Artificial Intelligence and Business Strategy
In collaboration withBCG
Improving key performance indicators is a clear mandate for most organizations. According to our seventh annual global executive AI survey, 7 out of 10 respondents agree that enhancing KPIs — not just improving performance — is critical to their business success. As one executive notes, “We need to evolve our KPIs all the time so we don’t run our business on legacy metrics.”
A growing number of companies now use AI — in a variety of ways — to accelerate that evolution. “I’m very excited about what machine learning can do in terms of having our senior leaders move away from metrics that look backward to metrics that can look forward,” says Avinash Kaushik, chief strategy officer at digital marketing agency Croud and a former senior director of global strategic analytics at Google.
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Early on at Lyft, engineers designed an algorithm to maximize revenue by matching driver supply and customer demand. “It looked at all the possible combinations of riders and drivers and picked the combination that — based on the ride being requested, where the driver was located, all of the system dynamics — would maximize revenue,” says Elizabeth Stone, former vice president of science at Lyft. Then, as data scientists began testing other objectives, something interesting emerged. One AI solution discovered that optimizing conversion rates — how often a user ordered a ride after opening the app — would, in turn, deliver more ride requests in the future. More ride requests ultimately mean more revenue.
1. S. Ransbotham, S. Khodabandeh, D. Kiron, et al., “Expanding AI’s Impact With Organizational Learning,” MIT Sloan Management Review and Boston Consulting Group, Oct. 20, 2020, https://sloanreview.mit.edu.