{"id":625894,"date":"2024-06-28T11:30:19","date_gmt":"2024-06-28T08:30:19","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/does-your-service-business-need-ai-here-are-4-rules-to-help-you-decide\/"},"modified":"2024-06-28T11:30:19","modified_gmt":"2024-06-28T08:30:19","slug":"does-your-service-business-need-ai-here-are-4-rules-to-help-you-decide","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/does-your-service-business-need-ai-here-are-4-rules-to-help-you-decide\/","title":{"rendered":"#Does your service business need AI? Here are 4 rules to help you\u00a0decide"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_85 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a37a5c7ed1fe\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a37a5c7ed1fe\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/does-your-service-business-need-ai-here-are-4-rules-to-help-you-decide\/#Why_service_providers_face_a_different_calculation\" >Why service providers face a different calculation<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/buradabiliyorum.com\/en\/does-your-service-business-need-ai-here-are-4-rules-to-help-you-decide\/#Doing_business_in_an_uncertain_world\" >Doing business in an uncertain world<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/buradabiliyorum.com\/en\/does-your-service-business-need-ai-here-are-4-rules-to-help-you-decide\/#The_strategic_use_of_AI\" >The strategic use of AI<\/a><\/li><\/ul><\/nav><\/div>\n<div>\n<a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/theconversation.com\/us\/topics\/artificial-intelligence-ai-90\">Artificial intelligence<\/a> is the big thing right now, with industries from <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.wolterskluwer.com\/en\/expert-insights\/artificial-intelligence-in-finance\">finance<\/a> to <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.bain.com\/insights\/generative-ai-global-healthcare-private-equity-report-2024\/\">health care<\/a> to <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/nrf.com\/blog\/how-artificial-intelligence-will-change-retail\">retail<\/a> scrambling to adopt AI or risk being left behind. But <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/scholar.google.com\/citations?user=WL_b0DEAAAAJ&amp;hl=en\">speaking<\/a> <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/scholar.google.com\/citations?user=82k6B5AAAAAJ&amp;hl=en\">as professors<\/a> <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/zicklin.baruch.cuny.edu\/faculty-profile\/christopher-r-meyer\/\">of business<\/a>, we think some companies might be jumping the gun.<\/p>\n<p>Our <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/doi.org\/10.1108\/JOSM-05-2019-0161\">recent research<\/a> suggests that service providers shouldn\u2019t automatically jump on the AI bandwagon. Instead, they should make a choice informed by their strategy. In short, when it comes to AI and service firms, more isn\u2019t necessarily better.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Why_service_providers_face_a_different_calculation\"><\/span>Why service providers face a different calculation<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Are you a manufacturer? Then if AI reduces your costs without lowering quality and gives you the return on investment you need, go ahead and try it.<\/p>\n<p>But service businesses \u2014 firms that do things for customers, rather than making physical products \u2014 are different. Unlike manufactured items, services are \u201cco-produced\u201d by the customer. Customers can complicate something <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.youtube.com\/watch?v=cnlm2e3EN78&amp;t=6s\">as simple as ordering pie<\/a>.<\/p>\n<p>Dealing with customers introduces what academics call <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/doi.org\/10.2307\/258417\">customer interaction uncertainty<\/a>. That uncertainty comes from two sources: the extent of interaction with customers, and \u2014 because customers may want a lot of different things \u2014 a potentially wide range of offerings.<\/p>\n<p>As an example, consider a restaurant. A customer orders what they want, combines different dishes as they see fit, and then eats the food when it comes out. The customer might make bad decisions, but the restaurant is stuck with them.<\/p>\n<p>If you let the customer interact with a server \u2014 or, even worse, the cook \u2014 they may ask for substitutes, question the ingredients or try to convince you to make something special. None of that will h<a href=\"https:\/\/buradabiliyorum.com\/en\/category\/download-scripts-themes-apps\/\" data-internallinksmanager029f6b8e52c=\"9\" title=\"Download Scripts &amp; Themes &amp; Apps\" target=\"_blank\" rel=\"noopener\">app<\/a>en if you confine them to choosing from a set menu via a tablet. To continue the analogy, a restaurant can offer a small number of standard dishes, or it can offer many dishes the customer can customise.<\/p>\n<p>If you run a service business, you\u2019ve already made any number of choices <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/journals.aom.org\/doi\/abs\/10.5465\/30040668\">based on your customer interaction strategy<\/a>. Imagine, for example, you run a financial services firm. Are your offices comfortable and convenient for your customers, designed for long meetings to go over their needs? Or do you restrict your time with your customers and work with them over the phone or even an app?<\/p>\n<p>Similarly, do you limit your offerings so that you know pretty much what you\u2019ll be doing for each customer? Or do your services vary widely depending on the customer\u2019s needs and the choices they make? Think, for example, of CPAs versus tax preparation apps.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Doing_business_in_an_uncertain_world\"><\/span>Doing business in an uncertain world<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>How much uncertainty do you allow your customer to introduce into your production process? This should be one of the main things guiding whether your service business adopts AI.<\/p>\n<p>To understand why, let\u2019s take a detour into what academics call <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/doi.org\/10.1287\/inte.4.3.28\">information processing theory<\/a>. According to this body of work, organisations cope with uncertainty by using knowledge to reduce risk. The core challenge for service firms is deploying knowledge in service production.<\/p>\n<p>Individual knowledge \u2014 also known as human capital \u2014 reduces uncertainty in service production as human workers <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/doi.org\/10.1007\/s11747-017-0560-7\">solve problems and meet customer needs<\/a>. But human capital has its problems: It belongs to the employee <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/doi.org\/10.5465\/amj.2005.17407911\">and not to the firm<\/a>, and it\u2019s not scalable. On the plus side, customers <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/doi.org\/10.1509\/jmkg.71.3.143\">still value<\/a> human interaction.<\/p>\n<p>The other form of knowledge is known as \u201corganisational capital\u201d: codified knowledge that the firm itself owns. Organisational capital has inherent advantages: It belongs to the firm, and it scales. AI, a form of organisational capital, clearly has these advantages.<\/p>\n<p>Information processing theory gives us <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.jstor.org\/stable\/pdf\/25059090.pdf\">three techniques for organising knowledge<\/a> to deal with uncertainty.<\/p>\n<p>The first is having rules and programs \u2013 a form of organisational capital. The second is having hierarchical structures. Here, front-line workers escalate intricate matters to more knowledgeable managers. The third is goal-oriented coordination: Businesses can deal with uncertainty by empowering lower-tier employees with decision-making autonomy, guided by overarching organisational objectives. These last two rely on knowledgeable, experienced workers \u2014 human capital.<\/p>\n<p>Here\u2019s how that fits with service strategy. Mostly, firms with fewer options for consumers and limited customer interaction use organisational capital. Nowadays, that typically means tech solutions on top of rules and programs. Firms with a wide range of offerings but limited customer interaction use a hierarchy, where challenges get passed up the chain. And firms with both a wide range of offerings and high customer interaction use front-line knowledge workers coordinated by targets or goals.<\/p>\n<p>Tech may augment the latter two modes, but the cost of offering a wider range of services or greater customer choice is that the firm becomes more dependent on human knowledge workers.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"The_strategic_use_of_AI\"><\/span>The strategic use of AI<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>AI, a sophisticated form of organisational capital, can reduce customer interaction uncertainty. The firm owns it and can scale it. Yet it is still bound by its rules and dataset, and there are areas of uncertainty where human capital still offers advantages: finding creative solutions, linking disparate concepts and understanding the nuances of human interaction, to name a few.<\/p>\n<p>The challenge is to strategically navigate all of this, combining customer strategy and human and organisational capital in a cohesive way. We came up with <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/doi.org\/10.1108\/JOSM-05-2019-0161\">four rules<\/a> that should help:<\/p>\n<ol>\n<li><strong>Strike a strategic balance.<\/strong> For predictable tasks, such as payments, automation enhances efficiency and sacrifices little. Complex and varied customer needs, however, demand the flexibility and empathy of human expertise and interaction. The optimal approach often lies in a balanced integration of both, where automation supports routine tasks and humans take care of those nuances that automation can\u2019t handle.<\/li>\n<li><strong>Leverage strengths.<\/strong> Use AI to navigate tasks such as data analysis and decision-making processes where objectivity and comprehensiveness are crucial. This ensures precision and reliability in services where mistakes can have big consequences, such as finance and health care. On the other hand, in services where trust, personal rapport and reputation are vital, prioritise human interaction to build and maintain strong client relationships.<\/li>\n<li><strong>Seek opportunities for synergy.<\/strong> Encourage dynamic interaction between human capabilities and AI technologies, so each can learn from the other. This not only enhances current operations but also fosters an environment where both humans and AI can evolve. This can lead to a sustainable competitive advantage over rivals by continuously expanding the firm\u2019s knowledge base and adaptability.<\/li>\n<li><strong>Consider the context.<\/strong> Assess the specific needs and values of your customers to determine the appropriate mix of human and technological resources. Recognise that this balance may shift over time as technologies advance and client expectations change.<\/li>\n<\/ol>\n<p>By following these guidelines, service firms can navigate the complexities of integrating AI into their operations, leveraging the best of all worlds to meet their clients\u2019 needs effectively and sustainably.<!-- Below is The Conversation's page counter tag. Please DO NOT REMOVE. --><img loading=\"lazy\" decoding=\"async\" style=\"border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important;\" alt=\"The Conversation\" width=\"1\" height=\"1\" class=\"js-lazy\" src=\"https:\/\/counter.theconversation.com\/content\/221490\/count.gif?distributor=republish-lightbox-basic\"\/><!-- End of code. If you don't see any code above, please get new code from the Advanced tab after you click the republish button. The page counter does not collect any personal data. More info: https:\/\/theconversation.com\/republishing-guidelines --><img loading=\"lazy\" decoding=\"async\" style=\"border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important;\" src=\"https:\/\/counter.theconversation.com\/content\/221490\/count.gif?distributor=republish-lightbox-basic\" alt=\"The Conversation\" width=\"1\" height=\"1\" class=\"\" srcset=\"\"\/><\/p>\n<p><em><a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/theconversation.com\/profiles\/david-cohen-1504226\">David Cohen<\/a>, Associate Professor of Management and Business, <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/theconversation.com\/institutions\/skidmore-college-1358\">Skidmore College<\/a>; <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/theconversation.com\/profiles\/christopher-meyer-1218836\">Christopher Meyer<\/a>, Lecturer, Zicklin College of Business; Advisor, Lawrence N. Field Center for Entrepreneurship, <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/theconversation.com\/institutions\/baruch-college-cuny-3773\">Baruch College, CUNY<\/a>, and <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/theconversation.com\/profiles\/sudhir-nair-1504225\">Sudhir Nair<\/a>, Associate Professor of Business, <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/theconversation.com\/institutions\/university-of-victoria-1182\">University of Victoria<\/a><\/em><\/p>\n<p><em>This article is republished from <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/theconversation.com\">The Conversation<\/a> under a Creative Commons license. Read the <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/theconversation.com\/does-your-service-business-need-ai-here-are-4-rules-to-help-you-decide-221490\">original article<\/a>.<\/em>\n<\/div>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMN63nwsw68G3Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more like this article, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/technology\/\" target=\"_blank\" rel=\"noopener\">Technology category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"https:\/\/thenextweb.com\/news\/does-your-service-business-need-ai-here-are-4-rules-to-help-you-decide\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Artificial intelligence is the big thing right now, with industries from finance to health care to retail scrambling to adopt AI or risk being left behind. But speaking as professors of business, we think some companies might be jumping the gun. Our recent research suggests that service providers shouldn\u2019t automatically jump on the AI bandwagon&#8230;.<\/p>\n","protected":false},"author":1,"featured_media":625895,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/img-cdn.tnwcdn.com\/image\/tnw-blurple?filter_last=1&fit=1280%2C640&url=https%3A%2F%2Fcdn0.tnwcdn.com%2Fwp-content%2Fblogs.dir%2F1%2Ffiles%2F2024%2F06%2FUntitled-design-8.jpg&signature=081937b53452c92b0b4e8eaf091e894c","fifu_image_alt":"","footnotes":""},"categories":[18],"tags":[],"class_list":["post-625894","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-technology"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/625894","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=625894"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/625894\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/625895"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=625894"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=625894"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=625894"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}