Competitive advantage of AI for small and medium-sized enterprises

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(This article is part of a Series on Artificial Intelligence (for board members and senior executives.)

Any company that isn't a market leader needs every edge and technology advantage they can get. Artificial intelligence (AI) has emerged as a transformative force for small companies. AI offers the promise of a competitive edge, leveling the playing field for those looking to compete against industry giants. This article explores how any company with an agile and innovative spirit can use AI to redefine the rules of engagement, turning challenges into unprecedented opportunities for growth and innovation.

For example, many companies use AI to personalize marketing and provide a highly customized customer experience. Small companies can compete with global brands by delivering a personalized message that makes customers feel special. Any company writing software can build new applications faster and more efficiently with AI code generators. AI is also leveling the playing field in online marketing.helping small companies identify social media platforms and key influencers.

AI Solutions in Action: Success Stories for Small Businesses

AI has become a catalyst for innovation that gives small companies a competitive edge. Let's look at some use cases that illustrate how AI is giving small companies a competitive edge:

  • Bella SanteA small group of medspas, consisting of three locations in Massachusetts, uses AI to modernize its customer service. The company was using a call center to handle incoming calls, but was understaffed to handle the volume of calls. Instead of adding staff, Bella Sante adopted an AI-powered chatbot to answer customer queries and route incoming calls. Using machine learning, the chatbot has become sophisticated enough to handle 75% of customer calls, routing 25% of incoming calls to human operators.
  • Forvia is an automotive supplier that strives to bring new technology products to the industry. The company was formed in 2022 by the merger of the French manufacturer of auto interiors and zero-emission systems, and Hella, a supplier of lighting and vehicle electronics. The company needed new talent to transition from traditional manufacturing to automotive technology, which meant revamping its hiring strategy (see Six Ways to Use AI (Including Chat GPT) to Address the Labor Shortage in 2024). By adopting an AI-powered recruiting system, Forvia has increased website applicant pool by 3.5 times, attracted 90,000 job applicants, and increased sourcing productivity by 30%.
  • Romark Logistics Supply chain uses AI to gain competitive advantage in the industry. Romark is a third-party logistics provider serving food, pharmaceutical and retail customers. As a company continues to grow, it must maintain a high level of inventory accuracy. With labor shortages continuing, Romark invested in AI-powered drones for inventory tracking. Drones circle the warehouse, scan barcodes and compare the information with warehouse management system software to track inventory.
  • Danone Group Uses AI analytics to manage channel and retail inventories, including AI-powered demand modeling. AI systems helped the company reduce forecasting errors by 20%, reduce lost sales by 30%, reduce product obsolescence by 30% and reduce the workload of demand planners by 50%. Is.
  • Hungryroot Uses AI for predictive analytics to provide customers with vegan, gluten-free, and nutritional meals. The company uses AI to analyze past orders and shopping behavior as well as user input, creating a list of food recommendations based on past preferences.

These are just a few examples of how AI is being applied to give small companies a competitive advantage. Any company can use AI to improve operations, enhance customer experience, create new products, or increase revenue (see Increase revenue with AI).

The impact of AI on business

To maintain your competitive advantage, keep an eye on emerging AI trends and consider their potential impact on your AI strategies. Here are a few trends to watch for:

  • Generative AI – Companies increasingly use generative AI for many things, including research to generate insights and answer questions. Generative AI powers content creation, can mine unstructured data for insights, respond to RFPs, translate marketing materials for international markets, review customer contracts for regulatory compliance, Useful for etc. Generative AI – CEO's top practices are driving value.).
  • Automation – Autonomous business systems will impact every industry, from self-driving cars to self-checkout at the grocery store. Automation promises to increase productivity. McKinsey estimates that 30% of activities in 60% of occupations could be automated, so everyone from factory workers to C-suite executives could be expected to become more productive working alongside machines. Is.
  • Cyber ​​security – According to IBM's Cost of Data Breach report, the average cost of a data breach in 2023 was $4.45 million. The report also states that companies using AI-powered security save an average of $1.76 million annually compared to those organizations. AI security tools are ideal for analyzing behavior patterns, predicting the consequences of unusual behavior and keeping hackers out of corporate networks.
  • Analytics – Sifting through the growing tsunami of data for meaningful insights is increasingly difficult. AI-powered analytics solves this problem. AI can quickly sift through vast data, looking for relevant information to help grow your business (see 5 Ways AI Can Help Increase Your Revenue). CEOs and executives are increasingly relying on AI analytics to make data-driven decisions.

Successfully implementing AI strategies

Regardless of the potential applications of AI for small businesses, AI initiatives must be closely aligned with business goals and customer needs. Identify areas in the organization that could benefit from AI, such as marketing and customer support. In assessing potential AI opportunities, define clear objectives and identify KPIs to measure success. Also, consider deploying pilot projects to see how well AI fits within the organization and identify potential issues around integration, interoperability, security, etc.

Sustaining competitive advantage through continuous AI innovation

Companies that get the most out of AI must be adaptable and open to continuous AI innovation. Consider creating a Center of Excellence (CoE) to explore new AI applications. Encourage managers and staff to embrace AI and propose new ways to improve operations and encourage company stakeholders to collaborate on new AI initiatives.

If your organization is going to compete with larger companies, artificial intelligence must be an ongoing part of your strategic roadmap. Be proactive and use AI to your advantage. Develop a sustainable strategy that combines AI technology, strategy and innovation to give your company the unfair advantage it deserves to outperform its better-funded competitors.

If you care about how AI determines the winners and losers in business, how you can leverage AI to benefit your organization, and how you can manage AI risk, Contact me on this number. I write and speak about how senior executives, board members, and other business leaders can effectively use AI. You can click to read past articles and get notified about new articles. “Follow” button here.

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