AI is a genie out of the bottle, and it cannot be put back. In a world overwhelmed by data, AI is the way forward for organisations.
Computing has moved on from information organisation and manipulation. Digitisation is turning everything and everyone into data, and machines can convert data into vision, hearing, text, speech, movement, patterns and decisions. With cognition coming to machines, modern computing is about autonomous learning and action by machines. Artificial intelligence (AI) is here and is evolving fast. Businesses and managers must keep up. But outside the tech industry, AI is mostly a buzzword. Most organisations are yet to digitise comprehensively because of legacy issues. They lack the level of data that is required to drive business strategy with AI. Even the few that have flirted with AI technologies have done so in a piecemeal manner. While AI-armed innovators are disrupting industry after industry, conventional organisations continue to see AI as an IT function, and autonomous machines as means to saving costs.
AI really comes into its own when a business wants to blitz scale. Its primary promise is to enable extremely fast work. The way to appreciate what AI can do for a business is to look at e-commerce, digital advertising, taxi, ticketing and social media companies that have taken over the world by using AI to manage huge and complex systems.
App-based taxis are a useful model for managers to appreciate AI’s power in business. These have revolutionised urban travel by ensuring availability at customer’s location, providing credible time of arrival, setting a price by demand and deciding the fastest route—all in an instant. This model of matching, mapping and pricing is made possible by algorithms that continuously learn from new data about each ride. AI learns from patterns of time, place, weather, traffic to adjust fares, routes and availability for future rides. The lesson is that AI changes the game when every part of the business feeds live data and accepts direction from AI.
To use AI in business, management leaders have to be clear about what they want AI to do for them. Buzz-struck managers follow the herd without tailoring AI for the business strategy or syncing organisation competence with it. Many get conned into buying AI snake oil such as algorithms that claim to read body language to identify suitable recruits. To develop meaningful AI applications, management has to set clearly quantifiable deliverables that AI can be trained on. Having a comprehensive measurement system is a basic requirement for using AI. Moreover, an organisation must have the personnel who can curate, label and rank data for algorithms to make correlations and predictions.
AI is just a tool and not a strategy by itself. AI can help organisations define and implement the strategy much better by offering deeper understanding of everyday affairs and probabilities. It can help businesses reach more customers, customise offerings, increase efficiency, read trends, develop new capabilities and beat competitors on innovation.
Still, the real-time computing capability of AI can have a big influence on business strategy. Food retailers are now feeding data about purchases, weather, location, social media posts, etc, to algorithm to come up with best-selling menus and prices for different times, days and locations. Parking companies are also using data to anticipate demand and price the slots accordingly.
AI can build rigorous profiles of customers and underwrite trust that is necessary for e-commerce. Online retailers can offer free trials to customers they can trust by observing their shopping behaviour. A new innovation in online business is adding a social media functionality to the retail platform. This allows shoppers’ friends to approve or disapprove free trial items, which increases sales and reduces returns. The friends can be paid for commenting on each item. AI can also shape business strategy by providing clues to long-term value of each customer by predicting their loyalty and future purchases, and also the cost of keeping them. Such intelligence can shift focus from maximising transaction value to maximising relationship value.
While AI offers a big leap in business capability, it has its limitations and risks. The biggest limiting factor is data availability and its quality. A lot of people are not fine with surveillance, and some governments do not approve data collection and commercial use without permission. Some American tech giants have suffered severe brand damage and financial penalties for their data extraction practices and flawed AI applications.
Explainability of decisions is another big challenge for AI. With too many different inputs fed into AI calculations, it is a challenge to attribute decisions to specific criteria. Without explainability, AI can even produce wrong decisions. So, care has to be taken to get data selection, collection and feed right so that AI does not calculate with partial facts or blatant biases. For all its challenges, AI is a genie out of the bottle, and it cannot be put back. In a world overwhelmed by data, AI is the way forward and organisations have to hook their strategy and management with this revolutionary new technology of work.
(The author is director general, All India Management Association. Views expressed are author’s own.)