Artificial Intelligence and Business Strategy
In collaboration withBCG
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Scenarios describing the potential for artificial intelligence (AI) seem to gravitate toward hyperbole. In wonderful scenarios, AI enables nirvanas of instant optimal processes and prescient humanoids. In doomsday scenarios, algorithms go rogue and humans are superfluous, at best, and, at worst, subservient to the new silicon masters.
However, both of these scenarios require a sophistication that, at least right now, seems far away. Our recent research indicates that most organizations are still in the early stages of AI implementation and nowhere near either of these outcomes.
A more imminent reality is that AI is agnostic and can benefit both good and bad processes. As such, a less dramatic but perhaps more insidious risk than the doomsday scenario is that AI gives new life to clunky or otherwise poorly conceived processes.
Consider faxes in the health care industry. Despite being obsolete in most places, “like the floppy disk or the CD player,” faxes are still a fundamental part of the medical infrastructure. Because of the long history and strong network effects, the medical industry still sends a staggering number of faxes every day.
Invented in the 1840s, well before the telephone, faxes illustrate how difficult it is to change an entrenched process.
Despite widespread use, sending faxes is, for the most part, a horrific way to transfer information. The process is typically (1) extracting and printing information from a computer system, (2) scanning it into an image, and (3) transmitting it somewhere else via fax. The burden rests squarely on the recipient to interpret a pixelated approximation of the original information. Structured digital information has become unstructured. With every fax, a data scientist gets their wings ripped off.
The conversion from structured information to unstructured and back is a waste. No one wins — a patient may be waiting for approval, medical staff may lack information, errors can creep in, etc. At a minimum, time and effort are needlessly spent.
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Advances in AI and image processing are making significant progress in reducing this problem. Organizations can use AI to recognize images, automate the interpretation, and restructure the information. Certainly, this is a welcome improvement. No one gets competitive advantage or business value from wasted time spent restructuring information.
However, this improved image processing is a pyrrhic victory.