The strategic importance of AI is growing at an accelerating pace. Many companies are reaping the rewards of AI now and will increase their investments as a result. Every board member and every senior executive must understand the key trends in AI that will impact their businesses.
The Top 5 Trends in AI are as follows:
1) Increasing investments
2) Rapid response
3) Risk management
4) Job changes
5) Organizational transformation
Companies are increasing their investments in AI and will continue to do so
According to ResearchAndMarkets.com, the global artificial intelligence market is expected to grow from $40 billion in 2020 to $51 billion in 2021 at a compound annual growth rate (CAGR) of 28%. The market is expected to reach $171 billion in 2025 at a CAGR of 35%.
Companies that are AI leaders are building an AI flywheel that will enable them to strengthen the lead they already have over their competitors. The flywheel effect comes primarily from AI systems that perform well and then produce more data, helping the system continually improve its performance. Eventually, a competitor will never be able to catch up. (See The AI Threat: Winner-Takes-All)
Another flywheel effect comes from the ability to attract AI talent by building an organization that can enable growth opportunities in AI for that talent.
The companies that have fully embraced AI are focused primarily on:
● Creating better customer experiences
● Improving decision-making and
● Innovating on products and services
AI is enabling companies to respond much more quickly to market and operational changes, giving AI-enabled companies a significant advantage
COVID-19 prompted many companies to accelerate their investments in AI. According to a PWC survey, AI is used in strategic decisions around workforce planning, supply chain resilience, scenario planning, and demand projections.
Most companies engage in an annual scenario/strategic planning process. AI can make the strategic planning process an ongoing one. By creating AI models, the strategic plan can be continually updated based on changes in supply, demand, operations, competitive moves, and more.
AI can help sense new threats and opportunities and help a company move away from historical reporting to insightful forecasting.
Companies are beginning to understand the risks associated with AI and the ways to manage those risks
Companies want to address AI risks but are slow to take action. The top issues include improving privacy, explainability, bias reduction, and improving defenses against cyber threats.
AI lives on data, and data privacy and consumer protection are paramount. (See Consumer Protection and AI—7 Expert Tips To Stay Out Of Trouble)
AI is sometimes a black box. In some cases, you need to know how and why AI makes certain decisions. In some cases, it’s not that important. However, you need to know when it’s essential and when it’s not.
AI can have many different types of bias risks. The board and senior management need to understand how to mitigate these risks and ensure that action is taken. (See How AI Can Go Terribly Wrong: 5 Biases That Create Failure)
Cyber threats can become more serious when state actors use AI. It’s an arms race. How are you playing the cyber security game with AI? (See If Microsoft Can Be Hacked, What About Your Company? How AI Is Transforming Cybersecurity).
A massive wave of job changes. Some of it is good for companies and workers, and some are only good for companies and not good for employees.
AI will replace some jobs. Most importantly, however, is that AI will replace many tasks. Suppose a job consists of many tasks that can be done more effectively or efficiently than a human. In that case, that job is likely to be replaced. (See Covid Has Changed How We Work. With The Rise Of AI, Is Your Job At Risk?)
If a job has some tasks that are better done by AI, and some that a human does better, then that human’s work contribution can be augmented and improved by AI.
In some cases, new jobs will be created related to the development, management, and ongoing maintenance of AI-based systems. Creating these jobs may be challenging, and each company needs to determine the best approach and the type of people they will need to succeed.
Importantly, workers at all levels will need to understand the implications of AI on their jobs. Some will need to be trained in entirely new skills, and some will need to learn that AI is not a threat but an opportunity. All will be concerned about how AI will impact their future.
Management will need to over-communicate the impacts of AI on jobs and on the organization as a whole.
AI and organizational transformation are coming together in positive ways
For a company to fully benefit from AI, it requires a cultural shift. The organization needs to become data-driven. It needs to learn how to share data, subject matter expertise, and AI models across the organization, breaking down traditional silos.
Automating routine tasks is important and is an excellent way to get a quick return on investment but isn’t a top priority for companies that have adopted AI.
According to PWC, the top-ranked AI apps for 2021 include:
● Managing risk, fraud, and cybersecurity threats
● Improving AI ethics, explainability, and bias detection
● Helping employees make better decisions
These applications are wide-reaching and strategic and will significantly benefit from organizational transformation as they are designed, built, and rolled out.
Whether you choose to buy or build your AI-based solutions, you’ll need continuous collaboration between the board, senior management, and project leaders. Further collaboration will be required between line managers, data scientists, AI engineers, and the users of the solution.
Please let me know if you see additional trends that can impact your corporate success in AI. I’d love to hear from you.