(This article is part of a series on Artificial Intelligence for Board Members and Senior Executives.)
Any company that is not a market leader needs every edge and technology advantage they can find. Artificial Intelligence (AI) has emerged as a transformative force for smaller companies. AI offers the promise of competitive superiority, leveling the playing field for those seeking to compete against industry giants. This article explores how any company with agility and an innovative spirit can harness AI to redefine the rules of engagement, turning challenges into unparalleled opportunities for growth and innovation.
For example, many companies use AI to personalize marketing and provide a highly customized customer experience. Smaller companies can compete with global brands by delivering a personalized message that makes customers feel special. Any company writing software can create new applications faster and more efficiently with AI code generators. AI is also leveling the playing field in online marketing, helping smaller companies identify social media platforms and key influencers.
AI Solutions in Action: Success Stories for Smaller Businesses
AI has become a catalyst for innovation that gives smaller companies a competitive edge. Let’s look at some use cases that illustrate how AI is giving smaller companies a competitive edge:
- Bella Sante, a small group of med spas with three locations in Massachusetts, uses AI to modernize its customer service. The company was using a call center to handle incoming calls, but there was insufficient staff to handle the number of calls. Rather than increasing the staff, Bella Sante adopted an AI-powered chatbot to answer customer questions and route incoming calls. Using machine learning, the chatbot has become sophisticated enough to handle 75% of customer calls, routing 25% of incoming calls to human operators.
- Forvia is an automotive supplier striving to bring new technology products to the industry. The company was created in 2022 by merging Faurecia, a French maker of auto interiors and zero-emission systems, and Hella, a lighting and vehicle electronics supplier. The company needed new talent to transition from traditional manufacturing to automotive technology, which meant improving its hiring strategy (see Six Ways To Use AI (including ChatGPT) To Solve the Labor Shortage In 2024). By adopting an AI-powered recruiting system, Forvia has increased the number of website applicants 3.5 times, attracted 90,000 job applicants, and improved sourcing productivity by 30%.
- Romark Logistics uses AI to gain a competitive advantage in the supply chain industry. Romark is a third-party logistics provider serving consumer goods, pharmaceutical, and retail customers. As the company continues to grow, it must maintain a high level of inventory accuracy. With an ongoing labor shortage, Romark invested in AI-powered drones for inventory tracking. Drones circulate through the warehouse, scanning barcodes and comparing the information with the warehouse management system software to track inventory.
- The Danone Group uses AI analytics, including AI-powered demand modeling, to manage channel and retail inventories. The AI systems have helped the company reduce forecasting errors by 20%, reduce lost sales by 30%, reduce product obsolescence by 30%, and reduce the demand planners’ workload by 50%.
- Hungryroot uses AI for predictive analytics to provide vegan, gluten-free, and dietary meals to customers. The company uses AI to analyze past orders and shopping behavior as well as user input, creating a list of meal recommendations based on past preferences.
These are just a few examples of how AI is applied to give smaller companies a competitive advantage. Any company can use AI to improve operations, enhance customer experience, create new products, or increase revenue (See Growing Revenue with AI).
The Impact of AI on Business
To maintain your competitive advantage, keep track of emerging AI trends and consider their potential impact on your AI strategies. Here are a few trends to watch:
- Generative AI – Companies increasingly use generative AI for many things including research to create insights and answer questions. Generative AI powers content creation, can mine unstructured data for insights, is useful for replying to RFPs, translating marketing materials for international markets, reviewing customer agreements for regulatory compliance, etc. (see Generative AI – The Top Ways CEOs Are Driving Value).
- Automation – Autonomous business systems will affect every industry, from self-driven cars to self-checkout at the grocery store. Automation promises to increase productivity. McKinsey estimates that 30% of activities in 60% of occupations can be automated, so expect everyone from factory workers to C-suite executives to become more productive working alongside machines.
- Cybersecurity – According to IBM’s Cost of Data Breach Report, the average cost of a data breach was $4.45 million in 2023. The report also says that companies using AI-driven security saves an average of $1.76 million annually compared to organizations that don’t. AI security tools are ideal for analyzing behavior patterns, predicting outcomes for unusual behavior, and keeping hackers out of corporate networks.
- Analytics – Sifting the growing tsunami of data for meaningful insights becomes increasingly tricky. AI-powered analytics solves the problem. AI can quickly sift through vast data, looking for relevant information to help you grow your business (see 5 Ways AI Can Help Increase Your Revenue). CEOs and executives are increasingly relying on AI analytics to make data-driven decisions.
Successfully Implementing AI Strategies
Regardless of AI’s potential applications for small businesses, AI initiatives must align closely with business goals and customer needs. Identify areas in the organization that could benefit from AI, such as marketing and customer support. In assessing potential AI opportunities, define clear objectives and identify KPIs to measure success. Also, consider deploying pilot projects to see how well AI fits within the organization and to identify potential issues around integration, interoperability, security, etc.
Maintaining Competitive Advantage Through Continuous AI Innovation
Companies seeking maximum benefit from AI must be adaptable and open to continuous AI innovation. Consider creating a Center of Excellence (CoE) to explore new AI applications. Encourage managers and staff to embrace AI and suggest new ways to improve operations and encourage company stakeholders to collaborate on new AI initiatives.
Artificial intelligence must be an ongoing part of your strategic roadmap if your organization is going to compete with bigger companies. Be proactive and use AI to your advantage. Develop a sustainable strategy that combines AI technology, strategy, and innovation to give your company the unfair advantage you deserve to outpace your better-funded competitors.
If you care about how AI determines the winners and losers in business, how you can leverage AI for the benefit of your organization, and how you can manage AI risk, contact me at glenngow.com. I write and speak about how senior executives, board members, and other business leaders can use AI effectively. You can read past articles and be notified of new ones by clicking the “follow” button here.
