During the last decade, we’ve seen the emergence of many digital systems and new technologies such as the Internet of Things and cloud computing. At the same time, we are witnessing that economic growth is inevitably slowing down in most developed countries, for instance, in the US. Quite a paradox, isn’t it?
Actually, such a situation is quite normal. A century between 1870 and 1970 was a period of unprecedented economic growth due to monumental inventions such as the electric light bulb, the steamship, the internal-combustion engine, telegraph, assembly line, penicillin and more. These remarkable breakthroughs not only influenced manufacturing and economy, but also significantly improved living standards for millions of people.
At that time, the world consistently experienced progress in terms of productivity that was propelled by two main factors — capital and labor. The traditional model of economic growth looks like this: if you increase capital investments or stock of labor, or use them more efficiently, the productivity of your company increases and you get higher revenue. But capital and labor are physically limited factors that can’t grow endlessly. Technological innovations also boost business and are captured by total factor productivity (TFP). But they don’t create new workforces and can’t drastically change the world the way “great inventions” did.
At present, this model’s efficiency has slowed down due to:
- Lack of revolutionary inventions (modern technologies can’t generate the level of prosperity the previous generations enjoyed)
- Unfavorable demographic trends (the population getting older)
As a result, there are stagnant or even declining economies around the globe:
What Is the Impact of Artificial Intelligence on Industry?
Many experts believe that innovations similar to “great inventions” will never occur. Still, artificial intelligence can fight for the title of a great invention. Many anticipate AI to become a new factor of production that will offer new sources of value and growth. The recent research by Accenture suggests that by 2035, AI has the potential to boost US production on average by 38%.
Artificial intelligence, unlike other innovations, can have a transformational impact on the industry. The main reason is that this is not a single technology, but a set of technologies that can augment and extend human capabilities. It comprises deep and machine learning, speech recognition and generation, image and video analysis, decision management, virtual assistants and more. Physical components include robots and intelligent machines.
Since artificial intelligence combines labor and capital factors, it can be named a labor-capital hybrid. It possesses the power to increase the corporate profitability of any business. Integrated AI technologies are able to sense, comprehend, act, learn, adapt and evolve; that’s why they have major advantages over human labor and traditional capital.
|Perform mental and physical labor tasks at greater scale and speed, sometimes beyond human capabilities||Can improve over time due to self-learning capabilities (as opposed to traditional capital, e.g. equipment or buildings)|
How AI Increases Industry Growth: Statistics
We’ve found out that AI can become the new leverage on the global economy. Now, let’s see how AI boosts industry profits in figures.
Accenture experts investigated 16 industries. Their research findings show that AI could boost economic value by $14 trillion across these industries in terms of gross value added (GVA). The greatest impact will be on education, and accommodation and food services — 84% and 74% respectively. In retail, healthcare and agriculture AI boost average profitability rates may reach more than 50%. Other industries will also see significant growth. The results of the predicted impact of AI in your industry are summarized in the chart below.
As you see, some industries will experience much greater impact from artificial intelligence than others. The reason is that AI boosts industry profits and innovations in three ways.
- Intelligent automation — implementation of tools, techniques and strategies to automate processes and eliminate the need for labor.
- Labor and capital augmentation — implementation of techniques that work alongside human workers, complement their work and improve their skills.
- Innovation diffusion — a strategy when AI innovations in one area penetrate other industries and influence them as well.
Thus, different industries have different potential to be affected by AI at the outset. For example, education, retail and financial services are labor-intensive sectors, so they will benefit from the additional workforce created by intelligent automation and labor augmentation.
For capital-intensive sectors such as transportation or manufacturing, AI will provide intelligent machines to eliminate faulty or useless equipment.
AI statistics for 2018:
- 15% of enterprises already use AI, while 31% are expected to add it in the coming year.
- The number of jobs dealing with AI has increased by 450% since 2013.
- 47% of organizations with advanced digital practices have a defined AI strategy.
- The compound annual growth rate for global spending on AI will be 50.1%, reaching $57.6 billion by 2021.
- 38% of consumers believe that AI will improve customer service.
How to Prepare for an AI Future
To make the impact of AI on industry profit considerable, any company should develop the right plan for intelligent transformation. With the introduction of artificial intelligence into the industrial processes, the main change will concern the way people and machines work together. Some jobs will disappear, new ones will be created, and the whole paradigm of working processes will undergo changes. Technology will rise to the level of humans and will cooperate with people.
In this regard, business leaders should follow three main steps to prepare for the AI future.
- Reorganize the HR branch — HR specialists should learn to interact both with human and virtual workers, manage them and coordinate their performance.
- Learn with machines — people should not stop learning; on the contrary, they should develop their thinking and creative capabilities in order to teach the machines. Remember, programs act on the basis of scenarios defined by people and are not capable of creating new cases themselves.
- Personalize services — customer experience is moving toward personalization, as AI offers a deeper understanding of customer needs and desires. Create your business to the idea of every user, and you will enhance the effectiveness and quality of your product.
To Sum Up
AI helps increase innovation and provides considerable opportunities for numerous industries. Businesses that decide to implement artificial intelligence will significantly increase their revenues in the coming years, as well as see unprecedented growth and sustainability.
If you realize the opportunity for your company, start acting now to develop the right strategies for intelligent transformation. SaM Solutions provides various services for small and large companies, from CRM creation to mobile app development with machine learning and other intelligent techniques. Please contact our specialists if you have any questions. Your AI future begins now!