Why one company is opting for AI and another isn't

Many companies look at their competitors with wonder and wonder why one company is much further along with AI than another. What makes some organizations embrace AI more quickly? While AI is often seen as a technological decision, the key driver for this adoption is surprisingly simple: economic necessity.

Companies under pressure: why AI is sometimes essential

For companies that operate in markets with low margins and high price elasticity, such as payment providers and insurers, AI is often a lifeline. Consider, for example, Klarna, which has replaced a large number of jobs with AI applications. Without this step, they would no longer be viable. In sectors where price and demand can change rapidly, and where staff costs are high, the pressure to increase efficiency is enormous. Companies that operate in such environments use AI to automate processes, reduce costs and still maintain productivity.

Insurers are another good example. These organizations are located in a so-called “commodity market,” where products are often seen as interchangeable and price plays a crucial role. By using AI, for example in customer service or summarizing customer conversations, insurers can improve their service and reduce costs. In such industries, the difference between success and failure often depends on the ability to control costs while providing an efficient customer experience.

High-margin companies: less urgency to innovate

On the other hand, there are companies with unique products and high profit margins. They have to worry less about cost savings and are less sensitive to price elasticity. For these companies, the urgency to use AI seems less urgent. They have a comfortable market share and their margins protect them against the immediate need for extensive digitization or automation.

However, there is a big risk here: once AI offers a proven competitive advantage, it can be dangerous to stay behind. Big companies that don't feel the urgency right now may one day find themselves in the position Kodak was in when digital photography emerged. As the market changed, Kodak was too slow to capitalize on the new technology, and the company was eventually overtaken by more innovative competitors.

Innovation as a long-term strategy

The credo”You have to innovate when you can, not when you need” is crucial here. Companies that wait to deploy AI until it becomes really necessary run the risk of being late. Generative AI and language models, for example, can bring huge efficiency improvements to processes that rely on information and knowledge. The opportunities to cut costs and serve customers faster and better are within reach, but require a proactive attitude.

Even companies that aren't feeling the pressure today would do well to start integrating AI now. By incorporating AI into the processes, they build resilience for the future. AI can help optimize customer interactions, accelerate internal processes, and increase overall agility.

Lessons from the past

History has shown us that the wave of digitization and the rise of the Internet had similar effects. Companies that thought their unique position would protect them were deceived when faster and more flexible companies overtook them. AI is now in a similar phase: the companies that look ahead and embrace AI are building a competitive advantage that is difficult to overtake.

In short, the difference between companies that are at the forefront of AI and those that are lagging behind lies in the economic necessity and willingness to innovate. As a company, it is essential to think ahead and use AI now, not only when the need arises. Only then will organizations remain relevant and competitive in a future where AI will play an increasingly important role.