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Artificial Intelligence and Machine Learning as business tools: a framework for diagnosing value destruction potential

Article

Artificial Intelligence and Machine Learning as business tools: a framework for diagnosing value destruction potential

Abstract

Artificial Intelligence (AI) and Machine Learning (ML) may save costs, and improve the efficiency of business processes. However, these technologies can also destroy business value, sometimes critically. The inability to identify how AI and ML may destroy value for businesses, and manage that risk, lead some managers to delay the adoption of these technologies, and, hence, prevents them from realizing the technologies’ potential as business tools. This article proposes a new framework by which to map the components of an AI solution, and to identify and manage the value destruction potential of AI and ML for businesses. We show how the defining characteristics of AI and ML risk the integrity of the AI system’s inputs, processes and outcomes. We, then, drawn on the concepts of value creation content and value creation process to conceptualize how these risks may hinder the process of value creation and actually result in value destruction. Finally, we illustrate the application of our framework with the example of the deployment of an AI powered chatbot in customer service, and discuss how to remedy the problems identified.
Artificial Intelligence and Machine Learning as business tools: a framework for
diagnosing value destruction potential

    !"#$%%&'()
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&-&&.
/&-&&.
0
Artificial Intelligence and Machine Learning as business tools: a framework for
diagnosing value destruction potential
ABSTRACT
/    12    3    132  4      
40    //  /    0&  !5        
 44 &6/53
4/4.44
0  /          0  4  /4  7  
80&6005/45.5
  40    40  /           /    4    
  0  /      3  /  &  9  5  5    /
/3./4800
4&950/
0075. 40/  
&500//45.
540/04/054
5404/&
Keywords:/3::
;4.60
*
1. AI AND ML USE IN THE BUSINESS CONTEXT
5  / 1<5*,'=2/
12    3    132           4  
044/4040
  00  5  4  0&  6    04      4  >
//4137? 0@*,'+2&!5
04&44/
<.4.1:;37?44*,'+2#58/>
.01?9*,'2&
<540/3
50/41?3*,'+2&6/
0044054./044
 /4     4  .   /   4&
<0/500 /45.  40/
/454/
/&
   5 40  40 /   / 5 4
5//3./480
04&950/
  0  07 5  . 4    
//4&500//45.5
40  /    04  /     05      4  &    
4.55404/&
%
2. COMPONENTS OF AN AI SOLUTION
9/4/4050
544&
00        4      A  /  5      /4
1/32041B?C*,'=2&
9400/
.40441'2&6//40
input data&34>94D8//
1    44    2          /      
&///44D/4854
/    .5    /4        &  ;    
      /  /      5  4          
44/19*,'+2&054/4.
 /;174 ?6*,'2&3
040
0.1  ?74*,*,2&E
440/&
000/ 04
/1E8!*,'=2&40
. &40  4  4
4          4  5          5  
408589//4&4
)
0      /48  .5        5  0  0
4450F&
6. 40   ML algorithm&&  40 0
0 01<.*,'*2& E 0/3 supervised learning
514204050
0/ 4  0   0  
00//404&
43B/16.*,'2&600
00  unsupervised learning 5  40      5
0&638./5/00
5  4  &6 A 4   / 4  
0&6//4reinforcement learning&63
0//4/
&/F/1&&
5425/.1&&4213
&*,'2&
6.40outputdecision /430&
5/0440/0
1".;4?C4.G*,'250/4
&E440//
/4///4
0/4&444/
=
/#//>.5
41H*,'=2&
[Insert Figure 1 about here]
3. CHARACTERISTICS OF AI AND ML, AND THEIR IMPACT
64005./
5440/
. 40 1 6 '2& 6 /    connectivity 5
40&/>
54.4.A.55.&
54>0
/              1    &  *,'*2      4
140.64?6*,'2&  5
  0  5          4            0
40     4  4  //  /4  5        &
 //04051&&
                4  /4      42    
7    8  /    4        14  ?
.*,'+2&340 044  4
04/041*,'=2
/0/041<.*,'* 2& 0
00A.0./4.&
+
4045/80/
/441:;37?44*,'%2&
6   cognitive ability. 30  0
 /4 4.  />&   0H I  4 
4H400/1<&*,'+2&
845/454
0/&&074
01G 3.F ? <.*,'%2&6A/3 0
//04041369
?*,'=250.&//50
/3/004/
  1!  *,'+2&  3  3    0  0      
404/405
.8       0    5  40    4
15J;0 .?*,'+2&8
00 3840/
/4&E40/>40/40
008//&64
/////5
5/001<0?BF
*,'+2&
6 imperceptibility.64F/00 
19  ?  ;  *,'2  5    00  0  /      
/5&4040/
3/8655///5565
5 40681*,'=2& !5
840044.&6
0      0          0  /4 0
 5  /4   4   48  /
1 .!E? *,'*24/ 05
>&64/5004.
& 400//4
H  ;08        0  1<  *,'2&     
400/4.//50
&<5>/4   
/45&!550
0 .5 5   5 5  
///540545/1!
*,'+2&440440
1 H3> ?H*,'=2&3
00//575
1*,'=2&9.55/45
00   4      5  0  /        
4&
[Insert Table 1 about here]
(
4. IDENTIFYING THE VALUE DESTRUCTION POTENTIAL OF AI
:0/1G.?6
*,'2&405
0#4 5
A154?4*,,,2&8/
 ?  1*,'(2  4 / 4   
00/&!544
///451B?6*,'%2&
5/50.<461*,,+2 
1%&'255001%&*2&
4.1 What is value creation and destruction
40/4/0
/  4/ /  1/ 
.04/50251 '()2&
:F0/F4
/000.154
?4*,,,2&6/45
3/0/.40/4
4&
50   
0//.&
',
 .454/0F0
5194E4<?H*,'(2&
:4./4///4041B
?6*,'%2&C5540
5 5 14 ? I *,,'2& "//  4  1I ?
4 *,,+2  404    5 5. //1B ?
6*,'%2&
64/4/0/4/3
>//&0/04.
41  *,'+2 0 5 00 4 
.1!?B*,'2&/>44
      1H  *,'=2&  6     0  3    
/04/0.5
0     174   *,'2# 5 5/ 
041<&*,'+2&0/3
4044//5.  
/>/&
!5  /      /      /    5  /    4
404&085
    04    5      4    />  8
4   5  0  / /  8 0   >
8Krisks marginalizing the entire fieldL1H*,'=0&',2&
4//>//0&//
''
 8 14B ?<*,,'2 &
0/41?<*,*,2&6>//4&
/005/4.
>4A.31<*,'2&
     8 0& 0   
.//413&*,'254
///45///503&
4.2 How value is created or destroyed
60//0/
04&00
41G*,'2&60
/1 ?3>*,'=2&J
/4    / 
0/051 ?3>*,'=2&654
/0/0041G*,'2&
64000
/5   / 4194 *,'(2& 4
004//5
   /    0 1  ? 3> *,'=2&
!561*,'+2.//45.
05/4/
&
'*
:  4  / 00   0 
1G*,'2&E/0/./
./41:/!?!*,'=261?
*,'+2&. / 6  5Kdestroy
value in a firm rather than simply fail to add anyL1*,,0&*,2&H
1*,''2/.//64
4//48//0/&
A/441G*,'2
0        1!4  G7M  ?    *,'+2&  ;
0A/445
 5.1G*,'2&J 1&&3
*,'25 4 70>4.
00/;
&
5. IMPLEMENTING THE FRAMEWORK
9550004
10*200450
4     / /4& 9  4
00/ /45. 5 40/0
44065&
5.1 Mapping out the components of the solution
'
9/40/.
040016*2& <
5input data44/4
4  4&      655  
   /4 5  5 0  0 50 1&&
542/48 /& 9  4  
5/4654555
0765/&
6      N   
    /      5      408  4  00  4  19  ?
;*,'2&/4
 05 4/4 48
/400075174 et
al&*,'2&
3algorithm 50658/>/4&4
0/07 0
4844&64/4
540//4
.448&
0/4&6/0/.0
1!?B*,'2O4.00
.  5        4#      .              
 0/04/4#.
'%
5440#40.
4504&6/4.0/4
/05/&
6 .   0/4 41&& 0  /42 
44///1&&00//25A
&/54A
   0 0   >0
04/40&
[Insert Table 2 about here]
5.2 Predicting how value may be destroyed
04/4/4401&&
  N  0    52   4  40    A  44    
>>47&"40
4A/40&
     5   5 4  65 5
4         100 44 /2 
0004/50/
4>1&&2&!5/ /4
65/40&
H0')P /  65  4
1: et al& *,'+2 .4 5 
4  5  5  5    /48 0  &          
')
4/4    /      3  4    00  44  /  
      4    //  0          68  
04&
E505
40404&64
  /4 0/4& 
50/4
        4      40  5    4&
4Q&&4
551<*,'2#5
5A005015*,'%2&3
5 4044 44 4/ 
1&&.521&&/0
4  02      .      5  4      1  ?
4*,')2&504.40
5    04  /  40  5  0      5  4    
//1&&2&
4/4A40/
04&!.554
5&6./5&4
40055
00  /4&  <  4    4  4       
.0/1>2.A13*,'2&
'=
64501et al&*,'=2//
5004&E5
  4                  40&
3  4     44     5 
40      5  1&2&  /    044    4    
401&&5 //40 2
//&
0475
4/5   5 /.A 
/54//45F& 4/
 /A  /4// / 0&  
N4A//    A   & /
 4 /   40 5 0 
540&A54
50/04
&
/0/0/404
540/..
4&440  
1:et al&*,'+2&E0
/>//.0A.440005
4055.1!*,'+2&
'+
5.3 Assessing what value could be destroyed
/3
4 40&  6    5  / >4  07  0
174 et al. *,'2&6 48/40 5
4  7  4        /        /4
1  .  ?  <74  *,'+2&  !5  4  40      
  0  /  4  /      /5      /
1*,'+2&
6/A4//05K
4L/&6/4.
1;5*,'25444.
55.5&
54.555
40.1! ? B *,'2&604  40 44
540.0/4
1et al&*,'+2&
4440/454
44    &  !5            /  &  
    /      04  A.      4    0  
/&64
0 0    5   4  0 19
*,'+2&4045//4///
4  .  0  //
'
19  *,'+2&  6     0   7    0    /
000541et al&*,'=2&!5
0074045
&
6. CONCLUDING REMARKS
!0   5  04/ 
0455/./5
04&40/A48
/1;0?.
*,,*2&4A/0/
5/40/&05..
7    4440/
0400//45...
0./5//
 5 ./  &6  4
07/40/.044
4/004    /415?!*,,%2&
      3  4  0    0  5.    4  /  
048&/05
40540/40
.&!5/0A./0
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/44.
04&
<          /    0        04
/&3044/>
4&"40A4
  1<  *,'2&    5    A 0  05      
0/5&3A0
.54.&<4/4/5
.    //    0#  5   0  /    13 et al&
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3A40//
1!*,'+2&A/5
0540A/0
4&65 0/ 440
50///0&.5
 //  54  45 
/&3404A/
/4 4& 48  4 5 
40704
00   5  /4 / 4&     4
48     4        4  0  0  4    />
1<0?BF*,'+2&!0A
A////&
*,
44/5//43
0///. 5
A    5    4    4            
&//45.00004.
0/440>/
4440//&
*'
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**1=R+2%(Q)*,&
B&G&1*,,2&BB/40
&Strategic Management Journal*%12*+(>*%&
3&?&1*,'+2&E066:;
>6H&MIS Quarterly%'12+*(>+=*&
&<&H&3&..&?9&1*,'*2&
9<N <.3.:4PLoS ONE+1+2&
54&?4:&1*,,,2&:0O5>
//&British Journal of Management''1'2'Q')&
G&3&?3&1*,'+2&What every CEO needs to know to succeed
with AI&  3& 0ORR555&4.&4R>/R>
4.R>R>R5>>>>>.5>>>5>
6&<&1*,'=2&   74.O 67
0        /  4  40& Management
Learning%+1'2=)>*&
 & & ? 4 J& 1*,')2& 9 182 .5 5  / Q
40/4& 4  /  4 &
Journal of Marketing Management'1(>',2''%'>'')+&
3& 37 & ? 0@& 1*,'=2&/ <4 
N/<.E7&Computational Intelligence and
Neuroscience;('(,&
9&  1*,'+2& Chatbots, Everything you need to know& CCW&
0ORR555&45.&4R5R>>>>>
.5S>>4
4  6&  !&    &  "&  B  B&  &  ?  <  &  1*,,2'& Introduction to
Algorithms&O3H5>!*&
;06& !& ? . G& & 1*,,*2& Attention Economy: Understanding the New
Currency of Business. 43O!B5 &
;5C&1*,'2&3./&Harvard Business Review(=12,>
=&
".  &  & ;  C&  "&  4  &  ?  C4.  G  G&  &  1*,'2&    
64<4SJournal of Management Information
Systems&*(1%2*%(>*='&
"&:E&;&37&?44&1*,'%2&6B/<
&Communications of ACM)(1+2(=>',%&
H  G&   &  ?    3&  1*,''2&  "  <   /  
"4  40  /  6  E0  B.      <& Journal of the
Association of Information Systems'*1(2=,=>='&
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H C& G& 1*,'=2& 5 /4 6 4  65 B. 34&
Applied Artificial Intelligence,12',>*'&
!4&G7M;&?&1*,'+2&4044O5
4044.0& Journal of the Academy of Marketing
Science,%)12++>%,'&
!3>!?BB&6&1*,'2&/<&Journal of Service
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<0&?BF<&1*,'+2&4A4
& The Conversation&  0ORR&4R>>>4>
A>>>4>>>('S
4XY5?4X44Y5
<;&<5G&<4&&!&H7&!
6&.&3& &J&06&!&</&
;H&H06&?!;&1*,'+2&34/H5
4.5&Nature)),1E2)%>)(&
<.<&<&1*,'*2&The algorithm design manual&O<0&
<E&1*,'2&6/Z0>ZO5/4A4Z
5.& The Guardian& 0ORR555&&4RR*,'RFR,=R/>
>>4>>>40S
3 Y<X00X;X3
<E&1*,'2&HZ54./.0/&
The Guardian&0ORR555&&4RR*,'R4R,R>0>
>0>>>4
6H&&3&?H7 &1*,'+2&.; B"45
<      4  4O   0  45.    B
0&Journal of Product Innovation Management%1)2='+>=(&
6.  &  1*,'2&      & The Guardian&
0ORR555&&4RR*,'RFR',R/>>>
>>/
&3&:&?&1*,'(2&0
/4;O40>/040&Technovation
%>)1G>G2*'>=&
:/3&!6&?!6&1*,'=2&4O
00&Marketing Theory'=1%2%=(>%('&
*%
:E&"&;&&37&?44&1*,'+2&E!4>
O;"47&ICWSM'17.
9  3&  1*,'+2& 4  1  2  & Information, Communication &
Society*,1'2'+>'),&
94 &E4G&<:&?HG&1*,'(2&:0F
.44&International Journal of Project Management+1)2+'>+%(&
9!&G&?; &B&1*,'2&O!4
G&Harvard Business Review(=1%2''%>'*&
I  &  ?  4  B&  1*,,+2&    4        0/4  /
0/4&Organization Science'1*2''Q'((
*)
Table 1. The impact of connectivity, cognitive ability and imperceptibility
Component Connectivity Cognitive ability Imperceptibility
Input data /
5/4
4A

;4
/
00/

0/4
#4

0
Processing
algorithm
6>//5
7
40&/
/
4
40/
40
04
C

04
Output decision 3.0
0
;//
/A/
0
3
0
40
.
4
*=
Table 2. Assessment of the risks presented by a chatbot’s connectivity, cognitive
ability and imperceptibility
Component Connectivity Cognitive ability Imperceptibility
Input data
Description:
Free form text;
Responses and
solutions; Past
transactions;
Customer data
B
4/4
#
BA.


C0
//0/





0/4

Processing
algorithm
Description:
Natural language
processing (NLP);
Sentiment analysis;
Result ranking
6
4

/4
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Output decision
Description:
Action; Natural
language generation
(NLG); Staff
intervention
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Figure 1. Key components of an AI solution
Figure 2. Diagnosing the value destruction potential of a business AI solution
*
... However, managers' cognitive abilities do not increase at a comparable rate with technological progress. Therefore, the increasing depth and scope of analytical results provided by digital tools can result in information overload and conflicts between corporate headquarters and business units, and ultimately destroy value (Canhoto & Clear, 2020;Nell et al., 2021). As a counter-trend, in addition to formal organizational changes, DT sparks the emergence of informal organizational networks in firms that evolve along bottom-up scenarios. ...
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The ongoing and ubiquitous digital transformation challenges the raison d'être of firms and forces managers to rethink business strategies and operations and academics to reconsider related theories. To aid these efforts, we conduct a systematic review of research on firms' digital transformation, generating a database of 537 peer-reviewed academic articles and analyzing it using a novel multi-layered framework. The framework separates three layers: an organization's core activities, its peripheral activities, and its external environment. We find that firms that have come far in their transformations are more embedded in platform ecosystems with unclear business boundaries. Relatedly, we identify a tension between decentralizing versus centralizing power across organizational layers during a firm's digital transformation and how this dynamic affects corporate strategies and firms' internal and external boundaries.
... According to a recent report from Gartner [9], senior executives regard analytics and AI as the key game changer to emerge stronger from the current pandemic. However, despite the excitement concerning the potential of AI, there is currently much scholarly debate about the adoption challenges and the competencies and capabilities needed for valuable results from AI [10][11][12]. Moreover, Forbes estimated that by 2023 34% of the employees expect their respective jobs to be replaced by AI solutions [13]. ...
Chapter
Over the past two years, scholars have increasingly paid attention to firms’ capability to adapt to their increasingly turbulent business ecosystem environments. This study embraces the dynamic capabilities theory, uses ideas from the accelerated corporate transformation, and posits that adaptive transformation capability, driven by ambidextrous artificial intelligence (AI) use, i.e., routine and innovative use in practice, serves as a mechanism for firms to gain superior organizational performance under COVID-19. Using a composite-based structural equation model (SEM) approach, we use survey data from 257 C-level practitioners with key decision-making roles and experience in AI and digital transformation initiatives. We used this data to analyze the theorized relationships. Outcomes show that the ambidextrous use of AI positively enhances a firm’s adaptive transformation capability. This capability, in turn, fully mediates the impact of AI ambidexterity on competitive performance during COVID-19. These outcomes have important theoretical and practical implications.KeywordsArtificial intelligenceAmbidexterityDynamic capabilityAdaptive transformation capabilityCompetitive performanceCOVID-19Composited-based SEMPLS-SEM
... Machine learning technology can be used in many fields, such as commerce [1], biology [2], medicine [3], and pedagogy [4], where algorithms can be used to analyze data quickly and obtain results that are difficult for the human brain to calculate. In education, machine learning technology has also been widely used, for example, to analyze student performance and achievement and in order to implement the necessary measures to improve student satisfaction and help them graduate [5], and big data have been used to analyze data on students at different stages of learning in order to improve educational policy [6]. ...
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There has been much discussion among academics on how pupils may be taught online while yet maintaining a high degree of learning efficiency, in part because of the worldwide COVID-19 pandemic in the previous two years. Students may have trouble focusing due to a lack of teacher–student interaction, yet online learning has some advantages that are unavailable in traditional classrooms. The architecture of online courses for students is integrated into a system called the Adaptive and Intelligent Education System (AIES). In AIESs, reinforcement learning is often used in conjunction with the development of teaching strategies, and this reinforcement-learning-based system is known as RLATES. As a prerequisite to conducting research in this field, this paper undertakes the consolidation and analysis of existing research, design approaches, and model categories for adaptive and intelligent educational systems, with the hope of serving as a reference for scholars in the same field to help them gain access to the relevant information quickly and easily.
... In production systems, machine learning (ML) is an integral part of a more extensive software system that performs the overall desired functionalities [11]. With its powerful forecasting tools, the ML system has been widely used in real-world industrial processes, providing valuable insights for running businesses [4]. Modern industries are usually characterized by different levels of scalability. ...
Preprint
Most industrial processes in real-world manufacturing applications are characterized by the scalability property, which requires an automated strategy to self-adapt machine learning (ML) software systems to the new conditions. In this paper, we investigate an Electroslag Remelting (ESR) use case process from the Uddeholms AB steel company. The use case involves predicting the minimum pressure value for a vacuum pumping event. Taking into account the long time required to collect new records and efficiently integrate the new machines with the built ML software system. Additionally, to accommodate the changes and satisfy the non-functional requirement of the software system, namely adaptability, we propose an automated and adaptive approach based on a drift handling technique called importance weighting. The aim is to address the problem of adding a new furnace to production and enable the adaptability attribute of the ML software. The overall results demonstrate the improvements in ML software performance achieved by implementing the proposed approach over the classical non-adaptive approach.
Chapter
The cryptocurrency market is an innovative alternative to the traditional currency markets that has increased the interest of investors, academics, and governments. In the last years, recent studies have tried to model the price of Bitcoin for investment and forecast purposes. Therefore, the objective of this study was to evaluate different crypto market variables through a quantile regression model and thus identify the best predictors for Bitcoin price forecasting by machine learning models. The main finding was that the Gaussian Process Regression models allowed the best performance metrics through the following predictors: high and low Bitcoin price, ask-sum, and Bitcoin price lagged. Likewise, the Bitcoin price was predicted for the next seven days, and it was observed a significant approximation by the confidence intervals of Gaussian Process Regression.
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