Greatest AI value needs new business models

In the 60s and 70s, most firms invested in mainframe computers, then minis, to improve service, not output, and because everyone else seemed to be doing so – they were not investing in IT to improve productivity – and these IT investments were all focussed on supporting existing business models

Josh Sutton, CEO of Agorai, an AI marketplace, says it wasn’t until the late 90s that we began to see significant new business  models being created – “the businesses that won weren’t necessarily the ones who implemented systems the best but those who took a ‘digital first’ mindset to imagine completely new business  models

Josh cites the entertainment industry – not the limted value gained using digital technology to revolutionise distribution by going on-line but the paradigm shift to re-imagining storytelling and optimising the experience for binge watching

“Digital technology focused companies on their customers – when switching costs are greatly reduced, you have to make sure your customers are being really well served – value shifted to who could create the best experience”

So, while many companies today are attempting to leverage AI to provide similar service more cheaply, the really smart players are exploring how AI can empower employees to provide a much better service or even to imaging something that never existed before

That said, it was interesting to read a detailed assessment of the current and future use of AI and its economic impact on new jobs and new products from PWC – Price Waterhouse Coopers, a big four accountancy firm – who say the biggest potential for AI impact lies in eight sectors viz:

  • Healthcare – via data driven diagnostic support, pandemic identification, imaging diagnostics (radiology, pathology)
  • Automotive – via autonomous fleets for ride sharing, smart cars/driver assist, predictive and autonomous maintenance
  • Financial services – via personalised financial planning, fraud detection and anti-money laundering, transaction automation
  • Retail – via personalised design and production, customer insights generation, inventory and delivery management
  • Technology, communications and entertainment – via media archiving and search, content creation (marketing, film, music etc.), personalised marketing and advertising
  • Manufacturing – via enhanced monitoring and auto-correction, supply chain and production optimisation, on-demand production
  • Energy – via smart metering, more efficient grid operation and storage, intelligent infrastructure maintenance
  • Transport and logistics – via autonomous trucking and delivery, traffic control and reduced congestion, enhanced security

One’s first reaction is that much of the above concerns existing processes, yet so much of AI’s potential lies with applications nobody has even thought of as yet

Even so, if PWC are right, then the economic impact of AI may eventually rank alongside that of other GPTs – General Purpose Technologies – such as electricity and the internal combustion engine

Overall, the upsides for AI already appear enormous so the sooner all businesses, not just in the above eight sectors, realise the benefits AI offers, the better it will be for both them and their home nations

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