabled voice assistant for order taking
rely on advanced machine learning methods. Methods such as
natural language processing, deep neural networks, recommender
algorithms, etc. are needed to successfully implement these
projects.
McDonald’s implementation of digital menu boards appears to have
gone well, but they seem to be experiencing some initial issues
with the voice AI-system for order processing. At least one lawsuit
alleges that McDonald’s has not obtained consent for collecting
voice data when ordering through their AI-enabled drive-thru
agent.
People skills
McDonald’s has acquired two companies specializing in AI. Their
McD-Tech labs is found with the members of the AI company
they recently acquired. Their strategy for gaining skilled AI
personnel is to use strategic acquisitions, partners, and new hires.
(Continues)

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TA B L E 2 (Continued)
Element of AI framework
Value from AI projects
AI, artificial intelligence; CCPA, California Consumer Privacy Act; GDPR, General Data Protection Regulation; KPI, key performance indicator; QSR, quick-
service-restaurant.
FIGURE 4 A flowchart of artificial intelligence (AI) decision-making framework for managers.
suggested in this work, tend to aid disproportionate growth
in some markets compared to established technologies,
and that the technological cycle of disruptive technologies
tends to have an up-wave phase longer than down wave
phase, suggesting an asymmetric shape of a technological
cycle. The past research, thus, emphatically supports inno-
vation with AI efforts and the current paper contributes
by suggesting a decision-making framework to maximize
value from such investments.
One of the prerequisites for AI value creation is suc-
cessful AI Adoption. Prior research used a modified TOE
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79
Example from McDonald’s case
Only McDonald’s can be privy to this knowledge, but available data
suggests the use of recommendation technology within the digital
menu boards has increased the order size. Their revenues are also
showing growth. Also, the AI voice-assistant is currently reported
to be showing 85% accuracy in correctly identifying orders. Being
one of the first entrants into using AI in the QSR industry affords
them with competitive advantages.
framework to suggest how technological factors (i.e.,
compatibility between needs and technology, a relative
advantage over prior innovation), organizational factors
(i.e., top management support, data, culture, resources),
and environmental factors (i.e., competitive pressures
and government regulations) are important for AI adop-
tion (AlSheibani, Cheung, and Messom 2018; Bremser,
Piller, and Rothlauf 2017; Pumplun, Tauchert, and Heidt
2019). Our framework shares some similarities and dif-
ferences with this framework. While we draw on many
factors from this framework (e.g., data quality, government

80
regulations, compatibility between needs and technology),
our framework differs in conceptualizing how organi-
zational strategy drives the development of AI-driven
business outcomes, which in turn guide the implementa-
tion decisions. In addition, we pay specific attention to the
importance of using a performance management system,
such as an OKRs, in establishing a set of outcomes and
including a series of measures that indicate the progress
on AI project performance.
We believe that a business strategy-based approach to
AI initiatives is important because while it is reasonable
for each department within a company to execute its own
pilot AI project to test the potential of AI, over a period
of time, it has the unintended effect of quickly turning
into a siloed and disintegrated environment. Therefore,
tying AI initiatives to business strategy, outcomes, and
departmental goals is important. However, without a per-
formance management system to set goals at the enterprise
and departmental levels, and to keep track of AI initia-
tives, it is hard to effectively manage the portfolio of AI
projects. In this context, the OKR approach we suggested
will be very helpful. The benefits of OKRs could be signif-
icant in the sense they can be shared across the enterprise
providing visibility to the AI efforts. Moreover, accurate
predictions in one part of the system have rippling effects
on other parts, and better coordination also allows deci-
sions to be optimized over a wider network (Agarwal,
Gans, and Goldfarb 2022).
CONCLUSION
Our work provides firms with a strategic decision-making
framework for AI initiatives to be used with a perfor-
mance management system such as an OKR system to
extract value out of AI investments. We provided the
use case of McDonald’s as an exemplar for companies
to implement our framework. We argue in this work
that it is not the AI technology, but how it is applied
to solve the “important business problems” that creates
value. We further argue that the decisions on AI imple-
mentation must be guided by the overall business strategy
and AI-driven business outcomes. Then the next question
becomes how to translate the overall strategy and out-
comes into AI initiatives. To bridge this gap, we propose
an OKR performance management system, which con-
sists of objectives and key measures (OKRs) at the firm
and departments levels. The OKRs then become the basis
for recognizing relevant AI projects, making them trans-
parent across the business, and integrating the results of
various AI projects across the businesses to derive business
value.
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AI MAGAZINE
We also discuss conditions in which data becomes a
source of competitive advantages. For instance, if a firm
creates an AI application which continues to gather big
data, which then continuously improves the AI program’s
accuracy, such data becomes a source of competitive
advantage. We also discuss how connecting predictions
to decisions is important within a business process and
across the functional areas. The different ways in which an
organization can create a network of AI systems wherein
the predictions from one system become inputs into other
system, and thereby, facilitating organizational efficiencies
will be a fertile area of research in the future.
However, our work is not without its limitations. First,
our work omitted some human-computer interaction
aspects of AI. For instance, work by Kellogg and Valen-
tine (2022) suggests five common mistakes managers do
when introducing AI. As an example, one of the mistakes
managers do is to quickly bring in AI to address areas
where it might have the most impact, but if they do not
get support from employees, it will result in potential fail-
ure. Rather, if AI’s efforts are focused on aspects of work
that employees do not like, then there is more likelihood
of gaining employees’ support for the implementation of
AI. Future work could look at how AI implementation
must go together with employees’ psychological readi-
ness to embrace AI. Second, companies are using AI to
innovate concerning employee productivity, but the results
are not often promising. For example, using AI to pro-
vide real-time feedback to improve performance helped
workers making men’s pants improve productivity, but the
employees making jackets, which involved more complex-
ity in the task and craftsmanship, complained that AI was
demotivating for them as it failed to adequately capture
the quality of their work (Kellogg and Valentine 2022).
Future research could investigate areas where AI could be
effective in boosting innovation. Third, our work did not
focus extensively on model explainability, a key obstacle
to the implementation of AI systems. Prior research sug-
gests that a lack of model transparency and explainability
could hurt the success of AI efforts (Adadi and Berrada
2018). However, research is emerging to suggest different
explainability techniques to enhance the applicability of
AI systems. We refer interested readers to the work by
Adadi and Berrada (2018) in this regard. We believe the
revolution in AI is undoubtedly here; the only question for
firms is whether or not they are ready. The intention of our
work is to prepare firms and managers for the compelling
opportunities inherent when maximizing the value of their
AI.
CONFLICT OF INTEREST
The authors declare that there is no conflict.

AI MAGAZINE
ORCID
Naveen Gudigantala https://orcid.org/0000-0002-5231-
8980
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AU T H O R B I O G R A P H I E S
Naveen Gudigantala is an Associate Professor of
Information Systems and Silicon Valley Distinguished
Professor at the Dr. Robert B. Pamplin, Jr. School
of Business at University of Portland. His research
interests include the business value of artificial intel-
ligence (AI) systems, data analytics, healthcare analyt-
ics, decision-support systems, ethical issues in supply
chains, and information systems education. His jour-
nal articles have appeared in internationally reputed
journals in information systems (IS) and in reference
disciplines of marketing and management (e.g., Com-
munications of AIS, Decision Support Systems, Interna-
tional Journal of Information Management, Information
Systems Management, Journal of Information Systems
Education, Management Research Review, etc.).
Sreedhar Madhavaram is the Alumni Professor of
Marketing and the United Supermarkets, Inc. Professor
of Marketing, and the Area Coordinator for Marketing
and Supply Chain Management at the Rawls College of
Business at Texas Tech University. He earned his PhD
in Marketing at the Rawls College of Business at Texas
Tech University. His research interests include theory
development, marketing strategy, capability building,
firm competitiveness, information systems/technology,
and strategic issues at the intersection of marketing and
information technology. His research has appeared in
several journals, including The Data Base for Advances
in Information Systems, the Journal of the Academy of
Marketing Science, the Journal of Business Ethics, the
Journal of Business Logistics, Industrial Marketing Man-
agement, Information & Management, the Journal of
Business Research, and AMS Review.
Pelin Bicen (PhD, Texas Tech University) is an Asso-
ciate Professor of Marketing at the Suffolk University’s
Sawyer Business School. Previously, she worked in
marketing strategy and marketing analytics for BBDO
Advertising Agency, managing both national and inter-
national brands. Her research focuses on intra- and
interfirm marketing and innovation strategy, resource
constrained innovation, global supply chain strategies,
and interorganizational governance. She has authored
several articles in marketing and innovation journals
 23719621, 2023, 1, Downloaded from https://onlinelibrary.wiley.com/doi/10.1002/aaai.12076 by Bbw Hochschule, Wiley Online Library on [12/04/2024]. See the Terms and Conditions (https://onlinelibrary.wiley.com/terms-and-conditions) on Wiley Online Library for rules of use; OA articles are governed by the applicable Creative Commons License
84 AI MAGAZINE

some of which are Journal of Business Research, Creativ-

ity and Innovation Management, Journal of Marketing How to cite this article: Gudigantala, Naveen,
Management, Journal of Marketing Theory and Practice, Sreedhar Madhavaram, and Pelin Bicen. 2023. “An
Journal of Business and Industrial Marketing, Innova- AI decision-making framework for business value
tion: Management, Policy, and Organization, Manage- maximization.” AI Magazine 44: 67–84.
ment Research Review, Journal of Marketing Education, https://doi.org/10.1002/aaai.12076
Journal of Global Scholars of Marketing Science, and
Journal of Research in Marketing and Entrepreneur-
ship among others. She has presented her research
at national and international marketing strategy and
innovation conferences.