The hype surrounding generative artificial intelligence is hard to ignore.
Many companies are investing in generative AI – around $150 billion, according to one estimate by Sequoia Capital – because they are afraid of being left behind. At the same time, many are paralyzed by the fear that generative AI hallucinations could damage their reputation. So what should founders, business leaders and investors know and do about this AI boom to capitalize and ensure their investments in this space are worthwhile?
Editor’s Note: This article first appeared in Entrepreneur Magazine.
There are two major industries – retail and healthcare – that are adopting generative AI applications that appear to add significant value with exciting potential that could provide insights for others to implement.
As an associate professor of management practice at Babson College and with a background that includes working at an AI startup while at MIT and the author of three books on the dot-com boom, I have a deep understanding of technological waves and their economic impact. I was inspired to explore this latest wave of technology and the significant shift in the AI landscape in my latest book. Brain Rush: How to Invest and Compete in the Real World of Generative AI.
It’s clear that everyone should try using an AI chatbot like ChatGPT so that they can allay fears and learn how it could help them and where it doesn’t work well. But will the benefits of generative AI-powered services encourage customers to purchase them at a higher price? Of course, it’s still too early to know.
Based on the investments retail and healthcare companies are making in generative AI applications, here are the early insights to help founders, CEOs and investors in other industries capitalize on the AI boom.
Create new growth curves
Retailers want to use generative AI to attract consumers and get them to buy. A 2024 Google Cloud report found that 50% of retailers surveyed launched customer service automation initiatives, “with 25% of respondents currently testing such programs and 22% already implementing them.”
As retailers explore other generative AI applications, here are two with the greatest potential to attract and retain consumers:
- Hyper-personalization. AI can enable retailers to create digital flyers that inform consumers about the best weekly deals based on their past purchases. A test of such digital flyers for a retailer found evidence of increased consumer engagement—specifically, a 14% higher loyalty program sign-up rate, a 100% higher click-through rate, and “a 2% to 5% increase in overall in-store sales.” ” according to Oliver Wyman Forum.
- Improved customer service. Consumers prefer a generative AI customer service agent because it is available 24/7 and reduces call wait times, noted Oliver Wyman. Generative AI could increase productivity in the retail and consumer goods industries by “up to 2% of annual sales – an additional $400 billion to $660 billion.” Brain rush.
The hyper-personalized digital flyer offers hope for a return on investment as it could lead to faster growth. However, it remains to be seen whether retailers will noticeably increase their sales compared to the cost of providing these digital flyers.
Increase productivity
Healthcare providers are under pressure to do more with fewer resources while improving the quality of patient care. Providers are using generative AI to streamline administrative tasks such as answering patient questions and scheduling appointments, automating the transcription of patient conversations with healthcare providers, simplifying patient consent forms, and helping physicians diagnose patients.
Two of these applications stand out for their value creation potential:
- Better information faster and cheaper. During the pandemic, patients tried to get information about COVID-19. Health care providers have had difficulty recruiting and attracting enough staff to meet patient demand for such information. To solve the problem, healthcare providers tried to shift work from call center staff to patient self-service. Contra Costa Health Care, a California-based healthcare provider, used an AI-powered healthcare assistant to redirect 80% of customer calls to its AI, saving the $20 per call that Contra Costa would have had to pay an outside contractor. This gave Contra Costa staff more time to respond to other calls more quickly, improving the patient experience, they say Brain rush.
- More attentive, personalized service. When doctors meet with patients, they often enter the conversation into a computer. Typing is somewhat distracting for the patient and the doctor. There is a risk that the doctor may miss emotional cues from the patient’s facial expression when typing, which could lead to important follow-up questions from the doctor. In addition, doctors may not enter everything they hear into the computer when asking questions and listening to the patient’s answers. To solve these problems, the University of Kansas Health System provided physicians with a generative AI-based tool. The AI reduced the time more than 2,000 doctors and other medical staff spent taking notes. The AI created summaries of medical conversations from recorded audio during patient visits, reducing the more than two hours doctors typically spend on note-taking each day Brain rush.
While there is much more to be discovered about early AI investments, these two industries are leading by example by trying to find applications for generative AI that create customer value and could prove promising in generating a return on investment.
Peter Cohan is an associate professor of management practice at Babson College, teaching strategy and entrepreneurship and advising student teams in their consulting work. He has authored 17 books, mostly focused on startups and business strategies.
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