Competitiveness and Competitive Advantage with AI

Leveraging AI in Business: From Competitiveness to Competitive Advantage - Part 1/4

Businesses and decision-makers are currently facing numerous challenges. One among others is the question of how to concretely utilize artificial intelligence (AI) within their own operations. AI is steadily making its way into companies' toolkits in two ways: on one hand, individual employees are using generative AI tools like ChatGPT for their personal tasks, and on the other, enterprise software providers are rapidly integrating AI features into their products, such as various "Copilot" functionalities.

Does this mean the concrete utilization of AI in businesses is taken care of, and AI can be crossed off the to-do list to focus on other challenges? I believe the answer is "hardly" in the short term, and "definitely not" in the long run. I will explain my reasonings in this and the following post.

Competitiveness versus Competitive Advantage

The topic can be approached from the perspectives of competitiveness and competitive advantage, along with a short and a longer time span. Competitiveness covers the company's ability to produce goods and services that are comparable in price and quality to those of its competitors. Competitive advantage, instead refers to a situation where a company can operate significantly better than its competitors in some area, thereby improving its market position.

To succeed in competition, a company must maintain its competitiveness, whereas creating a competitive advantage is much more challenging but offers significant benefits when successful. The following quadrant can be used to evaluate competitiveness and competitive advantage in the short and long term.

In this article, I'll cover the first element of the quadrant, reflecting on what leveraging AI in the short term for maintaining competitiveness could mean from a company's perspective. My views are based on the current situation, how AI tools appear today, and how the near future seems at this moment. Predicting the longer term is notoriously difficult and practically impossible with the rapid development of AI. So what each block of the quadrant contains at any given time will vary by company and industry, and will change over time with the development of AI. However, I hope this model provides you a way to clarify your thinking.

Competitiveness in the Short Term

Maintaining competitiveness with AI solutions can start with relatively easy-to-implement solutions. These measures kickstart the use of AI in business operations and simultaneously build an AI-oriented mindset within the company, a prerequisite for developing more complex solutions.

There's a wealth of ideas for leveraging AI in business online, typically related to enhancing the efficiency of individual employees' work, customer service, and internal communication.

Individual Work Efficiency

Work efficiency can be enhanced by generative AI tools, such as chatbots, copilots, and image generators. The number of available tools is constantly growing, and these personal assistants can in many ways boost efficiency and support cognitive work. Typical examples include writing emails and reports, generating images, and programming aids.

The significant production-enhancing effect of AI in software development is also supported by a study conducted by MIT, Microsoft and GitHub on the usefulness of Github Copilot in programming work. In this study, it was found that developers using AI completed their programming tasks 55.8% faster than developers who did not use AI.

These tools support productivity, work quality, and wellbeing by:

• Assisting in previously manual tasks, accelerating work completion, and identifying potential errors
• Helping employees overcome obstacles that might otherwise halt their work
• Enhancing developers' work with programming assistants like GitHub Copilot that bring new capabilities into their toolkit
• For example, in the maintenance and modernization of old software code, AI tools like Amazon CodeWhisperer can help translate code from one software language to another enables significant cost savings

Information Processing and Sharing

Organizations possess vast amounts of unstructured information scattered across platforms like Google Drive, OneDrive, and SharePoint, as well as in communication and collaboration tools like Slack, Teams, Jira, and Confluence. The larger the organization and the more information stored in various files and channels, the more challenging it becomes to find information. AI excels at converting this unstructured data into easily usable information. There are already dozens of "Chat with your business data" solutions on the market for this purpose, which integrate with the company's data sources and provide easy-to-use chatbot interface to the data.

When unstructured information becomes accessible to all employees, several advantages are achieved:

• Finding the right and relevant information is easier, which saves time
• Employees gain better visibility into organizational activities, enhancing transparency and supporting information sharing and a better overall understanding
• Reducing the workload of most sought-after experts by making the information they share more easily accessible
• AI-generated summaries facilitate and speed up situation awareness, e.g., in problem situations or changes

Customer Service

Generative AI tools and access to a company's unstructured data help customer service in providing better and faster service to customers. Work speed and quality are improved simply by giving customer service personnel access to unstructured data and, for example, the ability to use a chatbot for finding answers to customer queries and generating responses. Quick responses, in turn, improve customer satisfaction.

Easier access to data combined with AI tools enables:

• Automation of customer service so that AI searches for answers to support inquiries from company data and generates a preliminary response for staff to review and send
• Broader distribution of customer service responsibility within the organization, as sharing customer-specific and problem-solving -related information becomes easier
• Automatic processing of feedback and survey data, allowing for continuous analysis of responses and quick reactions
• Once the quality of data and functionalities have been verified, customer service can also be transferred directly to end customers using customer service chatbots

Tips for leaders:

• Ensure that company leadership is involved, as their role as supporters of development is critical. Invest in developing AI expertise through courses and consulting. You can find some thoughts on this topic in my previous post, "Five things every leader should know about AI."
• Facilitate the use of AI tools within the organization. Ensure that employees can safely utilize the tools and build integrations around your company's unstructured data. Trust that the employees will come up their own use cases where AI can help.
• Make sure use cases, ideas, and observations on the use of AI are shared within the organization. Build channels for information sharing, and create an atmosphere where employees want and dare to share their experiences.

Finally

Maintaining competitiveness in the short term is not so much about choosing the right AI tool but about how the organization's culture can be molded to support AI experimentation and continuous development to ensure competitiveness in the longer term. It's faster to switch tools later than to change a company's culture.

All signs indicate that AI development will continue at a rapid pace, and with competition already global in many industries, ensuring a company's competitiveness is not easy. The low-hanging-fruit AI solutions described in this article unfortunately do not suffice. It could even be dangerous if these measures create a false sense of security that "something is being done," thereby neglecting to consider AI's impacts on competitiveness in the longer term, as well as how to build competitive advantage by leveraging AI. In my next article, I will continue discussing the quadrant from these perspectives.

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