HBR's 10 Must Reads on AI, Analytics, and the New Machine Age (with bonus article "Why Every Company Needs an Augmented Reality Strategy" by Michael E. Porter and James E. Heppelmann)

1. AI and analytics are transforming business processes across industries

"AI powerfully magnifies the value created by those capabilities."

Process automation: AI and analytics are being used to automate digital and physical tasks, particularly back-office administrative and financial activities. This includes transferring data between systems, updating customer files, reconciling billing systems, and extracting information from documents using natural language processing.

Data-driven insights: Machine learning algorithms are being applied to detect patterns in vast volumes of data and interpret their meaning. This enables businesses to:

• Predict customer behavior and preferences
• Identify fraud in real-time
• Analyze product data for safety or quality issues
• Automate targeting of digital ads
• Provide more accurate actuarial modeling for insurance

Enhanced engagement: Natural language processing chatbots and intelligent agents are being used to engage employees and customers. This allows companies to provide 24/7 customer service, answer employee questions on IT and HR topics, and offer personalized product recommendations.

2. Augmented reality is becoming a powerful tool for visualization and training

"AR will become the new interface between humans and machines, bridging the digital and physical worlds."

Visualizing data: AR allows users to superimpose digital information directly on real objects or environments. This enables:

• Revealing internal features of objects (e.g. AccuVein showing veins under the skin)
• Demonstrating product capabilities (e.g. Bosch showing internal components of machinery)
• Overlaying data on physical environments (e.g. construction plans overlaid on building sites)

Guided instruction: AR provides real-time, on-site, step-by-step visual guidance for tasks such as:

• Assembly of complex products
• Operation of machinery
• Warehouse picking and logistics

Remote collaboration: AR enables remote experts to see what an on-site user is viewing and provide immediate guidance. This improves worker performance and reduces costs for activities like field repairs and maintenance.

3. Drones are revolutionizing data collection and aerial operations

"Drones are starting to fill the 'missing middle' between satellites and street level, digitizing the planet in high resolution and near–real time at a tiny fraction of the cost of alternatives."

Data collection: Drones equipped with cameras and sensors can gather high-resolution data from above, enabling:

• Mapping and surveying of construction sites, farms, and infrastructure
• Inspection of buildings, bridges, power lines, and other structures
• Monitoring of crops, wildlife, and environmental conditions

Operational applications: Beyond data collection, drones are being used for:

• Delivery of goods in remote areas
• Search and rescue operations
• Spraying of crops and distribution of seeds
• Providing temporary communications networks

Industry impact: Drones are transforming operations across industries:

• Construction: daily site mapping and progress monitoring
• Agriculture: precision farming and crop management
• Energy: inspection of wind turbines and solar panels
• Insurance: assessment of property damage
• Film and media: aerial cinematography

4. Blockchain technology promises to revolutionize transactions and record-keeping

"With blockchain, we can imagine a world in which contracts are embedded in digital code and stored in transparent, shared databases, where they are protected from deletion, tampering, and revision."

Decentralized ledger: Blockchain creates a distributed database where:

• Each party has access to the entire database and its history
• Communication occurs directly between peers without intermediaries
• Every transaction is transparent yet pseudonymous
• Records are irreversible and tamper-proof

Smart contracts: Blockchain enables the creation of self-executing contracts with the terms directly written into code. This can automate and enforce the negotiation or performance of an agreement.

Potential applications: While still emerging, blockchain could transform:

• Financial services: faster, cheaper transactions and settlements
• Supply chain management: improved traceability and transparency
• Healthcare: secure sharing of medical records
• Government: tamper-proof voting systems and public records
• Digital identity: user-controlled identity verification

5. 3D printing is enabling mass customization and reshaping manufacturing

"Additive is fulfilling its promise. It is now competitive with conventional manufacturing in its ability to make tens and even hundreds of thousands of units a year."

Mass customization: 3D printing allows for cost-effective production of customized goods, including:

• Medical devices like hearing aids and prosthetics
• Dental products like aligners and crowns
• Personalized consumer goods like eyewear and jewelry

Complex geometries: Additive manufacturing enables the creation of intricate designs that are impossible or prohibitively expensive with traditional methods. This is particularly valuable for:

• Aerospace components with optimized shapes for weight reduction
• Medical implants with porous structures that promote bone growth
• High-performance parts with internal cooling channels

Supply chain transformation: 3D printing is changing how products are made and distributed:

• On-demand production reducing inventory and waste
• Localized manufacturing closer to end customers
• Digital inventories of design files instead of physical parts

6. Human-AI collaboration is key to unlocking the full potential of AI

"Through such collaborative intelligence, humans and AI actively enhance each other's complementary strengths: the leadership, teamwork, creativity, and social skills of the former, and the speed, scalability, and quantitative capabilities of the latter."

Complementary strengths: Effective human-AI collaboration leverages:

• Human strengths: creativity, empathy, contextual understanding, ethical judgment
• AI strengths: processing vast amounts of data, identifying patterns, consistent performance on repetitive tasks

Key roles for humans:

• Training: Teaching AI systems and refining their performance
• Explaining: Interpreting AI outputs, especially for complex or sensitive decisions
• Sustaining: Ensuring responsible and ethical use of AI systems

Augmenting human capabilities: AI can enhance human work by:

• Providing relevant information and insights at the right time
• Automating routine tasks to free up time for higher-value work
• Enabling more personalized customer interactions at scale

7. Digital platforms are creating new "hub economies" dominated by tech giants

"Hub firms don't compete in a traditional fashion—vying with existing products or services, perhaps with improved features or lower cost. Rather, they take the network-based assets that have already reached scale in one setting and then use them to enter another industry and 're-architect' its competitive structure—transforming it from product-driven to network-driven."

Network effects: Digital platforms benefit from increasing returns to scale:

• More users attract more complementary products/services
• More data improves AI algorithms and personalization
• Greater scale increases bargaining power with partners

Industry transformation: Hub firms are reshaping traditional industries:

• Retail: Amazon and Alibaba dominating e-commerce
• Media: Facebook and Google capturing digital advertising
• Transportation: Uber and DiDi disrupting taxi services
• Finance: Ant Financial and PayPal challenging traditional banks

Concentration of power: This trend raises concerns about:

• Market dominance and reduced competition
• Data privacy and control
• Wealth inequality as value accrues to a few companies
• Dependence of other businesses on powerful platforms

Last updated: September 23, 2024