Artificial Intelligence and Exponential Business Models

04/11/2020 41

AI could be the pillar on which to build the economic, social and environmental development of the coming years. For this, it is essential that entrepreneurs consider not only linear business models but also exponential ones. That is, we seek to achieve terms of changes that are ten times greater or less than the current value and the abbreviation used to define this type of model is 10X.

Lisa Kay Solomon and Patrick van der Pijl published in 2017 in Singularity Hub an article focused on how to make an exponential business model for 10 times higher growth. In that article, the authors explained that raising a business model from 10 percent to 10X is going to require looking at the business and the market it serves in a completely new way. A big challenge will be to reimagine the existing business not only with ideas coming from within the organization but also from outside.

To build an exponential business model it is essential to study other business models that are successful and profitable. It is very useful to study those that for us could be “anti-logical” or that would not be applicable to us because they come from other industries, sectors and areas of knowledge. It is essential to take advantage of new technologies in the same way that emblematic companies such as Amazon, Facebook or Airbnb did in the past. In the last two decades, platforms have extended their influence to all society.

AI could be the pillar on which to build the economic, social and environmental development of the coming years.

In a 2015 study by Karl Täuscher for Fraunhofer titled “Business models in the digital economy: an empirical study of digital marketplaces,” the author explained that the success of marketplaces like Airbnb has created new digital markets. The author defined digital markets as companies that provide a technological platform to unite the demand side and the supply side to facilitate transactions between these parties. Today, these digital business models have become more sophisticated, incorporating the immense value that Artificial Intelligence provides.

In their article for Singularityhub, the authors took as a conceptual framework the canvas of the author Alexander Osterwalder, raising some ideas that are worth remembering. For the customer segment, the authors argued that it is important to solve challenges for the masses. We are talking about providing solutions to millions of people. In relation to the value proposition, you must have an exponential logic. As companies digitize their products and services, they not only create new versions of their traditional offerings, they create entirely new markets.

Customer relationships should integrate customers into a fan base and then collaborate with them. User-enabled customization of basic features, such as filters on Instagram, allows users to create something unique and share their creations across multiple touch points, acting as a viral distribution and marketing channel.

Distribution channels must use social collaboration. This collaboration will connect multiple physical and digital media to enhance value of the core offering. The more people contribute to the platform, the more valuable the service will be. The fastest growing companies use this strategy as a driver of customer acquisition, commitment and long-term value.

In the last two decades, platforms have extended their influence to all society.

Key activities will focus on agility and making processes automated and scalable. Exponential technologies can help analyse and automate routine activities to innovate traditional manufacturing or delivery methods.

Key resources must build a network culture. It is important for employees to network to socialize and share ideas and experiences in real time. Employees must also be given autonomy to do what they need in a decentralized, supportive and open culture. This will speed up decision-making, opening up the possibility of exponential business models.

Rare or frequent relationships will build on key allies. Many exponential business models come from rare partners. Finally, some general recommendations are offered. We must cultivate curiosity, imagination and creativity. It is also important to take the necessary time, be patient to unravel the keys to the future business.

It is important to design a transformative purpose and have the best talent. Businesses based on technology platforms should be studied and it is important to analyze how to apply ideas from other industries and sectors to enhance our exponential business model.