The Secrets of AI Value Creation

4AI‐Centric Elements

By far, the greatest danger of artificial intelligence is that people conclude too early that they understand it.

—Eliezer Yudkowsky (decision theorist and computer scientist, Machine Intelligence Research Institute)

Regardless of the type of value creation discussed in Chapter 3 (process optimisation, augmented or automated decision‐making, or product and service creation), four essential elements must be taken into account when utilising AI to create value: business domain knowledge, algorithmic, data, and stakeholder motivation.

Business Domain Knowledge

In order to unlock the business opportunities unique to the application of AI, it's critical to come to a shared understanding of what constitutes business domain knowledge. As an economist, professor at Harvard Business School, and cofounder of the reputable consulting firm Monitor Group, Michael Porter has been credited with redefining the way in which companies and corporations think and act when it comes to their business strategies and operations. His work on strategic business development has demonstrated the existence of common strategies across industries and highlighted their potential to achieve a competitive advantage.

According to Porter, the goal of every business is to establish a competitive advantage by leveraging our knowledge of the distinctive components of designing, producing, marketing, delivering, and supporting a product or a service (Porter 1985). By fine‐tuning each of these ...