Optimizing AI Results: Building an AI-Based Enterprise Competitive Advantage

 Artificial Intelligence (AI) is becoming increasingly important to the enterprise environment for a simple reason. It offers a competitive advantage. For enterprises that have already made a significant investment in digital transformation, defining and implementing their AI strategy is a critical next step. The digital infrastructure is in place and mountains of big data are being created that are well suited for an AI solution to extract valuable, accurate, and timely insights from it to empower the organization. However, this data has a limited shelf life and so the AI strategy must be pushed to the top of the corporate agenda rather than languish in the wait-and-see pile. As AI accelerates into the mainstream, organizations will need to have an effective AI strategy aligned with business goals and innovative business models to thrive in the digital era. The goal of this blog is to offer some high-level insights into creating such an AI strategy to develop enduring competitive advantages.

Creating an Artificial Intelligence Strategy

While AI is critically important to any successful digital transformation implementation, developing new competitive advantages, empowering employees, and ultimately to the success of the enterprise, companies are often implementing AI haphazardly. To maximize its effectiveness, it is important to prioritize where and how to use AI most effectively. To accomplish this, every corporation should have a written, organizational-wide AI strategy plan in place that defines these business priorities and iterates how AI can be used to achieve these goals in the quickest and most effective way.

Creating an Artificial Intelligence strategy is the process of working out how to use the technology to build a sustainable competitive business advantage. While AI is a technology driven effort, it is important to look at it as a strategic business goal. By focusing on strategic business goals such as creating competitive advantages, improving profits, or even reducing workforce costs rather than simply aligning AI efforts with technology goals, it is better aligned to achieve business goals.  

Within your strategy, AI initiatives should be linked to specific, well-scoped opportunities, problems and issues to have maximum impact. To initiate AI based automation in your business, here are a few pointers:

·      Identify problem: Start by identifying the problem and defining where you can use AI to improve efficiency.

·      Collect data: Identify the data source and focus on collecting the data from the relevant touchpoints.

·      Develop solution: Develop an AI-based solution to aid algorithmic decision making.

·      Implement and train: Once the solution is developed, implement and provide necessary training.

Building a Team

To create a comprehensive enterprise AI strategy requires business strategy, technical, AI, and data science expertise. While parts of this expertise can be outsourced, it is important to have internal resources to manage the longer-term AI goals. It is also important to grow internal AI support structures as an enterprise scales its AI investment. For all these reasons, AI support personnel is a critical aspect to include with the AI strategy.

While building an internal AI support structure is critical, it is also important to know where to outsource external resources to offer strategic AI consulting, a greater ROI through leveraging existing platforms or solutions, and of course for integration. This is especially important for earlier enterprises in earlier stages without the support of an internal mature AI expertise. Some early wins from an outsourced, mature AI solution will pave the way forward when aligned to the corporate AI strategy.

Looking for Lasting Advantage

There is a difference between optimization and a competitive advantage. While industry-based optimization techniques offered through AI can bring an early competitive advantage, they can quickly become standardized throughout the industry becoming an industry norm. For example, airline asset optimization techniques or even bank ATMs offered a competitive advantage to early adopters, and these strategies quickly became the new norm and essential to their operations and everyone else within those verticals.

To find an enduring competitive advantage, it must be based on something unique to the enterprise that no other enterprise has – the good people it employs, supporting systems that engage them and allows them to leverage their individual strengths, the core customer base, and the knowledge base that the enterprise has built over its existence. AI is in a unique position to leverage your investment in digital transformation to augment these unique qualities that every enterprise has.

Upgrading the Human Touch

Talented people always succeed in the context of a system making it hard to rate talent independent of its context. This success is not always portable to another system with different levels of support, industry focus, existing relationships, access to resources, product/service type, scale, or different sets of measures. For this reason, superstars may get more credit for their success than they deserve. This is to say that often it is a well-designed system that makes someone valuable.

Imagine if you can build a system that offers your employees a competitive advantage that can get “A” results out of “B” personnel. This offers three important benefits for any company, 1) consistency of results, 2) improved results, and 3) reduced costs. To the last point, there is no longer a reason to break the bank funding superstars. To the first two points, this offers greater employee ROI, lower employee turnover, and a better overall employee experience. This is the promise of enterprise AI – to offer a better system that removes the employee bottlenecks and allows them to work more efficiently through automation and AI assistance along with predictive insights that allow “B” personnel to perform at “A” levels. Leveraging your digital transformation investments with AI offers a huge competitive advantage potential throughout your enterprise workflows. Happy employees lead to happy customers which lead to better sales and customer retention. Who doesn’t want that?

Know thy Customer

Businesses can use AI to better understand customers and reach out to them. Our digital world offers so many ways to connect with customers that there is an overwhelming size of data available relating to customer patterns, trends, and preferences. AI helps you sort through data to identify the ever-changing image of your customers while gauging how your brand is perceived on social media and other important channels.

When you have a clearer understanding of your customer, it allows you to refine your strategies to use the best channels, create effective marketing campaigns, and communicate with customers more efficiently. Using AI and machine learning can improve the way you reach out to your customers, giving you a better advantage over a competitor that lacks updated or accurate information.

While getting to know your customer, AI can also be used predictively to suggest products, identify trends to build new product or services, and can even offer 24/7 attention as a personal assistant that can augment sales or blend seamlessly into your sales process to stack your sales funnel for human handoff. The goal in knowing your client is to improve the customer experience with rightsized attention, when and where the client needs it offering better products and services based on the insights that this AI strategy offers.

Aiming for Disruption

The whole point of building an AI strategy is to create a sustainable competitive advantage through digital transformation. One way to do that is to take advantage of disruptive business models when possible to differentiate and leverage that advantage by transforming the customer proposition. So, the first challenge for enterprises in the hunt for an AI competitive edge is to think through what business proposition they are actually offering through the perspective of AI. Perhaps that product is better monetized as a service or converting to an AI-based service will allow the service to scale many multiples of a currently human-based service offering. Maybe your database of customer complaints defines some AI-solvable customer needs that can be leveraged as a competitive advantage. Data has been described as the oil of the AI age making it an important asset in your exploration.

Here is a useful exercise to help discover areas where disruption can be useful: Visualize a business model where the company would cease to exist without a foundation in artificial intelligence. For example, with AI –, trade-offs between speed, scope, and scale that often plague the physical enterprise cease to matter. For example, Netflix has forever changed the video landscape just as Amazon has changed the retail landscape. In the Netflix example, for Blockbuster to compete with Netflix in scope, scale, and speed, they would need a team of smart librarians for each customer to research movie options and customer preferences to offer movie suggestions (– scope) – while parking a huge truck filled with videos (– scale) – outside the each customer’s house (– speed) – to be available when desired. We all know what happened to Blockbuster after Netflix appeared on the scene.

Don’t Play Catchup

A common tactic in technology strategy is to wait for a technology to mature and expertise to become widely available. However, the “fast follower” strategy works best for immature technologies while AI is actually quite mature with the well- established mathematical and statistical foundations well established. The problem with AI is that generic models add marginal value while it takes time to develop and optimize tailored AI solutions for an enduring competitive advantage. If you are adopting AI strategies that employ machine learning, there is a substantial effort required to collect and configure the data and train the AI solution.

To illustrate why the fast follower strategy doesn’t work for AI, the Memorial Sloan Kettering Cancer Center has been working with IBM to use Watson to treat certain forms of cancer for over six years, and the system still isn’t ready for broad use despite the availability of high-quality talent in cancer care and AI. When this solution does come online and offers a significant competitive advantage for the Memorial Sloan Kettering Cancer Center, how will the “fast follower” competition manage to catch up? In short, the winners may take all and the late adopters may never catch up.

Conclusion

The effects of AI will be magnified in the coming decade as it is expected that virtually every industry will transform business workflows and business models to take advantage of AI and machine learning. The opportunity is immense, but is currently being held back by the lack of imagination , slow implementation, and poor management. As mentioned above, this may be a winner take all opportunity for some sectors – so don’t let yourself be lulled into inaction.