The impact of artificial intelligence on various industries is undeniable. Not only is AI transforming sectors like SaaS, fintech, healthtech, and travel, but it is also making inroads into traditionally heavy industries that are ripe for disruption. As an investor focused on industrial AI, I have observed how companies in this space are increasingly adopting automation and data-driven decision-making. Their approaches vary depending on their specific needs and available resources.
In this article, I will explore different strategies that firms can use to incorporate AI technologies into their business processes. I will also highlight the advantages and disadvantages of each approach based on my observations.
1. Establish an internal R&D department
Many companies opt to create their own research and development (R&D) departments to drive AI innovation. For example, Siemens has set up its AI Lab to explore potential applications of industrial AI. While Siemens has seen some success in reducing production times without additional hardware, most companies face limitations when it comes to the benefits of an internal R&D department. Unlike startups, corporations have slower processes, less tolerance for errors, and high expectations that can stifle innovation. To make this approach successful, companies should give their R&D department autonomy to operate like a startup.
2. Create a corporate venture fund (CVF) or accelerator focusing on AI
Companies like Toyota and Qualcomm have invested heavily in AI startups through their venture funds and accelerators. Other firms, such as Fujitsu and Volkswagen, have launched their own acceleration programs to support startups addressing industry-specific challenges. While these initiatives can help companies pilot projects and collaborate with startups, they are often constrained by corporate culture and processes that may hinder innovation.
3. Hire a Chief Digital Officer (CDO)
Another approach is to appoint a Chief Digital Officer (CDO) or form a department dedicated to digitizing the company. The CDO’s responsibilities include developing AI strategies, engaging with startups, and driving digital transformation. However, challenges may arise from communication barriers between startups and corporate employees, as well as the need for alignment with the company’s vision.
4. Organize AI-themed hackathons
Hosting hackathons can be a powerful way to generate innovative ideas and solutions. Companies like Schneider Electric, GE, and Bosch have successfully implemented AI solutions developed during hackathons. The key to a successful hackathon lies in balancing creativity with systematization of results to leverage new technologies and talent.
Final thoughts
While these strategies can help companies integrate AI technologies and improve outcomes, effective communication and understanding between startups and corporations are essential. Companies should invest in bridging the communication gap and fostering collaboration to drive AI-powered innovation successfully.
