The Peril of Inaction with Artificial Intelligence
Business quiz: What do these company name acronyms stand for: AT&T. 3M. NCR. Geico? Did you know them all? If so, well done. The answers: American Telephone & Telegraph, Minnesota Mining and Manufacturing, National Cash Register, and Government Employees Insurance Co.
Now, here’s the hard question: What do all these names have in common? Answer: None of them accurately express what those companies do today.
Think about that. Each of these companies had the good sense to follow new technologies and new business opportunities even if they were inconsistent with their very name.
Then, on the other hand, ask yourself why Blockbuster doesn’t own the streaming video market. How did it lose to upstart Netflix? Why doesn’t Kodak, a brand that used to be virtually synonymous with photography, dominate the digital camera market? In both instances, it is because the entrenched leader failed to see that a new technology had transformed the entire industry.
Most of the time, the technology that the big company fails to adopt is isolated to its industry. But every now and then, something comes along that is so transformative, virtually every company must adopt it very quickly, or perish. The replacement of animal power with mechanical power is one example, as is the electrification of industry and the assembly line as a means of manufacturing. Artificial intelligence will undoubtedly be another one, for the implications of this technology are every bit as transformative as electricity.
Can this really be seen with such certainty? Absolutely. A business is simply the product of two factors: decisions and execution. Companies that succeed make better decisions and execute better than their competitors. That’s it.
It is hard to exactly quantify, but most employees at a company make a few hundred business decisions a day — which emails are most important to answer, which meetings to attend, how to prioritize their time, and so forth. Marketing people figure out what message to deliver to what audience through what channels. Salespeople decide which leads to call on with what offers. Programmers decide how to solve coding problems, product people decide what to bring to market, and so on.
So every person in the company makes, let’s call it, 200 business decisions a day. If your company has 1,000 employees, that is 200,000 decisions a day, or a million decisions every week.
And every one of them can be made better using AI.
Let me repeat that: Every business decision employees make can be made better using AI trained on the relevant data.
Imagine if SmallCo aggressively uses AI to make its key business decisions while BigCo doesn’t; who do you think wins in the long run? If every week, BigCo makes a million decisions based on “their gut” and SmallCo makes decisions using AI based on data, which would you bet on? Week after week, the power of better decisions compounds until at some point, BigCo’s executives will look around and find their products and their company obsolete, then irrelevant. They will wonder how they lost, but the simple truth will be that someone else made better decisions.
AI is still in many regards a nascent technology. Only in the past few years have the tools to implement it across the enterprise come to market. While with many technologies it makes sense to take a “wait and see” approach, this is not one of them. The power to make better decisions is not something one should equivocate on. I am sure that when steam power came along, some old-timers thought their animal-powered factories worked just fine. But in the blink of an eye, that whole world changed and those who did not make the transition fast enough did not have the time to recover and catch up.
I hate to say it, but most large companies fail to make the right changes in time. Of the original companies that made up the Dow Jones industrial average, only one remains on the index. And that one is General Electric, another company that transformed beyond the limits of its name. Those other companies had every advantage imaginable, but they failed, because the world changed, and they did not.