One thing no one is talking about with AI
With AI becoming ever more powerful the natural discussion leads to productivity gains and therefore to cost savings. Whilst lowering costs is never a bad thing, no one is talking about the other form of competitive strategy Michael Porter outlined:
- Low Cost Strategy
- Differentiated Strategy
There are pros and cons to the low cost strategy, it is a race to the bottom and there are no prizes for being the 2nd cheapest.
Differentiated strategies involve putting a unique package of value together in a way that a customer cannot directly compare to other offerings in the market. If you do this, the customer will not look at your offering as a commodity (a commodity being a product which in the users mind is the same as other products and so buys the cheapest).
As well as reducing cost and increasing productivity, AI can be used to create multiple value streams and package them in a way that means the customer cannot directly compare them to competitors, and therefore looks at the value of the offering, not just trying to find the cheapest of a bunch of similar products.