Author Name : Aahana Rathi
In the olden days, when it came to taking an important business decision one would gather round a table with a stack of reports, sales figures and market research. The managers would consider what had already happened, talk over their ideas about what might happen in the future and then arrive at a decision by relying on their experience and instinct. Nowadays, however, this process is changing quickly. Businesses now have another kind of intelligence to draw on: Artificial Intelligence.
AI has long since gone beyond the realm of science fiction and is now being applied to all kinds of business decisions, such as deciding which products to stock, forecasting customer behavior, and spotting financial risks. The fact that this change is so significant is not merely due to the technology itself but rather to the way it is altering the role of information in business.
All businesses generate data; for example, when a customer purchases a product, leaves a review, visits a website or clicks on an advertisement information is created. Although a single piece of this information might not be very significant, patterns can be discovered when millions of such actions are combined together. The difficulty has always been in being able to identify these patterns quickly enough to make use of them. That’s the area in which AI excels.
The AI system is capable of analyzing tremendous amounts of data within a matter of seconds, compared to the amount of time it would take a team of humans to do the same task. The system can analyze current sales against historical data and changes in behavior by customers, which would be undetected without the help of AI. This way, for a company, the data turns into a means of preparing for the future.
Imagine a clothing company deciding how many jackets to make for the winter season. In former times it would have mostly depended on sales from previous years. Nowadays, however, AI can take into account a much wider range of factors, such as current shopping trends, online searches, customer preferences, weather forecasts, and demand in different regions. The company is then able to produce a far more informed estimate rather than just hoping that its prediction is correct.
The same principle is true of marketing. In the past businesses were forced to advertise to large numbers of people and had to hope that the ones who were meant to buy would respond. Nowadays, AI enables a much more detailed understanding of customers since it can detect purchasing patterns and assist companies in working out which products, advertisements, or offers are more likely to attract groups.
One of the reasons why personalized recommendations have become so widespread is that when an online store suggests which appears to be almost exactly what a customer might want, it is usually employing AI to draw on past behavior. For companies, this can result in more effective marketing and, in some cases, better customer relationships.
AI is having a similar effect on the speed of decision-making. In the business world, the ability to react quickly can be of great value since a new trend can appear within days. A competitor may change its strategy overnight, and customer preferences can suddenly shift. It is possible to miss an opportunity if weeks are spent waiting for reports to be prepared and analyzed.
Because AI businesses are able to process information a great deal more quickly and then react to it. Rather than spending most of their time gathering and arranging information, decision-makers can use the time to consider what the information really means. There is, nevertheless, a risk of becoming overly dependent on technology.
Despite the capability of AI to analyze data, recognize patterns, and predict future events, it does not have the capacity to understand the business like a human being. While figures may provide sufficient explanations for customers’ decisions to act in a certain way, it may fail to explain why people suddenly make decisions and why a perfectly designed product fails in reality. Moreover, even the best predictions may be wrong in the light of unusual circumstances.
In addition, there is an issue of responsibility. Should anything go wrong with a recommendation that has been made by AI and caused harm, who will be responsible for the decision? Is it possible for algorithms to be influenced by some sort of prejudice? As organizations collect increasing amounts of information on customers, to what extent are people ready to give up their privacy for the sake of convenience? It becomes obvious that AI should not be used as an alternative to human decision-making.
The most successful businesses are probably those which know how to combine the two. Although AI can deal with information more quickly than any one person could, humans possess creativity, experience, judgement and an understanding of emotions and situations which cannot be simply reduced to figures.
A business leader who makes effective use of AI needn’t blindly accept everything the technology suggests; rather, they can treat it as yet another point of view which is able to show patterns, question existing assumptions and offer possibilities that might not have been thought of before.
This might be the most significant change that AI is making to business; it does not merely provide companies with faster computers or more advanced software but rather alters the way in which decisions are made.
Now the question is not just, “What happened? “Now companies can ask themselves why it happened, what might happen next, and what action they should take about it.
Artificial Intelligence will certainly keep on becoming more powerful, but it is not solely technology that will decide which businesses succeed. The true advantage will be derived from using it responsibly and intelligently. In fact, a machine can give an answer within seconds, but it is up to a human to decide whether that answer is worth pursuing.
