Artificial Intelligence – based business models drive paradigm shift

A contribution by Dr. Andreas Kipp, CEO KF2Strategy GmbH – 31.10.2018

Digitalization and fast paced technologization will bring on far reaching changes, as data is advancing to become a pivotal asset in today’s world. Artificial Intelligence (AI) will be a „game changer“ in business, politics and society in general. While AI is giving rise to new value propositions and business models, organizational structures as we know them will increasingly disappear, thereby shifting paradigms.
In general, Artificial Intelligence describes the algorithmic development of artificial neural networks, which when implemented can impact value chains by
-generating additional value
-enabling higher levels of quality
-driving efficiency gains
There are numerous examples and potential applications for AI-based business models. Identifying suitable areas of application for Artificial Intelligence not only requires business sense and creativity, but also a deep understanding of artificial neural networks and their possibilities and limitations. In that context, it is essential to have the expertise to be able to assess, which network designs, data encoding and data format may be appropriate for a potential solution. This results in high demands on organizations and their processes, when aiming to achieve a successful implementation of an AI-based business model.
Artificial Intelligence is predestined for efficient processing of huge data volumes, („Big Data“) as commonly used in the areas of image and voice recognition, for example. Images and sound patterns can ideally be transformed into binary code, thereby providing a perfect data format for an effective and efficient processing, using a suitable artificial neural network. Image recognition is the key success factor for autonomous steering of any object. Sound pattern recognition is the basis for human and machine communication. Tasks and specific problems with known quantifiable input and output parameters and an underlying correlation can be solved efficiently and with high accuracy using AI. Another major advantage of Artificial Intelligence over other methods is the effective and efficient handling of high dimensional (non-linear) optimization problems with an existing, but unknown solution and a large number of input parameters. This also makes robotics a typical area of application for Artificial Intelligence.
Inadequate development and usage of an artificial neural network can lead to fatal errors and misinterpretations, followed by seemingly good results or findings which can be not only misleading but often false. Nevertheless, innovative business models based on Artificial Intelligence are advancing rapidly, impacting almost every area of our lives. Organizations and processes will be uprooted and paradigms shifted. The benefits of AI are expected to outweigh the potential downsides. However, in order to avoid false application and misuse it is vital to thouroughly assess the advantages and disadvantages in each particular case before applying Artificial Intelligence.
Artificial Intelligence, fueled by increasing computing power, opens up a world of opportunity and will most likely never cease to amaze us.

Keywords:Artificial intelligence, AI , business model, neural network, paradigm, paradigm shift

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