ChatGPT and The Business World
ChatGPT’s value proposition, three types of relationship to understand, customer experience deflation, and ways to respond
Disclaimer: Opinions expressed are solely my own and do not express the views or opinions of my employer.
Happy Luna New Year! Hope you all enjoyed the first month of 2023.
2022 is a fulfilling year for me. I created this publication and started sharing my perspectives as an Innovation Consultant and Experience Strategist. I wrote 10 articles in total (not bad!), and I aim at sharing more this year. If you are passionate about the venture, innovation, and customer experience like I do, please subscribe!
Let’s start with ChatGPT. It has absolutely exploded everyone’s mind since launched in November 2022. We adopt it in a snap, and it has already changed the way we consume, create, research, and communicate. The last time our behavior got changed so drastically was 10+ years ago when Airbnb and Uber appeared. We know new business models will show up within the next 12–24 months and we can expect unicorn(s) built on this technology to arrive. What an exciting time!
Thrilled as I am, if I were to put myself in existing business owners, or my clients’ seats, I would be concerned. If ChatGPT is an earthquake, what’s the magnitude of impact it has on the business landscape, and me? And what should I do? This article is a response to that.
There are three types of relationships I look to understand when analyzing the impacts of a new technology — its relationship with people, with industries, and with businesses. I like to bring in concepts from various fields such as economics, product development, experience or service design, and human-centered methodology to help me understand where in the market the technology is pushing and pulling.
In this article, I will synthesize ChatGPT’s value proposition, model its impact on industries and businesses, and suggest ways for businesses to respond.
If it sounds interesting to you, give me a clap 👏, and read on!
Navigation Guide:
- ChatGPT’s value proposition
- ChatGPT and people’s expectations
- Impacts of ChatGPT on industries + ChatGPT impact diagram
- Impacts of ChatGPT on businesses + ChatGPT adaption diagram
- How should businesses respond to ChatGPT?
- Appendix
ChatGPT’s Value Proposition
To understand the impacts of any technology, we need to first get on the same page about what it is and how it’s valuable to people and businesses.
Note: I expand the concept of ChatGPT to today’s and future’s chatbots/conversational interfaces built on large language model(s), or LLM, which includes the ChatGPT launched by OpenAI that is built on OpenAI’s GPT-3.5 family of LLM.
In the simplest words that a Grandma can understand, what value does ChatGPT bring to the world?
For users, ChatGPT offers:
- Human-like answers — short or long, broad or concise — to a request.
These requests can be broad philosophical questions, specific coding questions, prompts to write a story, or just a few simple words leaving it open to ChatGPT for interpretation (tricky but works)
For businesses, ChatGPT offers:
- A low-cost, human-friendly way to
1) assist internal employees and customers
2) build a brand reputation (by sharing expertise)
3) identify new business opportunities (product/service innovation)
(See more ideas in Appendix)
ChatGPT is a very strong competitor for all tools that are designed to answer questions including Google, Quora, Zhihu, Stackflow, and Youtube. In the long run, it can replace human customer service agents and human marketing and brand professionals.
ChatGPT and People’s Expectations
A massive and inevitable wave of customer experience deflation is coming.
New technologies typically drive the business world to be more efficient. The strength of this driver can be strong or weak depending on:
1) how the market adopts it (E.g. intuitive for users?)
2) how mature its development is (E.g. bug-free?)
3) how immediate it can generate revenue (E.g. easy to commercialize?)
ChatGPT is a strong and disruptive driver because of its maturity and smooth human experience (as compared to other emerging technologies such as Web3 and Metaverse). It takes zero effort to understand and adopt, and its generacity captures human imagination broadly. There is no need for fancy promo videos, or explanations for obscure concepts. The result? It went viral immediately.
Because of the rapid market adaptation, ChatGPT’s impact on business is largely market-driven. Once ChatGPT is adopted by the early-to-late majority (as shown above), there is no way back. All existing customer experience today will be “deflated”.
Def. Customer experience deflation: a reduction in customer experience a business provides due to lifted expectations caused by external factors.
The standard of top-notch CX will be lifted. The business that are already falling behind in CX today will fall further behind (unless there is a determination to change).
So adopting ChatGPT is not optional for businesses, it’s a must-have.
Impacts of ChatGPT on Industries
How ChatGPT will influence industries differently?
While new technologies tend to benefit all industries in the long term, some industries are more ready to adapt and convert it into productivity and revenue than others. Take the digital content and education industries as an example.
Digital content industry
ChatGPT will enlarge the $2.5T digital content pie by enabling existing content generators to create higher quality content in the short term and automating valuable content generation in the long term.
However, since the demand for content remains relatively stable given the theoretically infinite supply of content enabled by ChatGPT, value creation will become more difficult and competitive for existing and future players.
Education
ChatGPT builds on the $3.1T education industry today and will make education more accessible to everyone. As the least developed part of the world increasingly moves online, the educational experience will become more and more productized as well. However, education industry involves human-led activities that cannot be replaced by ChatGPT, hence the impact is smaller.
ChatGPT Impact Diagram
The diagram below shows the relative impact ChatGPT makes in four industries. Assuming that business processes are equally complicated in all industries, the insurance industry, for example, might benefit less from ChatGPT compared to the content creation industry, as the insurance industry has less creative content generated and is less customer-facing. The value of “humanizing” communication is lower industry-wise.
*Keep in mind that not all industries are equally digitalized. Low digital maturity will hinder the industry’s ability to adapt.
Although we can’t put a number on the size of impact ChatGPT has on different industries yet, we can start to make hypotheses based on the method behind and validate them over time.
Impacts of ChatGPT on Businesses
How will ChatGPT influence businesses in the same industry differently?
To understand the impacts of ChatGPT on a business, we want to at least have a general idea about the total value ChatGPT creates in its industry as a whole. Then we can assess how equipped is the business for capturing its portion.
ChatGPT Adoption Diagram
For businesses within the same industry, some will be more ready than others to adopt ChatGPT.
In the diagram below, company x is stuck in the initial phase of digitalization and is not be able to get to the existing industry standard (solid curve). Company z is more digitally mature but it might not able to get over the data hump to jump on a value curve ChatGPT creates for the entire education industry (dashed curve). In this example, company y is the only one that captures the most value.
This model is high-level but it doesn’t need to be accurate to work. There are digital maturity report one can leverage to build hypotheses. Businesses need to find and admit where they are, and make plans to move outwards.
From the strategy perspective, from weak to strong, from temporary to sustainable, ChatGPT can help businesses build:
1) Barrier
2) Competitive moat
3) Competitive fortress
ChatGPT can improve operational efficiency for all businesses, which creates barriers against those who couldn’t adopt ChatGPT (company x). The barriers will only become stronger as customers’ and employees’ expectations shift upwards.
ChatGPT can also form a competitive moat, and the strength of the moat depends on how connected the captured data is to the business model and how much effort was put into translating data into insights. E.g. It might not make a big difference if the business only captures questions people have about the product it sells. However, if it manages to capture broader problems people have in their lives, it can inform business strategy and lead to new business opportunities.
ChatGPT can build a strong competitive fortress for players in industries where the technology and services are least humanized. Understanding how ChatGPT can improve employee and customer experience will be the immediate next step.
How should businesses respond to ChatGPT?
What can businesses do now to get ready for the ChatGPT-powered world?
Businesses need to first understand where it sits in the ChatGPT impact diagram and the ChatGPT adoption diagram given its current capabilities and competencies, define a ChatGPT-powered version of the business considering use cases in different departments, and, lastly, find ways to close the gap.
Although ChatGPT is still in the process of being commercialized, there is no need for businesses to wait. All businesses start start by:
- Identifying the can-be-automated scenarios in the current business processes. E.g. Creating newsletter has already been automated with ChatGPT.
- Identifying the can’t-be-automated scenarios and acquiring/allocating resources accordingly. E.g. ChatGPT can’t help businesses conduct the user research, position company strategically, or analyze competitors yet. It doesn’t understand what’s abnormal, surprising, the anomalies in context. Focusing on building “human-only” capabilities for those scenarios will be a smart move.
Wrapping it up
I hope it helps you understand how an innovation consultant go about understanding the impact of ChatGPT, or any new technology, on businesses, and making suggestions. I will continue to paying attention to ChatGPT (as we all will) and share more in my future posts.
Stay tuned! See you in my next post. 👋
Appendix
- Example ChatGPT use cases in business
1) Changing the way businesses document and share knowledge — Imagine every business having its own Corporate GPT where employees can ask questions intuitively and get accurate, unambiguous answers
2) Improving customer service experience — Imagine every business having its own customer service GPT that can answer any customers’ questions in a concise and humanized way
3) Automating creation of social media posts, newsletters, and articles — Imagine business relying more on non-human resources for routine marketing and brand building activities - ChatGPT and How AI Disrupts Industries
- Write a LinkedIn Newsletter with AI Using ChatGPT
- Which Industries Are the Most Digital (and Why)?
- What ChatGPT Really Means for the Future of Business
- ChatGPT Will Change Many Things — But It Won’t Change Everything
About
If you are new to this publication, I am a venture designer x innovation strategist. I used to incubate products within corporate innovation labs, now I help businesses understand the impact of new technologies, craft innovation and experience strategies, and implement changes to make real impacts on people’s lives.
This publication is dedicated to topics around business strategy & innovation. I will share more of my experience in formulating innovative strategies in future posts. Subscribe if you are interested in hearing more.
Stop by my virtual coffee guesthouse ☕️
Ping me on Linkedin if you are up for a virtual coffee chat. Or simply support me if you are generous ;)
