Right now, you can’t look anywhere without an AI tool turning up and fundamentally changing how we think about the world. Chat GPT, AI, Mid Journey, Bard, Llama, it seems that every week there’s a new wonder AI tool that’s doing incredible things at incredible scale. It’s exciting and worrying in equal measure. In the world of advertising, media and creative especially there is a lot of debate about how AI and machine learning will affect our world, while in technology businesses, there’s an arms race to incorporate AI capability into every tool and service.
Many businesses have seen the opportunity and decided to get on the front foot with AI. They’re developing new AI based services that totally reimagine what they do and the way they do it. It’s great to see these new capabilities being adopted so quickly, but there’s a risk that in their rush to stay ahead of the curve, many organisations are inadvertently doing a lot of damage to their bottom lines. They might do this in several ways:
Not understanding where the real value in their product or service offering lies.
There’s an old adage in product management that says that adding cost is not the same as adding value. Similarly, cutting cost shouldn’t mean cutting value. It’s tempting to use AI to replace parts of your offering because it offers appealing cost savings, but if this erodes the parts of your offering that your customers or clients really value, it’s a false economy. You need to be confident that you know where the real value in your service offering lies and be very careful not to undermine it. If you’re determined to lower costs, start in the places where a different (or lesser) customer experience might not be so impactful.
Not optimising to your pricing or charging models to maximise value.
As much as the hype about AI says it does everything better, the reality is that the technology is not mature, and people can still tell the difference. Yes, there are AI tools that can pass the Turing test, but equally, people are smart, they’re beginning to recognise that certain AI tools have a ‘tone of voice’ that’s recognisable and AI is not perfect. Don’t blindly try and substitute every part of your product of service offer with AI. Recognise that there are still areas where the human element is still highly valuable. Draw a distinction between your human and machine offerings. Recognise where a human still brings essential value, and charge for it. By doing so you can maximise the value and differentiate between your machine and non-machine-based offer.
Not being set up to introduce AI in a controlled way.
Technology and product-based businesses are often better positioned to successfully adopt AI because their products and services, and the processes that deliver them are highly structured and modular. A feature or capability can be developed independently of the whole offer and can be reused across offers. When you’re set up in this way you can understand exactly where and how AI is being introduced. If your delivery processes are not clear, or done in an ad-hoc fashion, it can be hard to introduce AI capabilities in a way that doesn’t disrupt the entire process. Technology has a way of transforming organic business processes into structured, productised systems. If you lob AI into the middle of an unstructured process, the outcome is unpredictable. It may have no effect at all, in which case your investment is wasted, or it may completely disrupt everything around it. Using AI demands much greater discipline in business process and communication.
Competing with yourself
We often see businesses setting up subsidiaries or incubators that operate in parallel to their existing businesses. This isn’t necessarily bad, but if these new offerings just directly compete with their traditional offers, they run the risk of eroding huge value from their core offering, even before the AI alternative is mature. A great deal of attention needs to be placed on how revenue and margins can be maintained in the old business model for as long as possible while smoothly transitioning to the new model. This involves clearly differentiating the offers, features, service levels and pricing models to manage the transition in a way that is manageable without slashing revenue or margins.
Without a doubt, businesses that have set themselves up with a more orderly, ‘productised’ approach to their product and service offerings are best placed to take advantage of AI. Now is definitely the time to be experimenting with what AI can offer, but before established businesses leap in with both feet, it’s worth taking the time to plan your AI adoption strategy.
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