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Management article
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Reference no. H03XDI
Published by:
Harvard Business Publishing (2017)
 
in "Harvard Business Review"
Length:
5 pages

Abstract

AI is a prediction technology. Its improvement is akin to turning up the volume knob on a speaker dial. But rather than volume, you’re turning up the AI’s prediction accuracy. What happens to Amazon’s strategy as their data scientists, engineers, and machine learning experts work tirelessly to dial up the accuracy on the prediction machine? In this example, it shifts Amazon’s business model from shopping-then-shipping to shipping-then-shopping, generates the incentive to vertically integrate into operating a product-returns service (including a fleet of trucks), and accelerates the timing of investment due to first-mover advantage from increasing returns. All this is due to the single act of turning the dial on the prediction machine.

Topics

Technology; Data management; Strategy

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