In Part 1 of the series “GenAI: Beware the Productivity Trap,” we discussed embracing an economic mindset to avoid falling into the productivity trap. We discussed some challenges with the productivity trap and then reviewed some data economic concepts that can take your organization to the next level of game-changing performance and innovation.
In Part 2, we will dive deep into the concept of nanoeconomics and how organizations can leverage nanoeconomics as a game-changing “force multiplier” to foster industry economic transformation.
A force multiplier is a factor that gives organizations the ability to generate more relevant, impactful outcomes with less effort or resources.
Let’s explore how nanoeconomics is the force multiplier for driving industry economic transformation.
Leveraging Nanoeconomics to Drive Industry Economic Transformation
In the age of Big Data (granular, individualized data) and AI, nanoeconomics is truly the game-changer. Nanoeconomics can fuel industry economic transformation by altering industry competition, disrupting traditional business models, and re-engineering an organization’s value-creation processes.
Nanoeconomics is the economic theory of individual entity (human or device) predicted behavioral and performance propensities (insights).
The secret sauce to nanoeconomics is the granular data and the resulting predictive behavioral and performance insights we can uncover and codify at the individual entity level. We can apply AI to the entity-level, granular data to uncover and codify human or device entity-level analytic scores that predict the likelihood of entity-level actions or behaviors (Figure 1).
An Analytic Score is a normalized, mathematically generated number that predicts a particular outcome or action’s likelihood (or propensity) for an individual human or device entity.
Figure 1: Analytic Scores
Analytic scores are a digital economic asset that can deliver meaningful, quantifiable value to the organization by:
- Improving decision-making with more objective, relevant, and consistent decision-making recommendations
- Enhancing customer experience and satisfaction through the delivery of highly personalized and relevant solutions
- Increasing operational efficiency and effectiveness by optimizing key business and operational processes and resource allocation
- Driving innovation and growth in driving the discovery of new value-creation opportunities
The entity-level analytic scores are stored and managed in an analytic (digital) profile or key-value data or feature store (Figure 2).
An Analytic (Digital) Profile is an asset model that captures analytic insights (propensities) about the organization’s most valuable assets, such as customers, products, or operations.
Figure 2: Analytic (Digital) Profiles
The entity-level analytic profiles facilitate the application of the analytic scores across multiple use cases, whereby each application of an analytic score not only delivers meaningful, quantifiable value but also provides the basis for the continuous monitoring and refinement of the analytic scores (Figure 3).
Figure 3: Analytic Profiles and Analytic Scores Optimize Business and Operational Use Cases
Finally, the application of nanoeconomics, analytic scores, and analytic profiles optimize critical business and operational use cases, enabling the organization to “do more with less” in optimizing the prioritization and application of the organization’s resources (at the individual human and device level) to transform an organization’s economic value curve (Figure 4).
Figure 4: Transforming Your Economic Value Curve
Examples: Nanoeconomics Driving Industry Transformation
Nanoeconomics can enable more precise, more effective decisions and actions that drive economic transformation in various industries, such as:
- Health care: Nanoeconomics can optimize the delivery and consumption of health care services by leveraging data and analytics to understand and predict the propensities of patients, providers, payers, and regulators.
- Education: Nanoeconomics can optimize the provision and acquisition of education services by leveraging data and analytics to understand and predict the propensities of learners, educators, employers, and policymakers.
- Energy: Nanoeconomics can optimize the production and consumption of energy services by leveraging data and analytics to understand and predict the propensities of producers, consumers, distributors, and regulators.
- Transportation: Nanoeconomics can optimize the mobility and accessibility of transportation services by leveraging data and analytics to understand and predict the propensities of travelers, operators, providers, and regulators.
- Retail: Nanoeconomics can optimize the supply and demand of retail services by leveraging data and analytics to understand and predict the propensities of consumers, sellers, suppliers, and marketers.
- Manufacturing: Nanoeconomics can optimize the production and consumption of manufacturing services by leveraging data and analytics to understand and predict the propensities of producers, consumers, distributors, and innovators.
Beware the Productivity Trap; It’s About Nanoeconomics – Part 2
GenAI / AI is a powerful tool for economic transformation but requires a mindset that moves beyond productivity improvements. To fully exploit the potential of GenAI / AI requires an economic mindset focused on creating value for customers, stakeholders, and society.
Nanoeconomics is the digital economic force multiplier enabling organizations to alter industry competition, disrupt traditional business models, re-engineer an organization’s value-creation processes, and transform their economic value curve (Figure 5).
Figure 5: Data Economics Value Chain
The following blog in this series will address organizations’ second challenge in 2024 to leverage AI to get value from their data – empowering the organization to help identify where and how AI and data can be leveraged to create value.
