AI for Business. Process Efficiency vs Competitive Advantage.

Computer doing work

Written By Justin Flitter

The pressure is on. AI is a key strategic objective for businesses across every sector in New Zealand. Leaders are working at pace to understand the potential opportunities and risks, to make the most of this remarkable new tech.

The challenge with consumer driven tech like ChatGPT is the upward pressure on managers and leaders to understand the implications of workers using these tools to get their work done faster.

Business leaders are increasingly faced with a pivotal decision: to adopt AI as a utility for driving efficiency or to leverage it as a strategic asset for developing a competitive edge.

In our work with businesses in New Zealand the use cases often fall into these two buckets.

As we work through their AI Roadmap we prioritise use cases by:

  1. Business Impact
  2. Technical complexity
  3. Time & cost

Business operations is about driving efficiency while front office optimisation is often about creating that competitive edge.

Ultimately, those that move first, make AI a key strategic objective, engage their people in finding the high-impact use cases and deploying a solution have the most to gain in the short and long term. Let’s dive in…

AI as a Utility: Driving Efficiency

The utility approach to AI in business focuses on leveraging AI technologies to enhance operational efficiency and reduce costs. This perspective treats AI as a tool that can be applied to existing processes to make them more efficient without fundamentally altering the business model or strategy. The primary goal here is to achieve incremental improvements in performance and cost savings.

Benefits of AI as a Utility

  1. Operational Efficiency: AI can automate repetitive and time-consuming tasks, allowing employees to focus on more strategic activities. This can lead to significant improvements in productivity and efficiency
  2. Cost Reduction: By automating processes, businesses can reduce the need for manual labor, leading to cost savings. Additionally, AI can optimize resource allocation and supply chain management, further reducing operational costs
  3. Risk Management: AI technologies can help businesses identify and mitigate risks more effectively. For example, AI can enhance fraud detection and improve cybersecurity measures

However, treating AI as a utility comes with its limitations. While it can lead to efficiency gains, it may not provide a sustainable competitive advantage. As AI tools become more widely available, competitors can easily adopt similar technologies, leading to a leveling of the playing field.

AI as a Strategic Asset: Developing a Competitive Edge

In contrast to the utility approach, viewing AI as a strategic asset involves integrating AI into the core of the business strategy. This perspective sees AI not just as a tool for improving efficiency but as a foundational element that can drive innovation, create new business models, and offer unique value propositions.

Benefits of AI as a Strategic Asset

  1. Innovation and New Business Models: AI can enable businesses to explore new opportunities and create innovative products or services. For example, AI can drive personalized customer experiences or enable new forms of content creation
  2. Competitive Differentiation: By developing unique AI capabilities, businesses can differentiate themselves from competitors. This can include proprietary algorithms, custom AI solutions, or novel applications of AI that are difficult for competitors to replicate
  3. Enhanced Decision-Making: AI can provide businesses with deeper insights and predictive analytics, enabling more informed decision-making. This can lead to better strategic planning and a more proactive approach to market changes

Adopting AI as a strategic asset requires a more significant investment in terms of resources and a willingness to experiment and innovate. It also involves a cultural shift within the organization, fostering a mindset that embraces AI-driven change

The decision to treat AI as a utility or as a strategic asset depends on a company’s goals, industry, and competitive landscape. While the utility approach can offer rapid efficiency gains and cost savings, the strategic asset approach can provide a more substantial and sustainable competitive advantage.

The most successful businesses will find a way to balance both approaches, leveraging AI to drive efficiency while also investing in innovative AI capabilities that differentiate them in the market.

Transparency: this article was written by Justin Flitter, enhanced in Perplexity, then edited and reviewed before publishing.

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