Product Innovation in an AI World: When does AI actually belong in your product?

Last week I contended that one of the strongest competitive edges is building what your competitors can't easily copy. This week I want to pause on another awkward question: “Does AI belong in that product or solution?”

I was reminded of this recently by an acquaintance's account of how an AI trend impacted a business. I will describe the scenario.

Eight people. A solid scheduling and invoicing product for trades businesses, with a strong loyal customer base. They were up against a larger competitor who announced an “AI-powered” version of its product. Within a week, an “AI Assistant” was near the top of the founder's next things to do.

They asked the question. What value would it give the customer?

There was a long pause. Then, the answer was “It would write their quotes for them.”

Fair enough. So, they looked at the data: support tickets, feature requests and churn conversations from the last six months for the business. Quoting barely featured. Most were already doing it happily from their ute in a few minutes. What they hated was chasing money. Late invoices. The difficult follow-up text at day 40, resulting in the cash flow squeeze that the business could ill afford.

The AI quote writer would have been a great demo on how to integrate AI. It would have made the sales pitch sound current. But it would have done nothing about the acute problem customers were experiencing and wanted solved.

So, they changed the question. Not “where can we put AI?” but “what problem is the customer actually asking us to solve, and is AI the best tool for it?”

The answer turned out to be a small and unglamorous change. A model that flagged, at the point of issuing an invoice, which customers were likely to pay late, based on that business's own history. One line on the screen. The owner could then ask for a deposit, or shorten terms, before the problem eventuated. That is AI earning its place. It did a job the customer needed and would value.

Here are some of the questions I now use with any product team that asks me the AI question:
🟢 Start with the problem, not the feature. Write down what the customer is trying to solve, in their words, not yours.
🟢 Ask what changes for them if it works. If the answer is “it looks more modern”, stop there and reset.
🟢 Check whether AI is the only way or just the fashionable option. A better form, a rule or a reminder often does the job for a tenth of the cost.
🟢 Test it before you build it. A mock-up and five customer conversations will tell you more than building a working prototype to showcase.

None of this is anti-AI, as AI can be a great asset for any business. But in a product, AI is not the innovation. The innovation is understanding a customer's needs better than anyone else and using whatever tool does it best. Sometimes that tool is an AI model. Sometimes it's a checkbox.

Presently, the competitor still has an AI assistant on its homepage. The founder of the business in this scenario has experienced a growth surge in sales and customer loyalty, because they solved a problem customers were struggling with in their day-to-day operations.

That's where this series lands for me. Competing in an AI world isn't about finding more places to put AI. It's about knowing your customers well enough to know what's worth solving.

So, here's my question for you this week. What is the one problem your customers would thank you for solving? And is AI the best solution to solve that problem?

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