Companies pan world are fast adopting the data-driven approach to informed decision-making. Many deploy Big Data to gather as much market information as possible to give a clear and concise direction to their business operations. However, leveraging the value contained in data requires the right processor. The task is cumbersome and entails more than a few human helping hands. Even then, such information is not devoid of errors. After all, to err is human. Also, dedicating two or more human resources to scan, collect, and curate information from an ocean of data is not feasible from a business perspective. This is where new-age technology like Artificial Intelligence can step in and fill the gaps. Artificial Intelligence has already proved its worth time and again. Hence, it is needless to say that allowing AI to filter out useful information from a pile of data is a wise choice. And, getting humans out of the way makes matters even more simplified. The reason being, business decision-making involves many stakeholders, thereby complicating the entire process by 65% or more. Not to mention valuable time lost in coming to a unanimous decision. As per recent surveys, 66% of decision-makers agree that applications of AI, like machine learning, computer vision, and natural language processing, help them increase profits and reach their goals seamlessly.
To elucidate further, it’s important to delve deeper into understanding how AI makes business decisions more effective. Let’s begin with –
Understanding AI Decision-Making
AI decision-making refers to the process of quantifying data, analyzing trends, and suggesting a course of actions using an artificial brain other than a human. For example, Volvo uses AI to maintain its safe reputation. Volvo uses sensors fitted in vehicles to detect and analyze driving conditions and monitor the vehicle’s overall performance in hazardous conditions. Its AI platform and Machine Learning Tools analyze over a million events per week to predict breakdown and failure in their cars accurately.
Another fitting example would be – AI applications in businesses to cut down losses caused by fraudulent loan applications. Underwrite.ai is an AI platform designed to access credit risk for small business and consumer loan applications and analyze numerous data points from credit bureau data sources.
This allows financial services to aptly access credit risk for individual consumers using advanced artificial intelligence algorithms. AI fetches portfolio data to unearth patterns for good and bad loan applications.
Likewise, AI can help businesses improve their business decision-making efficiency in zillion other ways.
How AI Helps in Decision-Making
Thank goodness for Data; understanding the market and making informed decisions keeping end-users’ interests in mind has never been easy. However, humans were still the central processor for such data before AI became known. Relying heavily on the human workforce for data processing was not devoid of challenges. And there were limitations to consider.
One limitation being, there’s so much information a human brain can register and store at a given point in time. More often than not, an average human brain starts struggling or shutting down when the eyes start to process the full distribution of values. A lot of data crucial to decision-making is lost in aggregate summaries. At times, summarized data can mislead businesses into taking wrong decisions.
Another limitation worth mentioning here is – data summaries processed by humans are not free of cognitive biases. More so, our human brains are wired to show that every relationship between elements is linear even when the data suggests otherwise. That’s because linear relationships are easier for human brains to process.
These blunders caused by human data processors prove quite expensive for companies in the long run.
The limitations mentioned above make one thing pretty clear – AI-brain is more reliable than a human brain. The obvious reason being, technology is not biased-driven. They deliver what they receive, unlike humans.
But humans didn’t lose their value entirely. In fact, it is a human brain that designs and commands AI to dig deeper and find variance in data at fine-grain levels that usually steer clear of human perceptions. More importantly, AI is programmed to understand linear and non-linear relationships easily. And they have no problem handling thousands or even millions of data.
According to technology research and consulting companies, digitally-disrupted businesses are overwhelmed by the sheer amount of data they deal with every day. With the help of AI, they can turn all that data into tangible outcomes, from sales and marketing to demand planning and supply chains.
Undoubtedly, AI better leverages information contained in a pool of data. But it doesn’t mean humans are obsolete. No! Artificial Intelligence is created and implemented to make life easier for its creators, humans, not replace them entirely.
Even though the Artificial Intelligence Platform quantifies data to make accurate predictions, the string still rests in human hands for final decision-making.
Hence, processes combining humans and AI are already gaining momentum worldwide as we speak.
Five Business Areas Where AI can Make a Difference
The following are the different areas where Artificial Intelligence can effectively improve business decision-making.
Complexities ride today’s customer-driven market. But, courtesy of social media, understanding customer needs and wants is not impossible. However, the task gets more challenging when businesses strive harder to align their products to customer needs and wants. Hence, developing a customer persona is critical to making informed marketing decisions. Again, the pool of data available online doesn’t make the job any easier for marketers. But AI simulation and modeling techniques can step up and provide valuable insights into the customer persona. These reliable insights make consumer behavior predictions an easy-breezy task. AI uses real-time data gathering, trend analyzing, and forecasting to make companies’ accurate and insightful market decisions.
Humans might suffer from decision fatigue. Not AI. The latter can effectively manage and control factors simultaneously, sourcing and processing large amounts of data within minutes and providing valuable insights. Such information can help businesses address customer grievances in real-time and add value when needed. Moreover, identifying a consumer’s lifetime value with the help of AI’s buyer persona enables businesses to render better services customized as per buyers’ needs/wants.
3. Problem Solving
Problem-solving in businesses entails scanning through Excel Sheets of Data, assessing each value, collecting hidden information, and making recommendations for the problem. Now, crises don’t arise with the prior invitation, but they entail prompt decisions to avert calamities. Relying on human sources can only delay the process and disrupt business operations. AI-enabled tools and platforms are designed to help businesses make informed decisions with speed and accuracy, minus human error.
4. Opinion Mining
Not all customers are vocal about their concerns, and many will silently change sides without voicing their opinions on feedback forms. That becomes challenging for businesses to gauge and predict the concerns of the silent majority. However, with the power of automation, AI has improved the opinion mining process. AI finds ways to collect sufficient opinions and analyze them correctly to help businesses make critical decisions faster and quicker.
5. Analytics Augmenting
To gain a competitive edge in the market, individual members and teams must perform at par and beyond. But given the various limitations of human physiology, this goal remains unfulfilled for many businesses. What the latter needs is Augmented Analytics powered by AI. Only then can decision-makers take informed measures from reliable data and recommendations. Laying hands on crucial data before your competitor gives that much-needed edge in the market. And that requires collating and analyzing information out of Big Data in the shortest possible time minus errors. Most often, human resources become unreliable to shoulder such humongous responsibilities. AI can effectively fill the gap and change the game for your business.
How AI is Changing the Way Businesses Make Decisions
It’s easier to understand this point with a real-life example –
Amazon’s Flywheel is an AI-based product-recommendation engine that is spinning over 35% of the company’s revenues every year. This tool, which emerged from Jeff Bezos’s napkin idea, successfully reduced the company’s costs but increased customer visits. This, in turn, raised sales figures for Amazon by churning more leads for the platform. Amazon Go Store, Alexa, and the store’s recommendation engine keep the Flywheel turning. Further, Amazon can cater to a more personalized, cohesive experience for its customers by storing and analyzing data using AI.
Today, Amazon is a trillion-dollar company. The effective utilization of AI for making informed data-driven business decisions has put Amazon ahead of its competitors in the market.
If you have further doubts about AI, just turn back to Amazon’s success story.
Today, the market is spinning fast. Hence, traditional approaches to decision-making can only put your business 10-years back in time. Companies cannot afford to spend hours analyzing every row, column or cell of data to make decisions. They need to make prompt decisions because a lot can depend on that. Hence, turning to automation and Artificial Intelligence is imperative for survival and getting an edge over competitors. With AI, solving multiple problems simultaneously has become a child’s play. And, making errorless data-driven decisions the need of the hour.