Move from reaction to prediction with generative AI

A lot of literature has been written about the current volatility that retailers are facing and the fact that the current risk-based environment will continue for the foreseeable future as the present disruptive forces that are driving the market have created a new status quo that retailers have to adjust to in order to add value to consumers.

How do retailers move beyond disruption? How do they steady the ship that is their current reality? How do they find value in this perfect storm that drives consumerism? Investing in technology and leveraging the insights generated by generative artificial intelligence (AI) could answer this equation.

The value of predicting: Identifying the light at the end of the tunnel or the oncoming train

The Forbes article points out that prediction is essential from an opportunity perspective (i.e., what roads you could go down) and a contingency-planning perspective (i.e., what to do when you see the train barrelling toward you). In the old days, we often would find ourselves in a situation where the train hit us, and we had to work together to fix the pieces. The beauty of predicting offers both a reactive and proactive prediction of things: opportunities for your business to take advantage of and identify things that could damage your business.

Perhaps if Budweiser hadn’t partnered with transgender influencer Dylan Mulvaney for an Instagram ad for Bud Light (a decision the author or the Forbes article supported), they wouldn’t have faced a very public and nasty backlash from their conservative audience, leading to two executives taking a leave of absence and almost $400m in lost revenue. Predicting vs. listening could have identified this country’s increasing trend of deep political division. Perhaps Budweiser would have second-guessed if they wanted to capitalize on this. Was it worth it? If you ask distributors, the company may never recover.

Trends vs. fads and market relevance

The Forbes article points out that the difference between a fad and a trend is time: fads are often short-term, and trends often last for the long haul. The Bud Light story of 2023 is a cautionary tale on how important it is for organizations to differentiate between trends versus fads and develop clear guidelines for what they will capitalize on and why.

The strongest organizations always consider the relevance of a specific trend or fad to their company by identifying one key element: cultural relevance. Cultural relevance is made up of two parts: what’s happening in the greater society and what’s happening culturally within the organization. When a trend or a fad has cultural relevance to what’s happening in the world and relevance to the organization and its values, then it’s a natural fit. What happened to Budweiser was their lack of understanding of the societal shift within the US market and their customer base. Perhaps if they recognized this shift, they would have recognized that it didn’t match their organizational culture or their customers’ context and would have made a different choice.

Why company values matter most

The Forbes article points out that to decide what trend or fad your organization will strategically capitalize on, you must be able to connect that trend or fad to your company’s values. Without that clear connection, it’s wise to pass. In 1996, during a boxing match for the WBA heavyweight championship, Mike Tyson bit off a chunk of opponent Evander Holyfield’s right ear. At the time, the Taco Bell marketing team came to me and said, “We should run a campaign saying, ‘take a bit out of this, not this.’” The first ‘this’ refers to the taco since its shape resembles a human ear. Sure, we could have hopped on this cultural fad and gained some publicity, but we ultimately decided not to pursue it because it didn’t align with Taco Bell’s values.

One of Taco Bell’s core values is everything has to be innovative and elevating. The author of the Forbes article points out that, at that time, Mike Tyson had just been released from prison for rape, and we knew that there was nothing we could have done with Tyson that was elevating. We chose not to act upon a fad and used our company values to govern our decision-making process.

The article adds even with access to powerful predictive AI tools, organizations have to make these decisions based on their core values, personal wisdom, and experience. If we let technology make these fad and trend decisions on our behalf, we can end up in a situation like Bud Light found itself in earlier this year. In the case of “take a bite out of this, not this,” mindlessly following an AI-driven tool’s fad-driven recommendation without considering if it was the right fit for Taco Bell’s values, the campaign could have been disastrous. AI tools like this should be another data point to consider in any company’s marketing decision process, not the driver of the decision itself.

Our windshield is getting larger

The Forbes article points out that it has always been easier for businesses to tell a story about the past than predict what’s next. Think about what you see when you’re driving a car. The rearview mirror is tiny, allowing you to see what’s behind you. While the windshield is huge, giving you a clear view of what’s coming up the road. But in business, traditionally, it’s been the other way around; we had proportionally little information about what’s coming up on the road ahead of us and a larger view into where we’ve already been.

Thanks to technological advances with generative AI, we’re moving into a new moment with a much wider windshield; we can see more of what’s next. This technology enables organizations to better align resources to the things that will drive growth. The businesses that prioritize predicting trends and fads, along with listening and leveraging this technology as an element of their decision-making process, will have more opportunities to see what’s coming and be agile enough to adjust their business strategies to win.

Stepping out of your comfort zone

Technology – specifically Big Data – can provide companies with many insights that could benefit their business. However, it is one thing to have all of these insights, but they mean nothing until they can be turned into action points that can benefit a business.

BRPs and turnaround specialists must encourage clients to step out of their comfort zone and embrace technology. At a time when layoffs are a distinct possibility, or there is a hiring freeze, space needs to be made for growing the technological capabilities of a financially distressed business. Technology is growing at a pace that is so rapid that it leaves late adopters in a position where they will never be able to catch up with industry trends once they pass them; this will only compound financial distress, not address it.