As hard as it is to believe, artificial intelligence (AI) was rarely mentioned in the discussions related to digital transformation that began almost a decade ago. Now, no mention of transformation would make sense without how AI is making it all possible.
The intertwining of digital transformation and AI is the subject of an upcoming book by Marco Iansiti and Karim Lakhani, both Harvard University professors. In their new book, Competing in the Age of AI, they look at successful digitally savvy enterprises across the globe, and how they do things differently.
Success in today’s digital economy comes from cloud, data science, and nurturing a well-networked ecosystem of partners and contributors. “The new breed of digital firm is all about innovation in the business model, experimenting and recombining various aspects of value creation and value capture,” according to Iansiti and Lakhani. Previously, value creation was usually achieved through simple transactional processes with customers in traditional organizations. In the digital world, things are more multi-dimensional.
Iansiti and Lakhani describe the common traits of enterprises taking the lead with AI-powered digital capabilities:
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They have adopted new kinds of operating models: Among the leading-edge corporate examples cited, Iansiti and Lakhani talk about Ant Financial, an online financial services organization that “relies on cloud technologies to keep data processing costs low in order to scale up.”
The bank’s operating model “is a sophisticated, integrated data platform,” they say. “With hundreds of millions of users making billions of transactions each day on its app, the platform collects information on everything users do. AI taps into the data to drive a broad variety of functions, including internalization, revenue optimization, and recommendations, as well as sophisticated analytics to understand the value created by potential new products and services.” With digital systems in place, “the bank does not need physical bank locations or a large workforce. In 2018, three years after its launch, the bank still employed only 300 people, about the same number it started with.”