Understanding artificial intelligence

Management for Professionals

Understanding

Artificial

Intelligence

Ralf T. Kreutzer · Marie Sirrenberg

Fundamentals,

Use Cases and Methods

for a Corporate AI Journey

Management for Professionals

The Springer series Management for Professionals comprises high-level business

and management books for executives. The authors are experienced business

professionals and renowned professors who combine scientific background, best

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More information about this series at http://www.springer.com/series/10101

Ralf T. Kreutzer • Marie Sirrenberg

Understanding Artificial

Intelligence

Fundamentals, Use Cases and Methods

for a Corporate AI Journey

123

Ralf T. Kreutzer

Berlin School of Economics and Law

Berlin, Germany

Marie Sirrenberg

Bad Wilsnack, Germany

ISSN 2192-8096 ISSN 2192-810X (electronic)

Management for Professionals

ISBN 978-3-030-25270-0 ISBN 978-3-030-25271-7 (eBook)

https://doi.org/10.1007/978-3-030-25271-7

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Any sufficiently advanced technology is not

too different from magic.

Arthur Clarke

Preface

One term is increasingly dominating discussions on the subject of digitalization:

Artificial Intelligence (AI). Chinese companies such as SenseTime even place

Artificial Intelligence at the center of the 4th Industrial Revolution, in which

most of the world’s economic nations find themselves today. SenseTime has a good

position to do this—after all, it is currently the most valuable AI start-up in the

world.

This is not by chance: In its master plan “Made in China 2025,” China defined

Artificial Intelligence as one of ten industrial areas in which China wants to achieve

a global leadership role. China had defined impressive goals. By 2030, China wants

to be more than just a global AI innovation center. The Chinese AI industry will

then have a value of approx. 150 billion US-$—and the AI-supported industry ten

times that amount. China has recognized that Artificial Intelligence is the mother of

all new technologies.

Developed countries in America and Europe are (still) far away from this kind of

strategic planning. Several questions arise regarding the possible causes:

• Is the inadequate analysis with Artificial Intelligence due to the fact that there is

still no comprehensive idea of what Artificial Intelligence can do for compa￾nies, entire industries, and countries?

• Is it primarily the tight legal framework that makes it difficult for companies

operating in that area to build up and use data necessary for Artificial

Intelligence?

• Or is it a lack of (proven) concepts to successfully unleash the potential of

Artificial Intelligence in the own environment?

We should have in mind that we are already in permanent contact with AI

applications today. If we use a digital personal assistant such as Alexa or Google

Home, we have access to AI applications. Anyone who receives support from

Google Translate or the German start-up DeepL in translating will benefit from

Artificial Intelligence. Whoever uses facial recognition systems utilizes AI algo￾rithms. When radiologists have X-ray images and CT scans evaluated by com￾puters, AI-supported expert systems are in action. In addition, robots are

increasingly being deployed—and not only in production. Autonomous driving is

another AI field of application that uses a robot as a driver. This makes it clear:

vii

Artificial Intelligence has already arrived in our everyday lives.

With this book, we want to contribute that (even) more people understand and

recognize the potential associated with Artificial Intelligence. At the same time,

it is clarified which framework is necessary for a responsible handling of

Artificial Intelligence. Finally, a convincing AI journey for the corporate

development of the AI potential is presented. After all, one thing is for sure:

Artificial Intelligence will change the lives of people and companies—embedded

in the possibilities of digitalization—even more sustainably than many can

imagine today.

The book encourages to consider this topic seriously (at an early stage) and should

help to identify and use sustainable value-adding fields of application—before

others do. Above all, it is intended to arouse curiosity and interest in the various

fields in which Artificial Intelligence can unfold its effects. It applies:

Artificial Intelligence will very quickly evolve from a nice-to-have technology

to a have-to-have technology. After all, Artificial Intelligence is not a tech￾nology like many others, but a basic innovation that will penetrate all areas of

business and life in the coming years.

It’s good to be prepared for that.

Berlin, Germany Ralf T. Kreutzer

Bad Wilsnack, Germany

August 2019

Marie Sirrenberg

viii Preface

Contents

1 What Is Artificial Intelligence and How to Exploit It? .......... 1

1.1 What Is the Core of Artificial Intelligence? ............... 2

1.2 Which Goals Can Be Achieved with Artificial Intelligence? ... 14

1.3 Fields of Application of Artificial Intelligence ............. 22

1.3.1 Natural Language Processing (NLP) .............. 24

1.3.2 Natural Image Processing/Computer Vision/Image

Processing ................................. 30

1.3.3 Expert Systems ............................. 34

1.3.4 Robotics/Robots ............................. 36

1.4 What Are the Global Economic Effects of Artificial

Intelligence? ...................................... 41

Bibliography .......................................... 55

2 Basics and Drivers of Artificial Intelligence .................. 59

2.1 Moore’s Law and the Effects of Exponentiality ............ 60

2.2 Digitalization and Dematerialization of Products, Services

and Processes ..................................... 60

2.3 Connecting Products, Services, Processes, Animals

and People ....................................... 62

2.4 Big Data ........................................ 64

2.5 New Technologies ................................. 69

2.6 Investment in Artificial Intelligence ..................... 81

Bibliography .......................................... 84

3 Fields of Application of Artificial Intelligence—Production

Area ................................................ 87

3.1 Introduction to the Fields of Application ................. 87

3.2 Significant Developments in the Production Area ........... 88

3.3 Smart Manufacturing................................ 89

3.4 Further Development of the Value Chains

and the Value Systems .............................. 94

3.5 Effects of Smart Manufacturing and Outlook .............. 96

Bibliography .......................................... 102

ix

4 Fields of Application of Artificial Intelligence—Customer Service,

Marketing and Sales .................................... 105

4.1 Service Sector: From Simple Chatbots to Digital Personal

Assistants ........................................ 105

4.1.1 Expectation Matrix of Customers and Companies..... 105

4.1.2 Voice Analytics and Chatbots in the Service Sector ... 107

4.1.3 Digital Assistants in the Service Sector ............ 116

4.1.4 Integration of Chatbots and Digital Assistants

into Customer Service ........................ 125

4.2 Marketing and Sales ................................ 130

4.2.1 Lead Prediction, Lead Profiling and Recommendation

Engine .................................... 130

4.2.2 Conversational Commerce ..................... 133

4.2.3 Sentiment Analysis........................... 136

4.2.4 Dynamic Pricing ............................ 140

4.2.5 Content Creation ............................ 141

4.2.6 Image Recognition ........................... 144

4.2.7 Fake Detection .............................. 147

Bibliography .......................................... 151

5 Fields of Application of Artificial Intelligence—Retail,

Service and Maintenance Sector ........................... 155

5.1 Challenges in the Retail Value Chain .................... 155

5.2 Forecasting Purchasing Behavior in the Retail Sector ........ 158

5.3 Service and Maintenance Sector ....................... 161

Bibliography .......................................... 165

6 Fields of Application of Artificial Intelligence—Health Care,

Education and Human Resource Management ................ 167

6.1 Health Care Applications to Improve Standard Processes ..... 167

6.2 Digital Twins and Human Brain Projects ................. 170

6.3 AI-Based Medical Use Cases.......................... 173

6.4 AI-Supported Education ............................. 179

6.5 AI-Supported Human Resource Management .............. 186

6.6 Summary ........................................ 190

Bibliography .......................................... 191

7 Fields of Application of Artificial Intelligence—Energy Sector,

Smart Home, Mobility and Transport ...................... 195

7.1 AI Applications in the Energy Sector .................... 195

7.2 Smart Home Applications ............................ 197

7.3 From Smart Home to Smart City ....................... 202

7.4 Mobility and Transportation Sector ..................... 205

Bibliography .......................................... 209

x Contents

8 Fields of Application of Artificial Intelligence—Financial

Services and Creative Sector .............................. 211

8.1 Financial Services .................................. 211

8.2 Creative Sector .................................... 215

Bibliography .......................................... 223

9 Fields of Application of Artificial Intelligence—Security

Sector and Military Sector ............................... 225

9.1 Security Sector and Social Scoring ..................... 225

9.2 Military Sector .................................... 230

Bibliography .......................................... 233

10 AI Challenge—How Artificial Intelligence Can Be Anchored

in a Company ......................................... 235

10.1 3-Horizon Model as a Framework for Orientation ........... 235

10.2 Recording the AI Maturity of Your Own Company ......... 238

10.3 Development of an AI Journey in the Own Company ........ 242

10.3.1 Phase 1: Comprehensive Information Gathering ...... 242

10.3.2 Phase 2: Systematic Preparation of AI Deployment ... 245

10.3.3 Phase 3: Development of AI Applications .......... 248

10.3.4 Phase 4: Integration of AI Applications

and AI Results into the Company ................ 268

Bibliography .......................................... 272

11 Outlook .............................................. 275

11.1 Time Horizons of Possible AI Developments .............. 275

11.2 Challenges for Politics and Society ..................... 280

Bibliography .......................................... 285

Bibliography ................................................ 287

Index ...................................................... 303

Contents xi

About the Authors

Prof. Dr. Ralf T. Kreutzer has been Professor of

Marketing at the Berlin School of Economics and

Law since 2005 as well as Marketing and Manage￾ment Consultant, Trainer, and Coach. He spent 15 years

in various management positions at Bertelsmann,

Volkswagen, and Deutsche Post before being appointed

Professor of Marketing in 2005.

Through regular publications and lectures, he has

provided important impulses on various topics relating

to marketing, CRM/customer loyalty systems, online

marketing, digital Darwinism, dematerialization, digital

transformation, change management, strategic and

international marketing as well as Artificial Intelli￾gence. He has advised a large number of companies in

Germany and abroad in these fields and trained and

coached managers at middle and top management

levels. He is a sought-after keynote speaker at national

and international conferences. He also moderates World

Café formats and other interactive forms of group work.

His most recent publications are Dematerialization –

The Redistribution of the World (2015, together with

Karl-Heinz Land), Digital Darwinism – Branding and

Business Models in Jeopardy (2015, together with

Karl-Heinz Land), Kundenbeziehungsmanagement im

digitalen Zeitalter (2016), Digitale Markenführung

(2017, together with Karl-Heinz Land), Praxisorien￾tiertes Online-Marketing (3rd edition, 2017), E-Mail￾Marketing kompakt (2018), Führung und Organisation

im digitalen Zeitalter – kompakt (2018), Digital

Business Leadership – Digital Transformation, Busi￾ness Model Innovation, Agile Organization, Change

Management (2018, together with Tim Neugebauer and

Annette Pattloch), Social-Media-Marketing kompakt

xiii

(2018), Online Marketing – Studienwissen kompakt

(2nd edition, 2019), and Toolbox for Marketing and

Management (2019).

Contact:

Prof. Dr. Ralf T. Kreutzer

Professor of Marketing at the Berlin School of Eco￾nomics and Law as well as Marketing and Management

Consultant, Trainer, and Coach

Alter Heeresweg 36

53639 Königswinter

[email protected]

www.ralf-kreutzer.de

Marie Sirrenberg is an IT Consultant at Atlassian

Platinum Solution Partner STAGIL. Previously, she

worked as an NPS specialist for the SaaS startup

zenloop, where she built up sales structures and advised

successful e-commerce companies on feedback manage￾ment. At WDM, a medium-sized industrial company, she

accompanied digitalization processes with a focus on

online communication and SEO.

During her master studies in International Marketing

Management at the HWR Berlin, she focused on

digitalization topics such as social media strategies,

digital education, and Artificial Intelligence as well as

Design Thinking. The comprehensive interpretation of

Artificial Intelligence for future business models was the

reason for the master thesis The future role of Artificial

Intelligence in the service sector – challenges, tasks,

recommendations.

Contact:

Marie Sirrenberg (M.A.)

Große Straße 1

19336 Bad Wilsnack

[email protected]

xiv About the Authors

Abbreviations

AAL Ambient assisted living

AGI Artificial general intelligence

AGV Automated guided vehicle

AI Artificial Intelligence

AIaaS Artificial Intelligence as a service

AIR Artificial Intelligence roman

AKI Acute kidney injury

AP Associated Press

API Application programming interface

AR Augmented reality

BaaS Backup as a service

BCI Brain–computer interface

BEO Bot engine optimization

BKA Bundeskriminalamt (German Federal Criminal Police Office)

BMI Brain–machine interface

CFI Leverhulme Centre for the Future of Intelligence

CPS Cyber-physical system

CRM Customer relationship management

CT Computed tomography

CUI Conversational user interface

DFKI Deutsches Forschungszentrum für Künstliche Intelligenz (German

Research Center for Artificial Intelligence)

DICaaS Data-intensive computing as a service

DWH Data warehouse

EEG Electroencephalography

EMG Electromyography

ERP Enterprise resource planning

ETFs Exchange-traded funds

EU European Union

FAQs Frequently asked questions

FLOPS Floating point operations per second

fMRI Functional magnetic resonance imaging

GDPR General Data Protection Regulation

xv

GDR German Democratic Republic

GIGO Garbage in, garbage out

GUI Graphical user interface

HBP Human brain project

HPCaaS High-performance computing as a service

HR Human resources

HuaaS Humans as a service

IaaS Infrastructure as a service

IoE Internet of everything

IoT Internet of things

IT Information technology

ITS Intelligent tutoring system

KDD Knowledge discovery in databases

LPWAN Low-power wide-area network

MaaS Mobility as a service

ML Machine learning

MOOC Massive open online course

MRI Magnetic resonance imaging

MUaas Music as a service

MVP Minimum viable product

NASA National Aeronautics and Space Administration

NER Named entity recognition

NLG Natural language generation

NLP Natural language processing

NLU Natural language understanding

NPS Net Promoter Score

OECD Organisation for Economic Co-operation and Development

OEM Original equipment manufacturer

PaaS Platform as a service

POS Part-of-speech (tagging)

RFID Radio frequency Identification

ROI Return on investment

RPA Robotic process automation

SaaS Software as a service

SDK Software development kit

SEO Search engine optimization

SLAM Simultaneous localization and mapping

SST Self-service technologies

STEM Science, technology, engineering, and mathematics

STS Speech-to-speech

STT Speech-to-text

TaaS Transportation as a service

TK Techniker Krankenkasse (German Health Insurance)

TTS Text-to-speech

TTT Text-to-text

xvi Abbreviations