As the business world continues to seek growth through efficiency, to shorten operational cycles and accelerate delivery, we may be bound to see the proliferation of emerging technologies like conversational AI.
Artificial intelligence systems have so far become a means for streamlined delivery as companies get to spend less to do more, whether this means less labor, faster task completion, or more analytics for better insights and improved decision-making.
But while the outlook from a business standpoint seems to largely build confidence for growth, the proliferation of conversational AI systems has created somewhat of a Jevons paradox scenario, where rather than simplify workflows, they at some point introduce a new form of complexity, which once more impacts delivery and competition, two core reasons why AI adoption thrives in the corporate landscape.
Click here to learn more about Jevon’s Paradox.
Understanding Jevons Paradox in a Digital Context
The concept behind Jevons paradox can be simply seen this way: You adopt a system during production, it enhances resource efficiency, but drives overreliance, which in turn leads to a spike in demand for the same resource meant to be downscaled during production.
When this happens, oftentimes, businesses are left with questions like: “When does the paradox end?” “How do we break it off?”
However, the real question isn’t about the paradox itself but about how businesses must navigate growth amid the shift. As much as AI adoption means complexity in today’s digital context, it also means emerging opportunities that businesses must identify and leverage to build a more competitive edge.
As we migrate more into the digital landscape, we will uncover more potential with AI; we will be bound to deal with a bigger pool of data sets to complete; and thus, we will have to make more decisions around the use of data for operational efficiency.
How Conversational AI Triggers the Paradox
When it comes to conversational AI, we’ve seen a rapid rise in commercial adoption, thanks to its ability to streamline customer relationships, shorten workflows for marketing teams looking to expedite campaign planning and execution, generate content and useful analytics, and navigate next steps in the marketing cycle. Sales teams are able to close deals faster as they leverage lead insights based on AI-driven analytics and handle multiple prospect segments simultaneously.
However, all of these come at the cost of the paradox. But as Justin with the Orange Beard at Firebringer AI advises businesses, exploring conversational AI capabilities goes beyond passive use. Teams must ensure they not only scope out why they need the tools but also ensure they know how well to blend this with human effort to optimize performance. Think in terms of employee training for the most effective use of these tools and proper oversight.
In the absence of clear directions on how artificial intelligence should be leveraged, companies may miss out on clear opportunities to scale up amidst the rising need for data in internal operations, which, in turn, can be overwhelming, even costly to run when measured against benefits.
Economic Implications for Businesses
The economic implications of Jevons paradox for businesses in the AI space involves both risk and benefits. And for every business owner, this narrows down to strategic decision-making.
The paradox isn’t firm- but industry-driven. As such, business owners must think in terms of how to understand its impact on their business performance, in their markets, while leveraging opportunities presented to ensure strategic control.
From an economic standpoint, conversational AI can help reduce costs and drive revenue. And when costs are lower, businesses benefit from surplus finances which may be further allocated to other strategic units, such as testing new tools, exploring new markets, launching new services and scaling up delivery and enhancing competitive edge.
While AI adoption accelerates due to its impact on operational efficiency, it often requires more data over time as more tasks get covered within shorter operational cycles. Again, the safe use of artificial intelligence in the corporate space is deeply tied to compliance, which concerns ethics as much as it does strategic growth.
To learn more about the impact of artificial intelligence on organizational performance, visit https://www.sciencedirect.com/science/article/pii/S2199853125000095.
In Sum: Manage the Paradox Strategically
Businesses must decide how much automation should be leveraged in their everyday operations and how much human oversight is needed. When goals are properly set out, artificial intelligence can become a well-curated means to strategic ends.
Also, IT governance can greatly impact a company’s use of these systems and, more so, its brand. Businesses need to ensure a careful review of artificial intelligence in terms of ethical use, regardless of target strategic benefits, as this would help ensure optimized delivery as well as alignment with brand values.
Again, they must remember that the proliferation of AI should not mean blind reliance, as human effort will always remain a crucial element for business growth, and a neutralizer of the paradox effect.