Big Idea: Artificial Intelligence and Business Strategy

How AI Will Define New Industries

While it’s likely AI will create new jobs, its more immediate (and lasting) potential is in helping advance the science that underlies new industries.

David Kiron and Gregory Unruh Reading Time: 6 min 

Topics

Artificial Intelligence and Business Strategy

The Artificial Intelligence and Business Strategy initiative explores the growing use of artificial intelligence in the business landscape. The exploration looks specifically at how AI is affecting the development and execution of strategy in organizations.

In collaboration with

BCG
More in this series
Artificial Intelligence Bots Competition

If you were a brilliant artificial intelligence (AI) expert just graduating from a doctoral program at a prestigious school, would you pursue that startup you’ve been thinking about, join a company that wants to build cutting-edge AI applications, or use your expertise to help scientists in other fields conduct basic research?

Admittedly, this is a bit of a silly question. The opportunities presented by the first two options are outrageous, and growing more outrageous by the day. With more than 2,000 startups absorbing much of the top-tier AI talent — estimated by some to be just 10,000 individuals worldwide — the combination of great scarcity and even greater demand for talent is driving salaries through industry roofs. Some businesses offer seven-figure compensation packages for elite AI talent.

Plus, it’s never been a better time to launch an AI startup. Investment in AI-focused ventures has grown 1,800% in just six years, from $282 million in 2011 to more than $5 billion in 2016, according to CB Insights.

The sanity behind these numbers comes, in part, from the fact that companies expect AI to allow them to move into new business segments or to maintain their competitive advantage in their industry. Driving this expectation is the idea that AI will enable them to dramatically improve the efficiency or effectiveness of their operations and offerings.

Despite the lucrative financial opportunities in these first two career paths, the alternative choice — to collaborate with scientists in other fields — may be more pivotal to how nations and businesses compete over the long term.

Conventional wisdom, based on no small amount of research, holds that AI-driven automation will create technological unemployment in a variety of sectors in the next five to 10 years. Optimists believe that this won’t be a big deal for the labor sector as a whole because corporate adoption of AI (and other digital trends) will create new industries and new job categories that will replace whatever AI-driven losses occur in labor sectors of the current economy. But there are two open questions about this hypothesis:

  1. How will these new industries be created?
  2. How soon will they come, if they come at all?

The creation of new industries frequently depends on dramatic advances in science and technology that can take decades to move from discovery to commercial application to new industry.

Topics

Artificial Intelligence and Business Strategy

The Artificial Intelligence and Business Strategy initiative explores the growing use of artificial intelligence in the business landscape. The exploration looks specifically at how AI is affecting the development and execution of strategy in organizations.

In collaboration with

BCG
More in this series

About the Authors

David Kiron is executive editor of MIT Sloan Management Review. He tweets @davidkiron1. Gregory Unruh is the Arison Group Endowed Professor at George Mason University in Fairfax, Virginia, and MIT Sloan Management Review’s guest editor for the Sustainability Big Ideas Initiative. He can be reached at unruh@mit.edu or on Twitter @gregoryunruh.

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Comments (3)
Nik Zafri Abdul Majid
Am going to speak on more psychological part of AI and impact on the senior generation.

There have been many skeptics when it comes to AI and creation of new job opportunities.  

No doubt that AI; using a more creative approach; will benefit many people especially the younger generation. 

To some "older" generation, AI seem to create more fear rather than "good news" - fear of being left behind, the fear of being terminated and fear of having to learn something more advanced etc. 

Despite these may not be accurate at some point, the need to  be more creative and most importantly; sending the right information to the prevailing workforce especially those who have served for too many years.

Again, as I speak now, with all due respect; I still see some corporations and manufacturers are using AI as an easy path to "sack" more workers under the pretext of "cutting cost".

Perhaps a more friendlier way to approach this delicate matter is required. For example, designing the AI elements to be more user-friendly which comes together with induction, reassignment or review of current job description to match the AI requirements, transfer of staff to branches or other units/departments etc. 

After all, spending on AI is always linked to profitable corporations which definitely  have branches nation or worldwide.

Create a blue rather than red ocean in the context of AI.

If this issue is not properly addressed, then the wrong perspective will go on forever. It will not be in line with the technological advancement era.

Just my 2 cents worth.

Nik Zafri Abdul Majid
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Javier Acosta
Interesting article.  Which ones will be the required skill sets required to be successful in such new industries?  It will be wise to anticipate now.
Winfried Shulz
AI is revolutionising industries. There was the story I read about Goldman Sachs. They replaced a room of traders with an AI algorithm and 2 programmers. I really like this site for AI. Lots of interesting content https://www.sp-bx.com/tag/artificial-intelligence/