This recession is deeper and more sudden than any other we have experienced. While we would all prefer this recession be a short one, that is currently unlikely. A deep and prolonged recession puts tremendous pressure on CEOs and Boards of all but the most fortunate companies.
Let’s assume this recession will last longer than we would like. In this recession, some companies will emerge as winners and many companies will fail. How can AI help? Why would senior executives even think about AI at a time like this? Why invest now?
AI is more important, and more transformative, than any other type of technology because it can improve every day, all by itself. If you apply AI solutions to the right business opportunities, you can emerge as one of the winners out of this recession.
AI can make an important impact in reducing costs, in optimizing financial functions and in finding new revenue streams. Let’s briefly examine each of these.
Some healthcare providers are using AI for registration-related tasks, like ensuring the availability of a patient’s medical history. Removing this function from staff members not only increases their efficiency but greatly reduces errors. Error reduction can be very costly as it can require staffers to re-do work. Oliveai is one company providing solutions in this area.
If AI replaces some employees, such as in customer service, the cost savings can be profound. Not only can an AI chatbot work 24/7, they are less expensive than an employee, and can improve customer satisfaction. Examples include Liveperson, Ibenta and Ada.
AI can reduce costs by focusing on predictive maintenance. Without AI, machine maintenance often uses a mean-time-to-failure analysis to estimate when it is time to replace certain components. With AI, machines can report on what is happening with that specific machine, helping to target components that are likely to fail soon, and only replacing those parts in the machines that require replacement. Companies providing predictive maintenance capabilities include H20, Dataiku and Industlabs.
Optimizing Financial Functions
Certain functions become more important than others in a recession. Imagine you can do real-time demand forecasting, inventory management and accounts receivables using AI. You will be in a position to react extremely quickly to the changing environment. You will be in a position to predict where to allocate your funds as opposed to only reacting to historical data.
What if you are charged with closing retail stores due to the pandemic? Without AI, decisions about which stores to close are likely to be based on individual store performance metrics and demographic analyses.
With AI, you can layer in much more intelligence in your store-closing decisions. For example, Accenture has built AI solutions that predicted what will happen with customers in the region being served by a particular store. Would those customers go to a more conveniently-located competitor, or would they shift their buying patterns to move online or even drive a little farther to stay loyal to that store brand?
AI creates better predictive models, enabling a higher level of confidence in the store-closing decision process.
AI can help manage bad debt decisions. In 2018, bad debt reduced profit margins by as much as 5% in many companies. In recessions, bad debt naturally increases as customers delay payments or go out of business.
AI can evaluate all relevant customer data, including credit rating, industry type, sales rep, payment history, debt burden, hiring and firing practices, and geography, along with many other data points to determine the likelihood of a company not paying their bills. Armed with this information, an AI-based system can make real-time recommendations on payment terms for customers. Solutions include CognitiveScale, HighRadius and YayPay.
Finding New Revenue Streams
AI can model expected consumer behavior to enable real-time promotions. (e.g. a discount on pool toys, high-quality computer screens, etc.)
Starting with historical results from promotions, AI can simulate buyer behavior by layering in new variables such as governmental regulations regarding shelter-in-place, the opening and closing of retail locations and schools, political affiliation, the likelihood of a COVID-19 outbreak and more.
AI can even collect data from the success of one promotion in one geography and conduct lookalike modeling to suggest similar promotions based on real-time results in another location. Solutions include Revtrax, Antuit and Vertica.
In addition to promotions, AI can help increase market share. Frito-Lay is in a constant battle for the consumer snack wallet. This is a fiercely competitive market. All competitors are trying to get the consumer to buy their bag of chips. To win over the consumer they can offer a wide variety of choices, but to be truly innovative, they need AI.
AI can look at vast warehouses of data and identify patterns that humans can’t see. AI can look at demographics, local consumer preferences, age, ethnicity, gender, income profiles, etc. and many other things to find patterns that humans can’t find.
What AI discovered is that in Frisco TX, a town of fewer than 200K citizens, there was a high population of ethnic Indians. The AI knew that ethnic Indians liked curry-flavored food. The AI recommended that they offer a version of Cheetos previously only sold in India, curry-flavored Cheetos called Kurkure.
AI found a micro market and recommended a product for that micromarket, and now Frito-Lay owns that market. The question you want to ask is – how many micro markets are there out there in the broad markets you serve?
Many of the examples in this article represent AI getting smarter and smarter every day. If you’re relying on humans to do the work that AI can do better, and your competitors are getting better and better every day, you will never catch up.
As we develop plans to come out of this recession, prepare for the competitive fight of your life. The winners will be using AI and many companies that do not use AI will discover they have lost the battle.
Contact Glenn Gow the “AI Guy” Today!
Glenn Gow is “The AI Guy”. He is a former CEO and has been a board member of four companies. He is currently a board member and CEO coach. Follow him on LinkedIn or email him at email@example.com.