It was just reported that Haidilao, a 5,000-restaurant chain in Asia, intends to save on labor costs by replacing chefs and waiters with robots. The purpose of this hyper-automation? To “lower labor costs and boost efficiency.” However, while important, the path to restaurant success isn’t by skimping and grinding down labor costs. Restaurants succeed by serving great, nutritious fresh food in a nice atmosphere staffed by great people. How many readers have stopped by a Horn & Hardart automat lately? Horn & Hardart helped pioneer the automat concept as early as 1902, but where are all those automats now?
That’s why it’s encouraging that the companies that are taking an early lead with artificial intelligence don’t see it as just labor-saving technology — rather, they see it as a way to grow, to better serve customers and provide a superior experience. This is one of the findings from a recent study by MIT Sloan Management Review and BCG, which looked at the state of AI — and motivations for moving forward with it.
The leaders in AI these days, they find, “prioritize revenue-generating applications over cost-saving ones,” the researchers, led by Sam Ransbotham, argue. “In the first wave of corporate AI adoption, many companies focused on making operational processes more efficient.” AI leaders are especially prone to see AI strategically, with 72% saying AI will deliver mainly revenue increases in the next five years. By contrast, only 28% expect mainly cost savings. By contrast, 41% of beginners see AI as a cost-cutting move.
Some additional findings brought to light in the study include the following:
AI is often easier than first thought. Yes, you read that right. The many articles out there about AI usually include graphics of robots or Robocop-style human hybrids, implying that AI is cooked up in labs by scientists and engineers. However, the researchers point out, “many companies have discovered, often to their surprise, that it is easy to apply AI and get quick results.” The catch for businesses, however, is deploying AI into as part of an overarching strategy that brings together systems and requirements from across enterprises. Eighty-five percent of AI leaders agree that an enterprise strategy is critical.
Pioneers are achieving scale: While AI so far is that it may perform with one-off point solutions, scaling it across a wider part of the enterprise is challenging. AI leaders are on the case. Point solutions leave “enterprises with no greater systemic capabilities than they had before,” Ransbotham and his co-authors explain. “AI at scale is the next step of digital transformation.”
Pioneers are diving even deeper into AI. One in five executives are considered leaders, a segment that is about the same as in last year’s survey. Yet, 88% of this group increased their AI investments, compared to 62% of laggards.
AI is creating both fear and hope among workers. Back to the labor arbitrage argument. The MIT-BCG survey shows alevel of uncertainty among executives about the impact of AI on their jobs — 47% say their workforce will be reduced because of AI in the next five years. “Lower-level operational and clerical workers are most concerned that layoffs are imminent, perhaps because these workers are less able to influence the course of events and thus feel particularly exposed. Managers need to address the concerns of their employees through reskilling, change management, and communication.”