The AI Product & Tech Stack, AI Platforms as Competitive Advantage
The value chain, core competencies and assets
When building an AI company it’s important to consider where in the value chain it will sit and what core competencies and assets will be key to a solid product value proposition and competitive advantage.
3 major elements of the stack are:
Foundational Models - the large models which are trained on a vast quantity of data at scale and that result in a model that can be adapted to a wide range of downstream tasks.
Specialized Models - models which operate within a limited context and are applied to a narrowly defined problem
Applications - products which rely on AI models to solve a consumer and / or enterprise problem
An AI company can invest in building one, two or all three parts of the stack and each of them will have a different role and require various capabilities and organizational strengths to be successful.
To develop a great foundational model you need access to large amounts of data and efficient and relatively inexpensive computing infrasatructure. The advantage of having a foundational model is that it is multi-purpose and can become the foundation for other AI-based products and support a partner and developer ecosystem. To become and remain competitive based on this model, you need to invest in technological R&D and differentiate through constant and significant performance improvements.
Specialized AI models rely on the capabilities of foundational ones and are additionally optimized for niche use cases. Their competitive edge comes from access to private data sets and deeper domain expertize than multi-purpose models. They can be used internally to power applications in the selected vertical and to become a platform for partners and other developers.
AI applications can be built either on top of foundational or specialized models. Their strength comes from deep customer empathy, a clear and convenient UX and features developed from market and user insights. The top of the stack will provide us with the widest variety of use cases for AI and will include companies of all sizes. It’s the most interesting from the perspective of product innovation.
The framework above and more is available on The Strategy Deck’s Resources page.
Whether you go for the entire stack or a slice of it, that decision will influence what capabilities and assets you need to invest in and how your company will have to compete and differentiate for the long-term.
Elements of a Platform
With great innovation in the world of generative AI, where new companies and products emerge daily, it's crucial to recognize the new platforms which are about to be established.
They don’t come easy - to create a platform you need:
A product which provides features and value by itself to customers
An ecosystem of developers and content creators
A marketplace with infrastructure and guidelines for how developers can build for and integrate into the platform to provide value for customers
The framework above and more is available on The Strategy Deck’s Resources page.
A platform serves as a foundation for collaboration and innovation, acting as a catalyst for rapid growth. Platforms create an ecosystem that brings together multiple stakeholders, including one or multiple types of developers, and customers.
Building a platform opens the door to valuable developer ecosystem integrations, expanding the capabilities and reach of the core AI product. By collaborating with complementary products or services, a platform offers to users additional functionality and enhances the product value proposition. The ability to integrate with other products creates a network effect, amplifying the overall impact and competitive advantage of the platform.
Platforms provide the opportunity to capture a broader user base because of their diversified product value proposition. Instead of relying solely on a single AI product or service, a platform allows users to access a multitude of AI capabilities from a single source. This diversity and convenience attract a wider audience, catering to different customer segments, use cases, and user preferences. A platform can gain a larger market share and establish itself as a go-to solution for AI-related requirements.
Building a platform in the AI space can offer a significant competitive advantage. It fosters collaboration, encourages innovation, expands capabilities through partnerships, caters to diverse user needs, and provides the adaptability required to thrive in an ever-changing landscape
Looking forward to see what AI platforms will emerge and grow out of the tremendous energy behind this tech.