Kroger also has the largest grocery loyalty program in the country. The company uses data from that program to predict what product offerings and promotions will convince members to show up at a local store more often, and to buy more.
“They are using the loyalty program to recommend new products with a high level of nutrition, to encourage customers to shop in the healthy food space,” Davenport says. “They also sell some of their data insights to consumer products partners. I think they’re well ahead of any other grocery retailer in that regard.”
AI’s value for large legacy organizations
The primary focus of Davenport and Mittal’s book is on legacy organizations that want to truly transform with AI.
“It isn’t about the digital natives that have a much easier time of it, since everybody [in those organizations] already believes in AI and digital transformation,” Davenport notes. “Still, a lot of companies say they’re doing it. But they have very few deployments of AI to show. They haven’t integrated it into their day-to-day work, and hence, don’t get any real economic value.”
Davenport acknowledges that many companies may feel reluctant to make a large investment at this relatively early stage of ‘modern’ AI. But the book is intended to demonstrate how organizations committed to AI use are reaping significant benefits, and in some cases, transforming their markets.
Toward that end, these leading organizations are both broad and deep in terms of AI adoption, Davenport says. They have several use cases or applications in production. They use a variety of technologies, including machine learning. Many also use robotic process automation and linguistics-based computational chatbots.
“The time to stand on the sidelines is over,” Davenport stresses. “In a way, we were trying to scare readers and say, ‘It’s going to be hard to catch up if somebody else in your industry is doing this, and you’re not.’”
Most importantly, AI is an area where it will be difficult to be a fast-follower, because it requires a lot of data and a lot of skills that are not widely available, Davenport explains. Organizations should start investing in AI now, and there are ways to do this fairly easily and inexpensively.
“Many vendors are incorporating AI capabilities into their ERP systems and CRM systems, so you could start there,” Davenport says. “But if you want any sort of competitive advantage from AI, you probably have to develop some of these capabilities yourself. That means developing the skills and technology capabilities in order to produce some of your own use cases.”
