This Time It’s Real: AI Will Be Revolutionary, How to catch the wave
AI’s breakthrough moment is now
The history of Artificial Intelligence (AI) abounds with booms and busts, big promises and big disappointments. Research by consulting firms including McKinsey and the Boston Consulting Group indicates, however, that AI is finally starting to deliver real-life business benefits. Everything needed for a breakthrough is there. Computer power has grown enormously, algorithms are becoming more sophisticated and the world is collecting larger amounts of data than ever before. Billions of gigabytes of data are generated every day.
‘Within AI, deep learning (DL) represents the area of greatest untapped potential.’ – McKinsey Global Institute
AI is a collective term comprising different fields. Some, like ASI (Artificial Super Intelligence) so far belong to the realm of science fiction instead of being a realistic technology. Others, however, are expected to engender revolutionary developments in the economy. Deep Learning has the most promising outlook of all AI applications and is expected to, for instance, automate entire production processes and enable autonomous vehicles. Within the domain of AI, Machine Learning (amongst which Deep Learning) attracts the most investment internationally. About half of all VC investment in AI is directed toward Machine Learning applications. In 2017, VC investment in AI totalled $12 billion. Applications include data-driven lending, autonomous vehicles, predictive maintenance, energy grid management, healthcare and much more.
What’s holding firms back?
A survey done by the McKinsey Global Institute of more than 3,000 businesses around the world found that many business leaders are uncertain about what exactly AI can do for them, where to obtain AI-powered applications, how to integrate them into their companies, and how to assess the return on an investment in the technology.Although technology companies may not know exactly how AI demand is evolving, they recognize the enormous opportunity within DL and want to capture it. With the technology still evolving, and with multiple players implementing wildly different strategies, the recipe for success is still uncertain.A cause of this uncertainty is most often ignorance on the part of company managements. C-suites often don’t know what AI is, what it can do for them or how to integrate AI into their business processes. Moreover, small firms often do not have the size to cover the large fixed costs of AI integration. For this reason, as has been the case with most technological developments, big firms are leading in AI integration. Lastly, successful use of AI needs expertise and/or ease of use. Companies need employees with either an advanced aptitude in AI or the ability to use AI applications. Many applications are difficult to use and require thorough understanding. The necessary talent is scarce which has lead big tech firms to engage in ‘acqui-hires’, i.e. acquiring companies with the goal (amongst others) of acquiring their talent.
What to do about it
Executives of firms should learn what applications AI has in specific use cases relevant to their company. Identifying business cases is the first step in the process. Both McKinsey Global Institute and BCG’s Henderson Institute recommend redesigning the entire business process from scratch and transforming the firm accordingly. However, when specific use cases can be identified which will not need transformation of all parts of the value chain, only parts of the value chain that need to be changed should be changed. Every successful transformation requires firms to
The aforementioned survey done by McKinsey shows that leadership from the top, management and technical capabilities and seamless data access are vital in any transformation towards a business model fully using the potential of AI.
Those that make big bets now and overhaul their traditional strategies will emerge as the winners. – McKinsey Global Institute
The AI revolution will be a pivotal moment for many firms which will determine whether they can adapt to a changing world. As with any transformation, there will be winners and losers – those who catch the wave and those who miss it. Make sure you do not miss out.
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