People are notoriously resistant to change. So when it comes to disruptive technologies – such as artificial intelligence (AI), robotics, and machine learning – it’s no surprise that many of us initially view them as challenges.
However, in an era of digital transformation, these technologies must be seen for what they are: opportunities. We need only look at the last 15 years for examples of start-ups and established brands that have turned technologies such as video streaming, online commerce, and mobile connectivity into massive successes – and companies (even whole industries) that have struggled and perished because they were slow to embrace change. Blockbuster, Polaroid, and Borders are just a few brands that have faded faded or gone. Will taxi cab services soon be a part of the past?
Seeing the Opportunities
New technologies present two key business opportunities but companies need to keep an open mind in order to benefit. The first is the ability to create unique and empowering competitive advantages.
Consider how BMW, for example, used AI to manage customer inquiries for two of its new cars. Customers could submit questions about the cars and receive answers back via web, mobile, or social-media platforms. This created a far more convenient customer experience than calling or visiting a dealership, and the AI-based service’s response times averaged only 1.2 seconds with 99.5% accuracy. What’s more, it resulted in hundreds of scheduled vehicle test drives.
The second opportunity is financial.
Companies can increase revenue, minimally in the 1% to 3% range, by using digital technologies to improve business processes such as order fill rates, customer service and customer loyalty. We also can realize operational-expenditure savings of 10% to 30% through improved asset utilization, inventory optimization and better use of production facilities. According to APQC (American Productivity and Quality Center), the world leader in benchmarking, market leading companies can often have a 40 to 50% supply chain cost advantage over their competitors.
A xhange in strategy
Before we can embrace new technologies, we need to make some fundamental changes to our organizations. For instance, digital technologies are no longer just an information technology (IT) issue. They’re a business issue and thus should be discussed at strategic business planning and boardroom levels.
Additionally, we must evolve business planning and modeling to accommodate the fast-changing technology landscape. For example, consider replacing the traditional strengths, weaknesses, opportunities, and threats (SWOT) analysis with a new one: strengths, weaknesses, strategies, and vulnerabilities (SWSV).
[ What AlphaGo Zero Means for the Future of AI. ]
Here’s why. Understanding strengths and weaknesses is a critical baseline to help identify areas for improvement and areas that can be leveraged to position a company’s strategy against competitors, seek “blue oceans or ponds”, and identify vulnerabilities to the existing business model and design new business models, e.g. Business Model Generation.