Artificial Intelligence (AI) and the New Business space; Challenges, Opportunities and Threats

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Tuesday, August 03, 2021 / 7.00AM / Teslim Shitta-Bey, CE/ME, Proshare/Header Image Credit: Future Learn



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Survival in the next normal will rest heavily on the integration of artificial intelligence and machine learning into everyday workplace activities, how companies go about doing this will separate winners, losers, and laggards. "If companies are going to scale past the recent business shocks caused by the COVID-19 pandemic they must keep an eye on rapid evolution; while old ways have been attractive at different points in time, new ways must be adopted by corporations if they want to stay healthy. History is lovely but it is not a perfect measure of the future" noted  the Rotman School of Management, University of Toronto's David R. Beatty recently.

 

Professor Beatty made the remarks at a webinar hosted by the Institute of Directors (IoD) Nigeria in 2020. Beatty's admonition was timely. Not only are companies finding themselves increasingly on the narrow ledge of business sustainability but they are equally discovering that consumers do not pity businesses unwilling to rethink, reimagine and restrategize their operations, products, and services.

 

Understanding future consumer preferences is no longer a luxury but a critical requirement for corporate existence. Contemporary organisations require a deeper knowledge of who they provide products or services to than in the past because consumer expectations have grown along a geometric curve of product and service needs shaped by dynamically changing preferences. The younger generation of consumers have a different temperament from their older counterparts, they are plugged into a reality that is fast-paced, crushingly selective, and unapologetically social.

 

Indeed, today's consumer is environmentally conscious, impatient, and savvy. The cash-conscious younger buyer requires speed, efficiency, effectiveness, and ease. The further away a company is from achieving these expectations the closer it is from being, in gen Z and Y contemporary lingo, 'deleted' (see illustration below).

 

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From AI Zero to Hero; Managing Market Challenges

Evolving an appropriate AI business response to consumer market expectations is as tough as nails. The main challenges to AI adoption and implementation include but are not restricted to the following:

  • Hyper-personalization of products and services
  • Difficulty in assessing and scoring propensity-to-buy
  • Growing need for product and service speed and flexibility
  • Reduced loyalty and high portability of customers (i.e. high customer bounce rates)
  • Regularity and consistency in customer creditworthiness assessments
  • High fulfillment costs (for online trading transactions)
  • High agency costs (for online retail channels)
  • High breakeven margins
  • Cost of data storage, analytics, and strategic deployment (data prediction)


Corporate analysts note that organisations need to bring greater focus into the business game with a larger dependence on data gathering, predictive analytics, and product or service personalization. Gone is the Model T Ford concept of product standardization where customers could buy every colour of Ford's Model T as long as it was black. In the new business order, every customer's demand is unique, and even though demand can be 'bunched' the sub-categories of preferences still represent a rainbow of choices.

 

With customers becoming increasingly choosy and intolerant of attempts to mass supply standardized products or services corporations need to have the data and computer processing power to identify the nuances in product or service demand and see how best to meet such demand without leaning into a major spike in operating costs. The balance between the personalization of products and services and higher product or service costs remains a hi-wire trapeze act for many corporations.  

 

The need to balance customer service or product satisfaction and higher costs may require quick-fix AI strategic tools that may include, but are not limited to, the following:

  • Regular consumer data touchpoints (primary data survey would provide the base data to be refined after customer onboarding)
  • Customer satisfaction analysis to drill down customer's immediate and prospective needs
  • Customer spending analysis
  • Customer income analysis
  • Customer aspiration analysis
  • Customer brand loyalty analysis (assessing product or service fungibility)

 

Going forward, data would no longer be a fancy set of numbers designed to intimidate the uninitiated but would represent the lifeblood of understanding market trends and appropriate corporate responses to fast-paced  market changes (see illustration below).

 

 

 

Illustration Getting Data to Do More

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Scouring AI Opportunities; the Future is Now

In a world where preemptive action trumps service provider and producer reaction, coming to terms with the future is not a choice but a rule for business sustainability. Seeing tomorrow is at the heart of future-forward technology application and adoption. If the company cannot preempt its customers' needs it would likely flounder by the time the needs become manifest as the enterprises' competitors would have swooped on the market gap like flies on a lump of sugar. In adapting to the future there is a need for speed, proactiveness, and adaptability.

 

Technology: Setting off from the Tarmac

The recent blistering pace of innovation and technological growth has required companies to adopt agile business frameworks for assessing consumer experiential journeys by modeling products and services in line with user experiences (UX/UI) and their forward idiosyncrasies using predictive algorithms that enable corporate adaptability. Companies wishing to take off the value addition runway must be prepared for massive data collation, arrangement, analysis, and prediction. Data analytics, Artificial Intelligence (AI), and Machine Learning(ML) will increasingly become the crown jewels of organizational toolboxes.

 

Businesses are going to need a stronger hand on technology and its multiple application to meeting consumer needs if sustainability is genuinely a corporate goal. Companies will need to beam their technology strategies into providing clear solutions to consumers' needs and probably their wants.  From brainstorming to norming and execution the company that hopes to survive the next few years must be deliberate and intense. Sluggards may cope but not for long. While execution will be a major part of the business approach to meeting consumer expectations, the issues of sustained market monitoring and business adaptability are two critical requirements for an enterprise wishing to avoid being left cold on the corporate performance tarmac in the future (see illustration below).

 

Illustration Beaming AI into Business Solutions

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Bricks and Stones

Brick-and-mortar establishments may have their uses but the future of business lies in codes and algorithms, and not in sparkling lobbies and gleaming hallways alone. The towering architectural masterpieces that dot urban skylines add beauty to the cities but do not guarantee business sustainability. To ensure that snazzy buildings provide tolerable business cash flows corporate boards need to treat the customer with intense interest and predictive foresight.  


The job of technology adoption and application is not exclusively that of the chief technology officer (CTO) but should pervade the boardroom penthouse with the chief executive officer (CEO) leading the charge. The CEO need not be a technophile or data nerd but he or she must be sufficiently motivated to understand how emerging technologies plug into consumer expectations and the businesses existing product or service pipelines and supply networks contribute to both top and bottom-line earnings. Fast and adaptable companies will outlive their slower counterparts because they have become responsive to change by leading it. In the prevailing business environment of the twenty-first century, the patient dog goes hungry because the fattest bones would have long been taken by its rivals.

 

The leadership of contemporary business organisations must have insights into how technology enhances corporate value and supports customer satisfaction. The opportunities include:

  •  Improving lateral and vertical supply chain networks.   
  • Using "co-opetition" as a tool for market share growth and tactical scaling
  • Using AI to deepen understanding of customers
  • Using ML to respond swiftly to customers' expectations
  • Creating agility in the workplace with staff focused on the future rather than the past

 

In taking new paths to corporate sustainability companies will need to break eggshells.


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Breaking the AI/ML Eggshells

How do you make omelletes? Clearly by breaking eggs. At the corporate level this has meant being ready to disrupt existing ways of doing things to keep the company fresh and dynamic. The problem with this, however, is that companies that have become successful at the game of being innovative and disruptive soon lose steam as their achievements become an enemy to their aspirations, and so the critical question is how do such companies sustain their spark?

 

"The issue is leadership" says Dr. Ayotunde Coker of the Stack Centre. "leadership must continually upscale itself and rethink the corporate purpose against shifting realities. Leadership is knowing when to reinvent yourself. Leadership must open its mind up to the possibilities of technology". According to the chief executive of officer of the Stack Centre, "It is important to understand the context in which you are operating in, you either shape the context or walk into the context because if you do not do either, you die as a CEO or get replaced or go down taking your company with you".

 

The corporate imperative is not only to stay up but also to grow up. Therefore, companies that are concerned about sustainability must be prepared to get a grip of the consumer context of the present and future by using predictive analytics to understand consumer or customer behaviour and the inevitable consumer mood swings hidden within AI/ML algorithms.

 

To face the challenges of today and to take advantage of the opportunities  of tomorrow corporate boards must wake up to smell the coffee of disruptive and predictive technology. The future is not coming, it is here.

 


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Downloadable Versions of 2020 Report (PDF)

1.      Executive Summary: CEO Remuneration 2020 Report - Paying the CEO in a Pandemic; The Unanswered Questions  July 30, 2020

2.      Full Report: CEO Remuneration 2020 Report - Paying the CEO in a Pandemic; The Unanswered Questions  July 30, 2020

 


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