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3 Reasons Why Executives Should Keep an Eye on Machine Intelligence

Creating headlines in the business press, these companies are now pushing the boundaries of machine intelligence, in the form of intelligent software. In their strategic intent to create value from their customer data, they are investing heavily in technologies for machine learning - an area of R&D that has been shunned by investors since the 80s.

As a result, the innovations now being produced may prove to be relevant for executives all over the world. New technological breakthroughs will lead to a wave of business opportunities, and disruption. After learning more about intelligent software, I have translated my observations into 3 reasons why I believe machine intelligence should be in the corner of every executive's eye.

1. Intelligent software is now challenging multiple industries at once

After decades of exponential technological advances, intelligent software is finally starting to behave like the General Purpose Technology it was predicted to be in the 60s. A single piece of software can now be used for multiple purposes, and in multiple industries, through its ability to learn from data.

A good example is IBM's digital brain called Watson. Watson is now, simultaneously, supporting investment decisions in the Finance sector, advising on medical symptoms in the Health Care industry, and providing customer service for the US Army. For an executive, this means that change may come very quickly, and from a previously unrecognized source of competition.

2. Intelligent software challenges business models

Companies with business models based on increasingly intelligent software are already challenging well established "red oceans", for example by offering supreme cost advantages or providing services of superior quality, accuracy or speed, as seen in the "robotization" of Wall Street.

The use of smart software also opens up opportunities for a whole range of "blue oceans", in the form of innovative business models. Depending on its use, machine intelligence has the power to influence a company's value offerings, key resources, cost structure, customer interaction, strategic partnerships and key decision making processes - considerations that all belong on a C-level.

3. Intelligent software gives economies of scale a new dimension

Unlike traditional technologies and man-powered labour, intelligent software and other digital technologies scale like a dream (see "The Second Machine Age" by Erik Brynjolfsson and Andrew McAfee). Answering a customer call, or performing an expert analysis, usually means that additional manpower must be added - to an additional cost. With intelligent software, the marginal cost of replicating a digital action or "resource" is close to zero.

For an executive, this means that benefits of scale can be pursued also in interaction- and knowledge intensive activities and industries. This is a sharp contrast to the way interaction- and knowledge based activities have behaved in the past, creating a new range of strategic opportunities.

The topic has caught the attention of management consulting firms

A telltale sign that machine intelligence has regained much of its previously lost credibility is the fact that management consulting brands are publishing articles on the topic. McKinsey recently published a story called "Will Robotics Replace Executives?", while Capgemini Consulting published an interview concerning intelligent machines in it's Digital Review No 6: "Surviving and Thriving in an Age of Digital".

This article was originally posted on LinkedIn
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