Business at a Crossroads

Daugherty is fond of saying that “AI is the new UI,” meaning user interface. In other words, that consumers are now starting to blend AI-based technologies into their everyday lives. For instance, millions of consumers are now in the habit of using a home-based, voice-controlled assistant to do everything from fetching pizzas to checking their bank balance. Voice control—which now accounts for about 20 percent of mobile searches—is becoming more common in our cars, our homes, and public places. Contact a brand online or even over the phone and you’re increasingly likely to encounter a bot that acts as a company representative.

Beyond that, businesses can use AI to figure out what consumers want and present it to them proactively. For instance, a fashion retailer can learn a consumer’s preference to offer very personalized fashion recommendations. Companies can also use AI for dynamic pricing, which fluctuates based on ebbs and flows of supply and demand. While consumers are used to such pricing for airfares, retailers are experimenting with it as well.

Using data from such interactions, companies discover more efficient ways to do business. A bank, for instance, might pore over data and discover new upsell opportunities. Overall, business spending for AI is projected to jump to $47 billion in 2020, up from $8 billion in 2016, according to International Data Corp. Gartner, meanwhile, claims that nearly every software product in 2020 will contain AI.

New Paradigms for Businesses

While AI is opening up new opportunities for established businesses, it’s also providing an entrée for disruptive startups that are taking advantage of new consumer usage patterns and preferences, and low barriers to entry.

To avoid being left behind, businesses are adopting the methods of startups. That means taking a more agile approach that emphasizes experimentation and short-term projects. To achieve this agility, many are leaning more on contract workers who in turn are enjoying the increased freedom that comes with that type of work. Daugherty refers to this paradigm as the “workforce as a marketplace.” He added that most companies today are still operating on an Industrial Age model when they ought to be shifting to a “liquid workforce” model that takes advantage of the workforce as a marketplace and allows companies more flexible staffing.

Staying competitive also means creating or joining digital ecosystems. Brick-and-mortar retailers, for instance, are partnering with mobile-based delivery services instead of trying to create their own. Daugherty said that 15 percent of the top 2,000 companies in the world right now have business models based on platforms. “We believe that will be 80 percent within about five years,” he says. “If your business isn’t based on a platform, then ecosystems become more important.”

Often, creating new ecosystems or leading the adoption of new technologies means that businesses need to be aggressive about standardizing the processes and ensuring consumers’ safety and privacy; government entities can be slow to recognize and adapt such new tools. In addition, businesses often work with several different countries. Many find that the best way to create standards is to work with others in the industry in tandem with government entities. As the pace of technology has hastened, so has the need for such cooperation.