Learn why AI for small and medium businesses is already a reality and should be part of every small-business owner’s agenda.
In a previous article, we explained how two waves of digital transformation took hold of the world in the last five decades. The first one started with the use of computers in organizations in the 1970s and the second one, the one in which we’re currently situated, is marked by the increasing presence of artificial intelligence in organizations and the automation of internal processes.
No matter the size of your company or the importance of your role, it’s likely that you are or soon will be impacted by artificial intelligence. The new competitive landscape in every industry will be defined by how quickly companies embrace AI, as companies that increasingly automate their operations become more efficient and data-driven, increasing the data gap between early AI adopters and laggards.
Companies in all industries will become increasingly automated
The use of artificial intelligence to automate internal processes can have a great impact on companies of all sizes and from all industries. A recent study by McKinsey shows that “half the activities people are paid to do globally could theoretically be automated using currently demonstrated technologies. The same study also found that in about 60 percent of occupations, at least one-third of the activities could be automated.
Although a significant proportion of many activities could be automated, the study suggests that very few activities will be entirely automated. Automation is likely to happen at a task level, not at a job-level. Humans will still have an important role in organizations, and managing the human-robot transition and coexistence will be a key function of tomorrow’s business.
The advantages of moving fast
Companies that embrace AI-driven automation early on can create big advantages, in some cases even monopoly powers, as the use of AI tends to create a “flywheel” effect. The companies operate more efficiently, generate more data, improve their services and products, attract more customers, sell more to current customers, collect even more data, become even more efficient…
Incumbents in tech and non-tech businesses are aware that artificial intelligence (or the lack of it) could define or completely destroy their competitive advantages. A recent report by MIT’s Sloan Management Review and the Boston Consulting Group, showed that around 85% of companies think AI will offer a competitive advantage, but only 5% are “extensively” employing it today. Another sign is the increase in M&A deals related to AI from $840 million in 2015 to $21.8 billion in 2017.
But as it happens with most technologies, the window of opportunity is short and in the case of digital technologies like AI, it tends to benefit only a few, as revealed by another recent research paper conducted by McKinsey. The study showed that when it comes to the adoption of digital technologies, returns are unevenly distributed in every industry, with a few early-movers earning outsized returns, while many others in the same industries experience returns below the cost of capital.
It becomes clear that no matter your size or your industry, in the new automated economy, waiting isn’t an option. But how can the small guy be part of this revolution? In our next article, we’ll start demystifing AI and its applications, so you can understand that even small businesses can use artificial intelligence to improve performance.