Explore & Thrive with AI Why Business must keep up with AI
Why will businesses be FORCED to adapt to AI?
Why won't things continue like they are today? What will break and why?
Why won't things continue like they are today? What will break and why?
This is not an article about why people implement AI in business (discretionary) or why is it important to implement AI in business (about key advantages offered by AI in business). This is an article about why businesses will be FORCED to adapt to an increasingly evolutionary trend of AI. It will not be governments or clients, it will be the changes in the economic environment that will make the situation untenable to do business like we've been doing in the past.
The answer of the question comprises of two parts:
In other words: In what ways can AI improve operational efficiency significantly for a business?
AI can provide significant advantages to a business willing to tweak its processes for the scale effects it provides.
These advantages come in three distinct factors: speed, quality, cost.
Example: Imagine you are a supplier, and you are to provide a quotation for a client. An AI working at your competition might be able to provide a quotation, alongwith entire filled forms within a few seconds. But as a human you will need to take at minimum one day to read and understand the requirements, then create a report, fill out various forms that need to be submitted to the RFC.
And by the time we were able to create this report and send it the AI would have send at least 100 more. The AI would not just have sent the quotes, but also would have prospected for new clients in the meanwhile.
In the above example, your competition automated just two aspects of their business - quotation and prospecting, and by doing just this, they were able to outcompete you a hundred fold.
Quality does mean different things for different businesses - it is "factors which are most consequential to the customer".
Example: E-commerce Industry: Quality factors are usually price, delivery time, and product quality.
But usually competitors get the same products from the same suppliers and even use the same shipping partners!
If the customer has multiple options to get the same product from different sources what makes him come back every time? The answer lies in the customer being COMFORTABLE.
QUALITY = CUSTOMER's COMFORT
When AI starts controlling businesses, it focuses on optimizing customer lifetime value (the total amount it can extract from the customer over the entire lifetime).
To optimize LTV, AI learns from and optimizes every customer interaction towards the goal of making the sale.
The system is like a game designed to lure the customer through the door regularly, as well as to keep him satisfied, while also making a profit.
Thus, AI has the ability to provide a customer experience much superior to what exists today.
Using AI to manage business operations can also help streamline various bottlenecks, which are typically caused by human inefficiencies, or communication errors.
For example, using AI in inventory management can streamline inventory levels based on real-time demand predictions. This can not only free up valuable working capital for a manufacturing business, but also provides a much leaner and more reactive business process.
Many processes which bottleneck the entire business results can be improved using AI.
AI does not take salary, and works error-free 24x7
Human costs are usually the biggest costs in a business. But an AI Business Bot is essentially a free employee.
So if you and your competition have the same exact business processes, but if you rely on humans and they use AI, obviously they will have much lesser costs! You simply cannot compete on that! Being able to lower your costs offers an advantage enough that the competitor will be able to pull customers away from you and threaten your business!
To summarize, here's the situation for a business utilizing AI vs humans:
Even today in 2024, humans cannot compete with AI's speed in many tasks like content generation. In 5 years, AI's speed, capability and accuracy will be even better.
AI can do real-time personalization for customers and control business operations, which leads to a far better customer experience than humans can ever provide.
AI Business Bots are essentially free, 24x7 hard-working employees with no demands. Humans perform slower than AI, need salaries and holidays, and also do mistakes.
A lot of us believe that there's always room to survive. Many people argue "even today a lot of businesses are still operating using systems that are pre-IT era and they are working fine!" , "many businesses are timeless - see the oak barrel industry!".
Yes, it is true that some businesses are timeless, but the reality is that most businesses are not.
We are about to enter an era in which AI will cause huge changes in the economy, so even if you are not in an industry which is directly going to be affected or automated much by AI, you might still see your customers tightening their spending (because they are in, or their customers are in such an industry). Such changes have a cascade effect. Also, these changes would be exacerbated if there's a downturn in the economy – which by the way a lot of analysts are predicting to happen very soon!
To survive you have to be nimble enough to accept reality, and not be in an imaginative world. AI is going to be immensely disruptive, since even today it can do "some" stuff in seconds which takes a person days.
If you were a customer in a tight economy and if competition offered you products in a faster / higher quality experience / lower cost, would you still stick around to your existing vendors? In most cases, you will make the switch, and of course it will be dependent on the switching costs, and the quantum of the speed / quality / cost.
CONCLUSION: The stark reality is that the advantages that AI offers are significant enough that they actually end up threatening even established businesses.
Published 12/07/2023
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