The world is in a digital arms race as every country seeks to win in tomorrow’s AI-based economy. It’s a high-stakes game. The impact AI is having on the global economy is unprecedented, and the countries that emerge as AI leaders today will gain a competitive advantage that will be difficult to overcome in the future. By 2030, AI is expected to contribute $15.7 trillion to the global economy. For context, that number equals approximately 20 percent of all financial assets in the global economy today.
AI is a massive economic driver, and no company in the world can afford to ignore its realities. Because we are entering the AI-Take-All economy.
Going Big or Going Home: The International AI Arms Race
Historically, the US has led progress in AI; five years ago it accounted for 77 percent of AI investment. By 2020, the market for AI technologies to analyze unstructured data will reach $40 billion, and generate more than $60 billion worth of annual productivity improvements for businesses in the United States. Given this huge market opportunity, investors in the United States are increasingly recognizing the value of AI, investing $757 million in venture capital in AI startups in 2013, $2.18 billion in 2014, and $2.39 billion in 2015.
However, not all of the investment is taking place in the United States. China has put together a national strategy to lead the world in AI, and has been pouring a huge amount of resources into building its own digital economy from scratch. Data is the key ingredient for an AI economy, so China’s biggest tech companies are making significant R&D investments in AI, recognizing that the country’s vast population and diverse industry mix can generate huge volumes of data to fuel an enormous market.
The effort is paying off. According to CBInsights, in 2017 nearly half of the total $15.2 billion invested in AI globally went to China. By 2030 China expects to have $7 trillion in AI, around twice as much as the second-highest investor at $3.7 trillion in the U.S.
Canada is another country emerging as an AI heavyweight. SCALE.AI is Canada’s public/private partnership. It leads the world in the effort to use AI to remake the management of supply chains – another key element in a future successful economy. To date, 78 companies and 40 additional organizations – academic institutions, government partners, venture capital firms, and others – have joined SCALE AI. They all collaborate on projects that should fuel economic growth for Canada.
Such massive partnerships are becoming the new normal in the interconnected world of AI. Unless they join together to create similar projects, other companies and countries will discover they have missed the opportunity. Progress in AI adoption is already widening the gaps among countries, companies and workers. Savvy businesses need to be on the winning side.
How Businesses and Countries Are Working Together to Advance AI Innovation
Critical to countries’ national AI strategies is fostering public and private innovation at home. Countries across the world are passing innovation-friendly legislation in order to produce environments that are ripe for AI investment. This governmental push is reshaping the competitive landscape and creating an extremely favorable legislative environment for forward-looking businesses that want to invest in AI and reap the benefits.
Retail is one field in which the impacts of early AI investment can be most easily seen, as mom and pop shops around the world shut down in the face of massive investment by interconnected global superstores like Walmart and online shopping giants like Amazon. Personalization – a key retail differentiator for decades – is no longer being done just by humans. AI enables even the most massive retailers to communicate with consumers at an individual, personal level. As a result, consumers’ expectations have evolved to the point that they expect to be given the same degree of customized offerings wherever they do business, and even for retailers to anticipate their needs. The debate about the relative advantages of AI over traditional human-driven merchandizing approaches is over. That ship has already sailed, and AI is the clear victor.
That is both good and bad news for most businesses looking to survive in the AI economy. The bad news is that major, established players like Amazon and Google have already accumulated a gigantic collection of signal and interaction data, and are using it to aggressively acquire market share, delivering more relevant products and content to their consumers. However, the good news is that effective AI systems are both accessible and affordable for other businesses. The “Amazon experience” is no longer only available to Amazon alone. Companies are selling AI-powered technology specifically designed to drive relevant interactions. This technology is also not industry-exclusive, meaning even hyper-niche companies can reap the benefits of AI investment and opportunities.
But it is especially urgent in technology-dependent sectors, where digital systems and touchpoints are common. The four sectors that thus stand to reap the most out of AI by 2030 are manufacturing, professional services, retail and wholesale, and financial services. Businesses in these categories need to be investing in relevance-driven AI, because their industry is brutally moving towards an AI-take-all economy.
The Tipping Point is Now
The impact AI will have on our global economy cannot be overstated or ignored – by 2030 70 percent of companies will be invested in at least one form of AI. It is no longer an option to disregard AI. The effects of customer-centric AI are already being seen as digital and online retail sales grow steadily, a trend that will only grow.
Customer centricity means having a relevant offering for each and every prospect and customer, whether your organization is focused on end consumers or business-to-business. People making buying and trading decisions expect individualized, relevant recommendations and suggestions to help them get what they need, wherever they need it, and immediately.
AI and machine learning technologies can now help tailor each interaction to every individual’s needs, understanding what they’ve done and anticipating what they need next. Businesses that don’t invest in such relevance-driven AI systems will not be able to compete. The sooner businesses adopt AI, the greater their chances of surviving in the fast-changing international AI economy.
About the Author:
Louis Têtu is Chairman and Chief Executive Officer of Coveo, a company that provides cloud-based, AI-powered search and recommendations services.