"Orchestrating the future of Asset Heavy Industries with AI Platform Business Models"
Pavel Abdur-Rahman, Data Scientist & Associate Partner, IBM
May 18, 2018: In preparation for the 2018 CAMSS Alberta conference (June 6, Calgary), we spoke with Pavel Adbur-Rahman, Data Scientist and Associate Partner at IBM to gain some insight on AI platform business models, which he will be speaking about during the event.
1. Can you begin by providing some insight on what an AI Platform Business Model looks like for most organizations?
US’s Amazon (mark cap of $785B), China’s Alibaba ($500B) and Canada’s Shopify ($20B) are good examples from the consumer retail sector that takes the ecosystem approach to its natural conclusion: orchestrating the future with the platform business model. We call them “Network Orchestrators”, who create a platform (converging an array of essential mature and emerging technologies) that participants use to interact or transact with the many other members of the network. These organizations enter a digital ecosystem to establish strong collaborative relationships with their employees, customers, suppliers, competitors, technology partners, academia and start-up accelerators.
2. How can companies adopt a deeply collaborative approach that spans an ecosystem to create win-win propositions?
By working with our most important global clients in Energy, Mining, Materials, Agriculture and Utilities sector, we are developing Watson for Natural Resources (WNR) Industry Platform to solve some of the most strategic C-suite business opportunities (e.g. production optimization, wells management, power cost reduction, predictive exploration, preventive asset management, etc). The network participants leverage our Calgary based WNR Platform Hub (industry experts, data scientists & full stack developers) supported by global client innovation centers. We apply an execution framework called “Data Driven Cognitive Garage”, which establishes executive sponsorship & beta users participation, drives 10X business cases, prioritizes functional prototypes, delivers through 8 weeks agile sprints, leverages assets from IBM’s research & ecosystem partners, protects proprietary client data and applies sophisticated legal & IP constructs to create win-win propositions.
3. In what ways can cultivating and orchestrating data as the most important asset help hone performance and the capacity for continuous change?
Given platforms generate lots of heterogeneous data for the entire value chain, “Platforms Operators” turn that data into innovation and the continuous recalibration of their strategy and operations planning. For example, the Oil Sands operation is a highly complex and deeply integrated system, with many variables that can impact production and profitability. By analyzing enterprise real-time data & events, 2 weeks plans, maintenance schedules, process flow diagrams, weather, etc., significant value can be generated including additional revenue, lower costs, and improved production stability.
4. How important is committing to innovation in this process?
In our recent Global C-Suite study of 12,854 participants from 112 countries and across 20 industries, we analyzed responses to 56 variables to develop a clearer picture of the attributes, capabilities and commitments common to the leaders. Committing to Innovation is one of the 4 key attributes of platform business models, the others being Establishing the Strategic Imperative, Creating Value from Reciprocity and Capitalizing on Data. Respondents report past + future re-allocation could approach an estimated USD $1.2 trillion in the next 2-3 years. Asset heavy industries report plans to invest more than others in platform business models.
5. Ultimately, what return can companies expect to achieve on their AI investments?
On average, “Platforms Operators”grow revenues faster and generate higher profits than other business models, earning market valuations as high as eight times revenue. When we conduct AI use cases prioritization exercises, in general, we are always driving towards 10X return on investment within three years.
6. You will be running a session on this very topic at the 2018 CAMSS Alberta conference. What key pieces of information do you hope attendees take away from the session?
Reinvention never ends. As new opportunities – some of them disruptive – emerge, the organizations that remain open to change can orchestrate advantage. In broad strokes, these include new trusted bonds with customers, new ventures to scale on platforms, and more nimble teams. To uncover your organization’s next advantage, consider these 3 actions:
(1) Interrogate your environment: Remain on high alert, avoid complacency about past successes and design & play a new offense.
(2) Commit with frequency: Divest to invest, invest for new growth and prioritize advocacy and co-creation over advertising.
(3) Experiment deliberately: Seek innovation over institutionalization, write new rules and find energy in motion.
Pavel will be speaking on behalf of IBM at the upcoming CAMSS Alberta conference on June 6 in Calgary. For full information on the event and to register to attend go to www.camsscanada.com/alberta.