Blog, Pricing, Uncategorized

How Business Benefits from Artifical Intelligence

By Mitch Lee
July 27, 2017

A tremendous amount of material is being written about artificial intelligence (AI) and machine learning (ML) – a great set of articles was just published in Harvard Business Review.  While the technical definition of ML – live in the field – may be strictly limited to IBM’s Watson reading x-rays, and variations of Google’s DeepMind playing Go, your ability to apply AI to your business processes is real, and happening today.

Stripped to its essence, AI is a tool for leveraging what would otherwise be manual work.  Think about the industrial revolution – before the advent of the steam engine, work products varied widely in quality, consistency, and certainly availability.  A machine made in one area had no chance of being employed somewhere else – unless the person that made it traveled with the machine and continued that craftsman-like care necessary for that machine to keep producing over the long haul. Think of your own experience: all those instances of spread sheet models made by someone very, very smart.  But that person moved on, and nobody else can make it work.  All that craftsmanship and embedded value withers away…

But with power (steam replacing muscle), and standardization (formal steps replacing free form starts), manual steps were mechanized: made routine for a machine to perform.  Some decried the demise of craftsmanship, but in reality, the craftsman was unburdened, and freed to think about what needed to happen next. To be more creative.

AI presents the very same opportunity for businesses today.  Those that recognize the manual steps within business processes, ahead of their competition, will gain tremendous advantage.

They will look to replace manual brain cycles for the power and speed of computer cycles, and move business rules (some written, some simply carried around in peoples’ heads) into software. They will free up time better spent creating; they will not let perfect be the enemy of the good.

Artificial Intelligence

Start with Price

One area of your business where you already have data and robust tools to mechanize, automate, and free up creativity for business problems is pricing and margin management. From opportunity to revenue, there are plenty of steps that can and should be optimized.

Think about setting price in the same way you’ve worked to improve the way you produce the things you sell, be that things or services. You are not (hopefully) crafting every single action as if it were a one-off – you’ve got processes that are routine. Support those processes – make them routine, and available for re-use – with the help of a tool.

These tools should be targeted to work well for 80% of the situations you encounter which frees up time to work the other 20% for creativity and innovation. Remember, trying to build a first-time tool that that covers every situation will be an endless project, not to mention a bottomless pit of effort and investment.

Start by collecting your rules, and put them in “code” that makes it accessible and transparent to everyone.  For example, do you have a sign-off levels for contracts in a delegation of authority document?  Is it in a static document that everyone has to look up each time to ensure no changes are needed? How might you take that manual step out of your quoting/contracting process and, based on your data, make it a better fit for all involved?

The good news: getting started with AI, or ML, or whatever term you want to use doesn’t require a subscription to Watson or that you hire a team of engineers. Instead, put some thought into your business processes and how they might be improved with automation.

Kudos to those who have already automated the step of integrating approval requirements to their commercial processes.  And for those that haven’t: you’re behind the curve.

  • AI , artificial intelligence , machine learning , ML , pricing

    Mitch Lee

    Mitch is a Profit Evangelist at Vendavo with 25+ years of experience in the technical, operational, marketing, and commercial arenas of the process industry. Prior to Vendavo, Mitch was with BASF and Orica in product marketing and business management, driving operational optimization, pricing excellence, and margin improvement, as well as personal engagement in high value sales negotiations. Mitch also has deep experience with raw materials supplier portfolio management having negotiated large scale and long-term agreements with global suppliers.