Cognitive business models position enterprises for long-term success
In the business world, the most critical mandate is one of financial sorts. To survive, companies have to turn a profit. Every business model is developed with this obligation in mind. Whether by increasing revenues, cutting expenses, adding new revenue streams or embracing a combination of strategies, these business models are only as good as the results they are able to generate.
Traditional business models have done a fine job steering organizational practices, but innovations built on digital technology have opened the door to new ways of thinking. Experts now view cognitive business models as the strategic framework that will shepherd in a new way of doing business — one that builds upon the strategy of traditional business models by leveraging new digital intelligence to streamline operations and maximize profits.
In the most general sense, cognitive models differ from traditional models in terms of the technology they use and the way they make decisions. Instead of leaning on time-tested best practices, cognitive computing solutions can uncover new insights and make recommendations traditional strategies might not have recognized. These opportunities didn’t exist in years’ past, when the technologies being used were in their infancy and not available to the masses. However, as artificial intelligence has been refined and made available at the enterprise level, it has become the engine for new, powerful business models.
Out with the old
Even before cognitive computing blew the lid off of traditional business models, digital influences were already causing disruption and change. As Inc. pointed out, the rise of the internet and social media created a more complex platform for communications between brands and their consumers. Instead of relying on one-way communications and more linear interactions, social platforms encouraged a nonlinear approach to these interactions, with the concept of engagement taking precedence over other communication metrics.
Other digital changes pushed traditional business models to adapt as well. Today’s consumers are far less patient than consumers of the past. Slow websites, frustrating shipping times and delayed experiences all foster negative brand impressions and put a company’s viability at risk. Traditional models have had to adapt to these changing market demands by embracing strategies that are agile enough to keep pace with evolving consumers’ demands.
Though that change may sometimes come too slow for some consumers, traditional models have done a fine job of supporting this adaptation. However, cognitive business models are far better equipped to support the type of operations needed to succeed in an increasingly digital world. Cognitive capabilities represent a new era built upon unprecedented digital intelligence, which offers the potential for automation and efficiencies traditional models simply can’t match.
The progress made by traditional business models has been necessary and beneficial, but better alternatives are opening the door to a far more productive future.
Modeling cognitive change
As IBM CEO Ginni Rometty explained to Fortune, the next decade will be defined by the application of cognitive models by businesses eager to leverage digital intelligence. The transition will take place on several levels: Ideological and philosophical change will be driven at the executive level, while the application of cognitive models will produce tangible results.
Rometty highlighted a few areas in which companies can start building a cognitive business model through practical changes to their operations. One of these suggestions is a focus on driving deeper engagement with consumers, providing better support and interaction to elevate the customer experience. Rometty also recommends using cognitive intelligence to build scalable training solutions for employees that can provide effective training while keeping costs under control.
Other changes include the following:
- Streamlining in your supply chain
- Building more intuitive products that answer more directly to the needs of your consumers
- Using cognitive insights to guide product discovery and research
These cognitive business models will be a prime source of disruption as they replace traditional models and force organizations to adapt Those difficult transitions will lead to much brighter futures in which efficiency and optimization are valued and businesses are positioned for long-term success.