The DHM Model: Creating Delight, Hard-to-Copy Advantages, and Margin Enhancement in the Age of AI

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Sep 26, 2023

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The DHM Model: Creating Delight, Hard-to-Copy Advantages, and Margin Enhancement in the Age of AI

Introduction:

As AI technology continues to advance and reshape various industries, businesses must adapt and find ways to stay competitive in this changing landscape. The DHM (Delight, Hard-to-copy, Margin-enhance) Model provides a framework for businesses to thrive by focusing on delighting customers, creating hard-to-copy advantages, and enhancing margins. In this article, we will explore the DHM Model and discuss how it can be applied in the context of AI replacing humans.

Delighting Customers:

Delighting customers is a crucial aspect of any successful business. Businesses must constantly strive to understand and meet the evolving needs and preferences of their customers. The DHM Model encourages businesses to jot down how their products currently delight customers and explore ways to continue delivering delight in the future.

One example of a company that excels in delighting customers through AI is Netflix. By leveraging their personalization technology, Netflix can accurately forecast streaming hours for potential titles based on the movie tastes of their 185 million members. This allows them to invest in original content accordingly, providing a personalized and delightful streaming experience for their customers.

Creating Hard-to-Copy Advantages:

To stay ahead of competitors, businesses need to create hard-to-copy advantages that set them apart in the market. Hamilton Helmer's book, "7 Powers," outlines seven such advantages, including brand building, network effects, economies of scale, counter-positioning, unique technology, switching costs, and captured resources.

In the context of AI, businesses can focus on developing unique technology that is difficult for competitors to replicate. By investing in cutting-edge AI capabilities, companies can enhance their products or services and create a competitive edge. Additionally, businesses can explore strategies to build strong brands that establish trust with customers, making it harder for competitors to match their offering.

Margin Enhancement:

Margin enhancement is crucial for businesses to ensure sustainable growth and profitability. The DHM Model encourages businesses to experiment with pricing and business models to find ways to enhance their margins.

In the age of AI, businesses can leverage automation and AI-powered tools to streamline processes and reduce costs. By implementing AI-driven solutions, businesses can increase efficiency, reduce manual labor, and optimize resource allocation, leading to improved margins. It is essential for businesses to explore the potential of AI in enhancing their margins and adapt their pricing and business models accordingly.

The Impact of AI on the Workforce:

As AI technology advances, there are concerns about the potential replacement of human workers. A recent Gallup survey found that the fear of AI replacing jobs has increased among American workers, particularly those with college degrees. Goldman Sachs Research estimates that generative AI exposes 300 million full-time jobs to automation, with certain industries more susceptible than others.

However, it is important to note that not all jobs are at equal risk of being replaced by AI. Skilled trades, such as plumbing and electrical work, are viewed favorably by the younger generation (Gen Z), with a belief that these jobs are less likely to be replaced by AI. Nevertheless, it is crucial for businesses and policymakers to address the potential impact of AI on the workforce and invest in retraining programs to support workers in transitioning to new roles.

Actionable Advice:

  • 1. Embrace AI-First Thinking: Businesses should adopt an AI-first mindset and explore how AI can revolutionize their products or services. By building the entire product experience around the capabilities of AI, businesses can gain a competitive advantage and drive innovation in their respective industries.
  • 2. Invest in Skill Development: To mitigate the potential impact of AI on the workforce, businesses and policymakers should prioritize investments in retraining programs. By equipping workers with the skills needed in the AI-driven economy, we can ensure a smooth transition and minimize job displacement.
  • 3. Foster Collaboration between AI and Humans: Rather than viewing AI as a threat, businesses should strive to foster collaboration between AI systems and human workers. By leveraging the strengths of both AI and human intelligence, businesses can create more efficient and effective processes, leading to better outcomes.

Conclusion:

In the age of AI, businesses must adapt to stay competitive. The DHM Model provides a valuable framework for businesses to excel by focusing on delighting customers, creating hard-to-copy advantages, and enhancing margins. By embracing AI and leveraging its capabilities, businesses can unlock new opportunities for growth and innovation. However, it is crucial to address the potential impact of AI on the workforce and invest in retraining programs to support workers in this transition. By following the actionable advice provided, businesses can navigate the evolving landscape of AI and thrive in the digital era.

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