CIO Dive
The "AI" is a new technology that is being used in the creative field, such as Netflix, which uses AI to plan new products that are sure to be popular. The following is a brief overview of the key factors that are affecting the success of the new business model.
June 23, 2022 2:00 pm Published.
[Matt Ashare, CIO Dive]
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CIO Dive
Long considered a tool for business improvement, AI is beginning to play a role earlier in the business process, closer to product design.
Speaking at the MIT Sloan CIO Symposium on May 23, 2022, Boston University's Questrom School of Business Professor According to Marshall Van Alstyne, the use of AI's analytical capabilities to design new products and services is a promising frontier for enterprise IT.
By integrating siloed internal data and leveraging external data sources, companies can create dynamic AI ecosystems to drive innovation, improve efficiency, and create new business opportunities.
Legacy companies in heavy industry, finance, and insurance ...... incorporate AI into product development.
Many organizations that are able to leverage AI close to product design are digital natives. However, "some legacy companies are also following this model," said Thomas Davenport, professor of information technology and management at Babson College.
Targeted advertising, customer service automation, quality control, and logistics are areas where AI has proven its business utility. When combined effectively with big data, AI could reshape the way products are developed.
Following in the footsteps of Uber, eBay, and Meta (formerly Facebook), which are already using AI on a large scale, legacy companies such as aircraft manufacturer Airbus, insurance company Anthem, and Singapore-based financial institution DBS Bank are also integrating AI into their systems.
This environment is like a 'Disneyland of data,'" Davenport said. With a 'Disneyland of data,' we can improve our AI models, improve our services, reduce customer friction (friction, usability inconvenience), get more customers, and acquire more data."
This virtuous cycle is creating a whole new market through search capabilities using machine learning, just as web services such as Amazon and eBay use data to match buyers and sellers on their sites to enable e-commerce. While AI-based recommendation systems remain a powerful business tool, a new way of thinking about AI technology is gaining ground.
Using AI not only to "figure out how to sell," but also to "create something that sells.
Netflix is one example of a company that has built a business around recommendation algorithms. The company began creating streaming content by combining its growing data assets with AI to guide its development process. The acclaimed show "House of Cards" was created using this approach.
Amazon similarly leveraged AI for its original distribution content, "The Marvelous Mrs. Maisel," Van Alstyne said.
"Recommendation systems have been thought to tell you 'what will succeed' based on existing products," he said. But on the contrary, this system can also be used to create things that don't exist yet," Van Alstyne said.
For companies that use cloud-based APIs to implement such AI pairings, this mechanism will contribute to increased revenue and market capitalization. A 2021 study analyzing 200 companies that employ APIs, in which Van Alstyne also participated, found that companies that let their AI learn from their interactions with third parties increased their market capitalization by 4% over two years and 38% over 16 years.
But there are also cyber risks involved. "If you expose your API to the outside world, you have a 1.2% chance of being hacked every month, and while there are great benefits to using APIs, there are also more things you have to manage," Van Alstyne said.
Just distributing the data we have now is profitable enough.
Even companies that can't afford the risk can benefit," said Vipin Gopal, Chief Data and Analytics Officer at Eli Lilly & Company, a pharmaceutical company. Gopal noted that in the pharmaceutical industry, there is an opportunity for massive gains simply by sharing data that is currently siloed.
We see this in every industry," Gopal said. We've grown up with siloed data in different parts of the company, whether it's research, clinical development, packaging, or commercial. There is a huge amount of data in different parts of the enterprise in an almost disconnected state."
(First published at https://www.ciodive.com/news/AI-product-design-MIT-CIO/624400/ (CIO Dive))
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