The Emergence of Dominant Designs in Artificial Intelligence

What is it about?

Artificial intelligence (AI) technologies are engaged in a harsh battle for market dominance. This article examines the emergence of a dominant design in terms of technology, service, and business model innovation. We conduct a theoretical synthesis of the literature on industrial organization, technology management, network economics, operations management, and strategic management—with the implications of each theory related to the dominant-design battle in AI. The findings indicate a dominant design for AI will be based on innovation concerning business models as much as on technology, and that the dominant business model will include AI as a service.

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Why is it important?

------------------------------------------------------- Contribution to Academic Scholarship ------------------------------------------------------- Technologies that connect industries with different clockspeeds create complex interactions which require new business models that align the ecosystems. Firms then need to exploit technological modularity and network economies accelerated by digital platforms. Therefore, dominant designs will be based on business model innovation as well as on technological progress. ------------------------------------------------------- Contribution to Management Practice ------------------------------------------------------- Only a few large digital platforms have the computational power to deliver AI through the cloud, and this business model is increasingly dominating the market. With AI supplied as a cloud-based service, companies will not need to create AI to integrate it in their offering. The quantity and quality of data for training AI will then determine competitiveness. ---------------------------- Author Perspective ---------------------------- The accelerated, disruptive development of AI is challenging theory by generating new industry dynamics which have not yet been explained. As AI redraws the business landscape and lays the ground for other groundbreaking innovations, understanding the interlinked coevolutionary nature of the AI ecosystem let more firms leverage this development.