Smarter by the Minute: The Rapid Rise of a Bespoke Economy (Pt 3)
Executives are doubling (and tripling) down on investments in AI and IoT, recognizing technology’s capacity to transform their companies from the inside out.
In Part Two of this series, I looked at how market leaders are leveraging AI and smart products to deliver personalized customer experiences, rethink their workforce strategies, and prepare for new business models. As their comfort level and sophistication grows, early adopters continue to gain critical market advantage. Executives are doubling (and tripling) down on investments in AI and IoT, recognizing technology’s capacity to transform their companies from the inside out. With an eye toward strategic growth, market leaders can leverage disruption at scale within their operations and revolutionize R&D to anticipate and meet consumer demands before competitors even know they exist.
The Power of Exponential Disruption
Just as IoT and AI can deliver customized experiences for consumers, they are also able to solve myriad problems for businesses – with dramatically multiplied effects. When an individual consumer uses connected devices to control her home heating and lighting costs, she can save hundreds of dollars each year. When a global manufacturer leverages AI analysis against data generated by thousands of IoT devices across hundreds of its facilities, the cost savings are measured in millions. The data captured by IoT and analyzed by AI can manage inventory, automate work processes, perform quality checks, answer customer questions in real time, and make decisions that drive efficiencies across virtually any scenario, tailored to the precise needs of the moment.
Supply chain management is ripe for this type of reform. While retailers like Target and Walmart already have robots roaming the aisles using visual analytics to manage inventory, there is tremendous potential for intelligent supply chains to not only track inventory in real-time, but to use AI’s predictive powers to drive real agility. Manufacturing organizations have a range of opportunities—through AI-linked computer vision or AI-chipped smart devices- to manage and track the movement of goods in a way that can predict, and even prevent, events before they happen. For example, using connected device data, AI can tell that a specific part on a product is going to fail in two weeks, notify the supply chain in advance of the part dying, and allow ample time to stock and ship the item rather than forcing a last-minute order that puts pressure on inventory levels, incurs rush fees, and disrupts operations.
New Connections Drive New Revenue Streams
New approaches to using IoT and AI within their organizations belie a bigger vision for market leaders. While early cost savings are a tried and true way of securing support for further investment, leaders have their sights set on something more ambitious: driving value and creating new revenue streams. 72% of AI leaders expect revenue increases—not cost-cutting—to be the main outcome of IoT and AI adoption in the next five years, and it’s a goal shared by all but the most passive organizations. While customers are enjoying the benefits of bespoke experiences, they aren’t the only winner in this tech equation: personalization is profitable for brands, and the bottom-line benefits of AI and IoT can be significant. 6 in 10 executives credit IoT with opening new lines of business, and 9 in 10 believe AI will create new business growth in the next five years.
While early cost savings are a tried and true way of securing support for further investment, leaders have their sights set on something more ambitious: driving value and creating new revenue streams.Jason Vazzano, CEO and Co-Founder, Vectorform
At the heart of this growth is the ability to harness the power of customer-generated data. With billions of gigabytes of data generated each day, connected brands already have an unprecedented volume of real-time consumer and product information at their disposal. AI and its deep learning capabilities are enabling these brands to not just amass data but analyze it, find meaningful patterns, and apply them to transform R&D and accelerate product development.
The Evolution of R&D
By providing real-time consumer feedback that validates (or disproves) ideas quickly and decisively, IoT and AI essentially build R&D directly into the product development process. AI can sort through troves of data in milliseconds, serving as a focus group of 10,000,000 and making smarter, more reliable decisions than a traditional R&D team alone ever could. This enables brands to cultivate not only new revenue streams, but also deeper relationships with today’s increasingly fickle consumers. Customers who share their experiences can become a meaningful part of the product development process and play a role in building the brands they love, creating a stronger affinity and a firmer connection than ever. That intimacy is valuable: customers who feel an emotional connection to a brand spend twice as much as customers who consider themselves merely “satisfied” with a brand, and go on to have a 306% higher lifetime value, stay with a brand for an average of 5.1 years vs. 3.4 years, and recommend brands at a much higher rate (71% vs. 45%).
To achieve this level of personalization and agility, organizations need to rethink and retool their product research and development approach, moving from a stagnant, siloed approach to a dynamic, inline model that generates AI-powered insights. These insights will better enable organizations to respond, in-real time, to consumer wants and desires – even to the level of anticipating customer needs before they happen, and designing new revenue streams tailored to meet those needs.
Pursuing the Bigger Promise
Autonomous cars, new health screening products, identity protection services, smart lightbulbs – these represent just a fraction of new revenue streams powered by IoT and AI. The possibilities span all industries. As wind and solar technology improvements accelerate, energy companies might take a serious look at prioritizing distribution over generation, including behind-the-meter services such as smart home enablement. Auto companies racing toward the goal of total electrification and autonomous transport might begin viewing self-driving vehicles as the gateway to a new consumer experience where extreme personalization can be monetized.
With all their inherent power, IoT and AI are poised to grow stronger still when paired with other technologies that join the evolution. 5G promises to be a key enabler of smart digital ecosystems, driving high-speed connectivity within factories and across multiple locations. Likewise, as the need to safely store connected data becomes more critical, AI can be paired with blockchain to leverage its cryptography and ensure a highly secure filing system for storing all the sensitive consumer data that unlocks value for brands and customers alike.
Ultimately, the full promise of exponential technology is not about connecting devices, compiling data, or streamlining organizations. It’s about connecting consumers to your brand, forming relationships that provide new levels of service at scale to your customer base, and designing and serving up bespoke experiences that have the power to meet unspoken needs. The organizations that see this potential and act on it with courage, speed, and intent will be the leaders as the future unfolds.
Are you ready to leverage IoT and AI to disrupt your company and create customer experiences that win in the market? That’s the question Vectorform is answering with clients like Jeep, DTE Energy, SharkNinja, and more. If you’d like to be part of the conversation, connect with me on LinkedIn or contact our team of experts.
Interested in learning more? Let’s start a conversation.