'Fusion Strategy can deliver low-cost solutions to Indian masses'

Artificial Intelligence (AI) is no longer a luxury for corporations but an imperative that must be integrated with decision-making in real time, says management guru VIJAY GOVINDARAJAN of Tuck School of Business at Dartmouth College. In his latest book Fusion Strategy co-authored with Venkat Venkatraman, he argues that Al and real-time data should be leveraged to radically transform physical products and the companies that make them. He explains how in an email interview with Kanika Datta. Edited excerpts:

- VIJAY GOVINDARAJAN

In the opening chapter of your book you suggest that Indian companies lag global competitors in terms of AI adoption. How far do you estimate the "distance to frontier" for India Inc? 

In the US, digital giants such as Google, Apple, Netflix, and Amazon have destroyed consumer companies by leveraging data and AI. Google disrupted advertising. Amazon changed strategy in retail. Netflix reimagined the way we watch movies. The IT services boom started in India in the mid-1990s. However, the Indian IT companies succeeded by automating processes, not by developing new business models. India has the digital talent. It should deploy that talent to make smart industrial products such as connected cars, connected tractors, smart homes, and so on.

Would catching up involve massive investments or IT tweaks to incorporate the kind of best practices described in your book?

IT is about process efficiency. Digital is about developing new strategy. Tweaks of IT won't do. We need massive investments in retooling and producing AI talent. Open AI and Anthropic have developed Large Language Models. This is foundational AI. India need not have to invest in such foundational breakthroughs. What India needs are AI talent that can build applications on top of foundational models to offer new customer value.

Embedding data analytics in your products and services, the essence of the "fusion strategy" would push up costs. Wouldn't this impact a price-sensitive economy such as India?