As lessons begin to emerge from the global pandemic, the opportunity to benefit from skillful AI implementation grows.
The current coronavirus pandemic has introduced into the global economy a level of volatility and uncertainty that, combined with the virtual cessation of economies around the world, puts many companies in a “make it or break it” position. Increased implementation of artificial intelligence processes will not be a panacea, but it can enable smart companies to endure the current downturn and emerge stronger when it has passed.
When we look to the past and assess corporate performance in the face of economic downturns since the mid-1990s in the US, we find that 14% of companies have taken advantage of downturn years to increase both sales and margins. However, 44% of companies have suffered, experiencing reduced margins and decreasing sales.
During and in the wake of the current crisis, the determining factor of success will be those companies that are focused on fully leveraging the value of AI. What, you might ask, makes artificial intelligence so critical amid increased market volatility?
The Need to Transition from Forecasts to Scenarios
The current pandemic has revealed that, in a period of instability, market forecasting becomes much more difficult to achieve. Rather than building corporate activities around broadly based market forecasting, companies need to use the power of AI to conduct ultra-granular forecasting to develop not a single projection but a series of possible scenarios.
The corona virus also highlights the fact that market conditions will increasingly differ in different parts of the world. In order to make specific decisions for each region, companies will need tremendous amounts of data and data analytics. This is typically a situation in which the power of big data and AI can add value. With the right AI-based optimization engines, for example, companies will be able to see much more clearly which scenarios will lead to good business decisions—decisions that will be resilient even as regional market conditions change.
What to Expect After COVID-19
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Despite the fact that this pandemic has put the brakes on economies around the world, we believe the following trends will continue, but at a faster pace. First, companies will build redundant, increasingly reliable operations to reduce vulnerability in a volatile market. And they will use redundancy to secure supply chains and optimize costs, and use automation to minimize costs and increase reliability, such as through the use of predictive maintenance. Second, remote economies will increase. This includes increased use of connected services and things, much less traditional retail and more direct-to-consumer sales. AI will increase companies’ ability to conduct highly targeted marketing campaigns.
Country specific responses to the pandemic have highlighted the fact that, increasingly, different parts of the world may continue to act in more local, less global ways. Companies can adapt to this change by increasing personalization, a trend that has been accelerating in the past decade. AI has changed the rules of the game with the development of personalization engines capable of creating offers based on individual buying habits, seasonal demand, geographic location, and countless other parameters.
At the same time, companies will come to rely increasingly on AI-driven innovation as the physical testing of products and services by thousands of consumers is replaced by data-driven models and automated tests. This approach is currently being followed for beauty products, food products and drugs.
According to a recent BCG/MIT survey, only 20% of companies around the world use AI at scale. Given AI’s ability to increase redundancy and reliability, this relatively small group of companies are poised to become market leaders in a post-COVID world. If the remaining 80% hope to lead the market as well, they must dig deep and make significant new investments in AI. Clearly, the global economy is experiencing a situation in which any degree of investment may seem a luxury. Nevertheless, investing in AI is the best things companies can do to survive—and perhaps even flourish—in the near future.
Copyright by Sylvain Duranton
Global Leader, BCG Gamma
“Clearly, the global economy is experiencing a situation in which any degree of investment may seem a luxury. Nevertheless, investing in AI is the best things companies can do to survive—and perhaps even flourish—in the near future.” Sylvain Duranton
Remarks from SwissCognitive: Sylvain Duranton was one of the global speakers at SwissCognitive’s first Virtual AI Conference, co-organised with AI Capital on 31st March and 1st April. The conference gave an intensive overview from various industry-perspectives on how AI helps us to overcome challenges caused by the Coronavirus, and how this technology is going to provide us with new ways of processes and functioning after the crisis. The Virtual AI Conference was attended by 500 attendees, calling-in from 20 countries, and its content was spread through SwissCognitive’s social media channels, reaching 400k followers in the AI eco-system.