AI as the core of digital products

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Introduction

Last Friday, I attended The Product Conf 2024 in Madrid, where Oji Udezue, in his conference “Forward to the Future: How to Be Successful at PLG in the Age of AI,” launched a reflection that struck me profoundly. Artificial intelligence (AI) has ceased to be a luxury and has become a necessity. It's no longer just about adding a layer of AI to improve a product; now, real innovation comes from integrating AI deep into the core of the backend. This strategy not only enhances functionality but also transforms the user experience, optimizes internal processes, and offers differential value that can completely transform your product or business.

Thank you, Oji Udezue, for bringing such useful reflections and forcing us to think differently in such a dynamic world and to get out of the inertia of everyday life.

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The Relevance of Integrating AI Deeply into Digital Products

Integrating AI deeply into the development of digital products allows for maximizing its capabilities. We're not talking about AI as a simple “dressing” that makes our products look more modern. It's about turning AI into the core that drives the entire operation of the product. In doing so, we not only achieve incremental improvements but also significant transformations that redefine how users interact with our products and how they respond to their needs.

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Difference Between Using AI as a Surface Layer vs. Having It in the Core of the Backend

Historically, many companies have used AI as an additional layer to improve certain functions. Think about product recommendations in e-commerce or chatbots for customer service. Yes, these implementations have been useful, but it's like putting a turbo on an old car. AI acts as an improvement, but it's not transforming the fundamental structure of the product.

Now, imagine a car designed from the ground up with a turbo engine. That's the difference when we talk about AI in the core of the backend. Spotify is an excellent example: it uses AI not only to recommend music but to personalize the user experience based on global listening patterns and emerging trends, adapting user recommendations and experiences in real time. Another example is Tesla, whose autonomous driving system is based on a deeply integrated AI, collecting and processing data in real time to improve vehicle safety and efficiency.

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Transition to an AI Core

Companies are taking this approach because competitiveness in the market requires it. Oji Udezue also stressed that companies that don't integrate AI deeply into their systems will be at a disadvantage. The ability to adapt quickly to market and user needs is essential for continued success. In a world where agility and adaptability are key, having AI at the core becomes a critical differentiator.

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Benefits of this Transition: Economic and Product Impact

The benefits of this transition are multiple and have a significant impact on both operational efficiency and business success. Imagine having a factory where each machine is capable of self-adjusting to be more efficient, detecting problems before they occur, and predicting which products will be most in demand in the future. That's what core AI can do for your digital business. It's not just about improving the user experience a little bit, but about radically transforming how you operate.

Companies that integrate AI deeply can reduce operational costs by automating processes and minimizing human error. In addition, they can increase revenues by offering more personalized and relevant products and services, which in turn improves customer satisfaction and retention. Let's think about Netflix, which not only recommends movies but also personalizes the entire viewing experience based on user behavior. Not only does this retain users, but it also makes them consume more content, increasing the value of each subscriber.

On the other hand, replacing existing products to create new versions with AI at the core may seem like a significant investment, but the long-term benefits are unquestionable. This allows companies to stay one step ahead of the competition, adapt quickly to market changes, and better meet customer needs. Additionally, with a product optimized from the core, development teams can focus more on innovation and less on solving repetitive problems, leading to a faster and more efficient development cycle.

A good example of this is Amazon, which has integrated AI deeply into its inventory management system. Not only does this system track inventory in real time, but it also predicts future demand for products with impressive accuracy. AI analyzes historical sales data, buying trends, seasonality, and external events such as promotions or weather conditions to adjust inventory in its distribution centers. This real-time forecasting and adjustment capability allows Amazon to maintain a constant flow of products without the need to store large unnecessary quantities, saving space and reducing costs. In addition, by having the right inventory in the right place and at the right time, Amazon can fulfill orders more quickly and efficiently, significantly improving the customer experience.

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Risks of Not Making This Transition

Ignoring this transition can be very dangerous. Companies that don't integrate AI deeply could face loss of competitiveness, be overtaken by more innovative competitors, and face less optimized and more expensive processes. Additionally, disconnection with the user can be a serious consequence, since the inability to provide personalized and relevant experiences can result in lower customer satisfaction and a higher abandonment rate.

On the other hand, it is important to point out that not all sectors or companies face the same level of risk. Some companies and products already solve their customers' problems very well, and the needs in these sectors are not as changing. However, even in these cases, AI can offer additional competitive advantages and better prepare for future changes in the market.

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Conclusion

The deep integration of AI into the core of the backend of digital products is not just a trend but a necessity to remain relevant in a highly competitive market. By understanding and applying this approach, companies can not only survive but thrive in this new era. The future of product development is here, and AI is the engine that will drive that transformation. I hope this article has provided you with a clear and practical vision of the importance of integrating AI into the core of your digital products. Until next time!

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