AI's Strategic Risks: How Data Integration is Reshaping Competitive Dynamics
As AI unlocks new ways to integrate data, businesses across sectors are shifting focus from operational risks to competitive opportunities, creating new business models and strategies...
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1. My Interesting Conversations
I recently gave a speech to a chapter of the National Assoc. of Corporate Directors (NACD) focusing on the "AI's Strategic Risks." Boards tend to focus heavily on core reputational, financial, fraud, and other downside risks that are more operational, but I wanted to raise the perspective to the risks that the competitive dynamics around your company could be reshaped by AI.
Building on my recent post about how it is becoming easier to integrate data using AI tools, there is a growing number of companies creating major new businesses that attack established competitors in sectors they have not pursued before, because of the new services they can offer as previously siloed information comes together.
The most visible of these is the rise of Retail Digital Media Networks. Amazon has long offered an array of ways marketers can use its assets to target customers on and off Amazon properties. Now this has extended to Home Depot, Target, CVS, and of course Walmart. Home Depot, who named its network "Orange Apron Media" already has over 300 employees working in the business. But the biggest breakthrough is that Amazon is now offering a platform for any size retailer to create their own network using whatever data they keep in Amazon Cloud.
Retail media networks have NOT been the core businesses of retailers. Beyond the AI, these companies are stepping back and planning new business structures to go after these markets. New roles, new management processes, and new pricing structures. And they are going after the media dollars being spent elsewhere, which should have boards of established media companies nervous.
Another example is in the B2B space. A distributor in the construction sector saw that they had access to tons of data on building products, who used them, for what types of projects, what they cost, and also, what the ongoing maintenance costs were, since they sold service contracts. Few builders have the same scale of data, so the distributor is now selling itself as an upstream partner to architects and contractors, helping them plan good/better/best solutions for their projects. Again, this requires new tech capabilities, different sales and service skills from the distributor, questions about how to price the services, and how much to invest to build the business. With other competitive distributors focused mostly on efficiency, this one realized that, while they did need to tap AI to streamline their operations, a better way to compete would be to move upstream for more value-added services.
A last example is in financial services. There, as AI brings together customer data across products, and new models can drive finely-tuned, cross-channel next-best-action messaging, wars are escalating to grow the share of wallet from one's existing customers through much smarter cross-sell. This has always been part of the banking and investment management playbook, but AI is now unlocking new levels of effectiveness that will leave laggards behind. In addition, leaders realize that it is not just about the AI, but also about building a business model that uses decisioning tools (and data from simply asking the customer questions) to relentlessly test all kinds of approaches to engaging their customers. Agile pods focused on onboarding new customers, or cross-selling customers who set off a trigger that are always coming up with new ideas, using AI tools to get tests out fast, and optimizing their approaches as they learn more. It is a business model as much as an AI question.
So my bottom line is that the integration of data that AI can unlock is a powerful new fuel for growth, not just efficiency. BUT it takes thinking through the new business models involved, the operations behind it, and the roles that change. Even how P&L's work.
In doing so, AI will create new opportunities for those that see the bigger picture. How are you mobilizing to tap the growth potential from integrating more of your data using AI?
2. Four Things To Share
ICYMI – Over the next five years, we believe there will be $2 trillion in incremental growth from personalization. Check out my new book with Boston Consulting Group (BCG)’s Mark Abraham, “Personalized: Customer Strategy in the Age of AI” to learn more. Buy Here!
AI agents can help B2B organizations by acting as a personalized concierge that understands, guides, and supports buyers and customers across delivery channels. Great insights via Forbes: Read here.
When telling a brand’s story, focus on authenticity – understanding the target audience, and the right channels. Follow these steps from Grace Keith Rodriguez in Fast Company: Read here.
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3. Insights Video: Driving Growth & Building Competitive Moats
4. Join The Personalize Academy For Free!
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You can reach out to me directly on the detail below, and I look forward to how we can learn together!
Thanks,
Dave
Contact Me:
I work with a range of companies, from large $5+bn enterprises who are trying to grasp the opportunities that AI offers, to marketing businesses who are bringing exciting innovative solutions to market.
You can reach me here:
LinkedIn: https://www.linkedin.com/in/daveedelman
Website: https://www.edelmanadvisoryservices.com/
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