Artificial Intelligence (AI) is fundamentally reshaping traditional business models by introducing innovative approaches that capitalize on its capabilities:
Subscription Economy
AI enables businesses to offer personalized subscription services based on predictive analytics. Companies can continuously optimize offerings and pricing models to meet customer preferences and behaviour patterns.
For example, AI-powered streaming services like Netflix use recommender systems to suggest content based on user's viewing history and preferences (Bawack et al., 2022)(Pfau & Rimpp, 2020). AI algorithms can analyze real-time market data to adjust prices, ensuring optimal profit margins dynamically. This agile approach fosters customer loyalty and higher lifetime value.
Platform Businesses
AI facilitates the development of digital platforms that connect users and providers in new ways. These platforms leverage AI algorithms to match supply with demand more efficiently, creating scalable and network-driven business models.
Uber is a prime example of a company that uses AI to predict rider demand and optimize routes and prices in real-time (Bawack et al., 2022). AI-driven personalization and automation enable these platform businesses to scale rapidly and maintain competitive advantage (Lee et al., 2019). By collecting and analyzing usage data, AI enables the transformation of traditional product-centric businesses into service-oriented models.
AI as a Service (AIaaS)
Businesses can now integrate AI functionalities into their operations through cloud-based AI services. This model democratizes access to AI tools and expertise, allowing organizations of all sizes to leverage advanced capabilities without significant upfront investment.
Leading tech firms like Amazon, Microsoft, and Google offer comprehensive AI-as-a-service platforms, empowering businesses to incorporate AI into their strategies and processes.
Data Monetization
AI-driven insights enable businesses to monetize data by offering analytics services or selling aggregated data to third parties. This model leverages AI's ability to extract valuable insights from large datasets, creating new revenue streams beyond core products or services.
For instance, a transportation company could use AI to analyze traffic patterns and sell mobility data to urban planners or commercial and residential real estate developers (Firouzi et al., 2023).
Autonomous Systems
AI-powered autonomous systems are transforming transportation, manufacturing, and agriculture industries. These systems operate independently, optimizing processes and reducing human intervention, thereby introducing entirely new operational efficiencies and business models.
Autonomous vehicles, for example, enable new mobility-as-a-service models, where transportation is provided on-demand without the need for human drivers (Soni et al., 2019).
In summary, AI's transformative impact extends beyond optimizing existing processes—it catalyzes the creation of entirely new business models. By leveraging AI's capabilities in data analytics, automation, and predictive intelligence, businesses can innovate, differentiate, and capitalize on emerging market opportunities in unprecedented ways.
References
Bawack, R E., Wamba, S F., Carillo, K., & Akter, S. (2022, March 1). Artificial intelligence in E-Commerce: a bibliometric study and literature review. Springer Science+Business Media, 32(1), 297-338. https://doi.org/10.1007/s12525-022-00537-z
Pfau, W E., & Rimpp, P. (2020, November 14). AI-Enhanced Business Models for Digital Entrepreneurship. Springer International Publishing, 121-140. https://doi.org/10.1007/978-3-030-53914-6_7
Lee, J H., Suh, T., Roy, D., & Baucus, M S. (2019, September 1). Emerging Technology and Business Model Innovation: The Case of Artificial Intelligence. Springer Science+Business Media, 5(3), 44-44. https://doi.org/10.3390/joitmc5030044
Firouzi, F., Jiang, S., Chakrabarty, K., Farahani, B., Daneshmand, M., Song, J., & Mankodiya, K. (2023, March 1). Fusion of IoT, AI, Edge–Fog–Cloud, and Blockchain: Challenges, Solutions, and a Case Study in Healthcare and Medicine. Institute of Electrical and Electronics Engineers, 10(5), 3686-3705. https://doi.org/10.1109/jiot.2022.3191881
Soni, N., Sharma, E K., Singh, N., & Kapoor, A. (2019, January 1). Impact of Artificial Intelligence on Businesses: from Research, Innovation, Market Deployment to Future Shifts in Business Models. Cornell University. https://doi.org/10.48550/arxiv.1905.02092
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