Interview – There is no stand-alone strategy for AI, it must be part of the company-wide strategy

Ronny Fehling is Partner and Associate Director for Artificial Intelligence as the Boston Consulting Group GAMMA. With more than 20 years of continually progressive experience in leading business and technology innovation, spearheading digital transformation, and aligning the corporate strategy with Artificial Intelligence he industry-leading organizations to grow their top-line and kick-start their digital transformation.

Ronny Fehling is furthermore speaker of the Predictive Analytics World for Industry 4.0 in May 2020.

Data Science Blog: Mr. Fehling, you are consulting companies and business leaders about AI and how to get started with it. AI as a definition is often misleading. How do you define AI?

This is a good question. I think there are two ways to answer this:

From a technical definition, I often see expressions about “simulation of human intelligence” and “acting like a human”. I find using these terms more often misleading rather than helpful. I studied AI back when it wasn’t yet “cool” and still middle of the AI winter. And yes, we have much more compute power and access to data, but we also think about data in a very different way. For me, I typically distinguish between machine learning, which uses algorithms and statistical methods to identify patterns in data, and AI, which for me attempts to interpret the data in a given context. So machine learning can help me identify and analyze frequency patterns in text and even predict the next word I will type based on my history. AI will help me identify ‘what’ I’m writing about – even if I don’t explicitly name it. It can tell me that when I’m asking “I’m looking for a place to stay” that I might want to see a list of hotels around me. In other words: machine learning can detect correlations and similar patterns, AI uses machine learning to generate insights.

I always wondered why top executives are so frequently asking about the definition of AI because at first it seemed to me not as relevant to the discussion on how to align AI with their corporate strategy. However, I started to realize that their question is ultimately about “What is AI and what can it do for me?”.

For me, AI can do three things really good, which humans cannot really do and previous approaches couldn’t cope with:

1. Finding similar patterns in historical data. Imagine 20 years of data like maintenance or repair documents of a manufacturing plant. Although they describe work done on a multitude of products due to a multitude of possible problems, AI can use this to look for a very similar situation based on a current problem description. This can be used to identify a common root cause as well as a common solution approach, saving valuable time for the operation.
2. Finding correlations across time or processes. This is often used in predictive maintenance use cases. Here, the AI tries to see what similar events happen typically at some time before a failure happen. This way, it can alert the operator much earlier about an impending failure, say due to a change in the vibration pattern of the machine.
3. Finding an optimal solution path based on many constraints. There are many problems in the business world, where choosing the optimal path based on complex situations is critical. Let’s say that suddenly a severe weather warning at an airport forces an airline to have to change their scheduling because of a reduced airport capacity. Delays for some aircraft can cause disruptions because passengers or personnel not being able to connect anymore. Knowing which aircraft to delay, which to cancel, which to switch while causing the minimal amount of disruption to passengers, crew, maintenance and ground-crew is something AI can help with.

The key now is to link these fundamental capabilities with the business context of the company and how it can ultimately help transform.

Data Science Blog: Companies are still starting with their own company-wide data strategy. And now they are talking about AI strategies. Is that something which should be handled separately?

In my experience – both based on having seen the implementations of several corporate data strategies as well as my upbringing at Oracle – the data strategy and AI strategy are co-dependent and cannot be separated. Very often I hear from clients that they think they first need to bring their data in order before doing AI project. And yes, without good data access, AI cannot really work. In fact, most of the time spent on AI is spent on processing, cleansing, understanding and contextualizing the data. However, you cannot really know what data will be needed in which form without knowing what you want to use it for. This is why strategies that handle data and AI separately mostly fail and generate huge costs.

Data Science Blog: What are the important steps for developing a good data strategy? Is there something like a general approach?

In my eyes, the AI strategy defines the data strategy step by step as more use cases are implemented. Rather than focusing too quickly at how to get all corporate data into a data lake, it will be much more important to start creating a use-case, technology and data governance. This governance has to be established once the AI strategy is starting to mature to enable the scale up and productization. At the beginning is to find the (very few) use-cases that can serve as light house projects to demonstrate (1) value impact, (2) a way to go from MVP to Pilot, and (3) how to address the data challenge. This will then more naturally identify the elements of governance, data access and technology that are required.

Data Science Blog: What are the most common questions from business leaders to you regarding AI? Why do they hesitate to get started?

By far it the most common question I get is: how do I get started? The hesitations often come from multiple sources like: “We don’t have the talent in house to do AI”, “Our data is not good enough”, “We don’t know which use-case to start with”, “It’s not easy for us to embrace agile and failure culture because our products are mission critical”, “We don’t know how much value this can bring us”.

Data Science Blog: Most managers prefer to start small and with lower risk. They seem to postpone bigger ideas to a later stage, at least some milestones should be reached. Is that a good idea or should they think bigger?

AI is often associated (rightfully so) with a new way of working – agile and embracing failures. Similarly, there is also the perception of significant cost to starting with AI (talent, technology, data). These perceptions often lead managers wanting to start with several smaller ambition use-cases where failure isn’t that grave. Once they have proven itself somehow, they would then move on to bigger projects. The problem with this strategy is on the one side that you fragment your few precious AI resources on too many projects and at the same time you cannot really demonstrate an impact since the projects weren’t chosen based on their impact potential.

The AI pioneers typically were successful by “thinking big, starting small and scaling fast”. You start by assessing the value potential of a use-case, for example: my current OEE (Overall Equipment Efficiency) is at 65%. There is an addressable loss of 25% which would grow my top line by $X. With the help of AI experts, you then create a hypothesis of how you think you can reduce that loss. This might be by choosing one specific equipment and 50% of the addressable loss. This is now the measure against which you define your failure or non-failure criteria. Once you have proven an MVP that can solve this loss, you scale up by piloting it in real-life setting and then scaling it to all the equipment. At every step of this process, you have a failure criterion that is measured by the impact value.

This year Predictive Analytics World for Industry 4.0 runs alongside Deep Learning World and Predictive Analytics World for Healthcare.

Benjamin Aunkofer

Benjamin Aunkofer is Lead Data Scientist at DATANOMIQ, a consulting company for applied data science in Berlin. He is lecturer for Data Science and Data Strategy at HTW Berlin and gives trainings for Business Intelligence, Data Science and Machine Learning for companies.