The pandemic dramatically shifted how we live, work, and shop, accelerating the adoption of digital technologies . As online shopping surged, retailers faced the challenge of managing out-of-stock items, leading to frustration for customers and personal shoppers alike [1]. This challenge provides a great example of why compound innovation is so important.

What is Compound Innovation?

As Paul McDonagh-Smith from MIT Sloan School of Management explains, compound innovation is about more than just combining technologies [2]. It’s about creating a robust and sustainable solution by integrating human elements like creativity, curiosity, and compassion. It’s about “bonding technologies together with human elements”. This integration is crucial for building companies that are productive today and sustainable for the future .

Walmart’s Approach: An Example of Compound Innovation

Faced with the challenge of out-of-stock items, Walmart turned to AI [1]. Their approach was not simply to replace humans with machines, rather they combined AI with human interaction . Here’s how it worked:

• AI-Powered Recommendations: Walmart used deep learning AI to analyse hundreds of variables in real-time such as size, type, brand, price, shopper data and customer preferences to suggest the best substitute for an out-of-stock item.
• Human Oversight: Personal shoppers then review the AI’s recommendations and contact customers to get their approval before finalising the substitution. This ensures customer satisfaction and offers an opportunity for personalisation.
• Continuous Improvement: The AI system learns from each transaction and continuously improves its recommendations, benefiting both new and existing customers.

This is a great example of compound innovation in action, combining AI, social media, and cloud computing technologies, with the crucial human elements of communication, choice, and continuous learning.

AI for Human-Centric Matching

AI is also revolutionising the way we create matching solutions by tailoring services to meet individual needs and preferences .

This can be seen in areas such as :

• Healthcare, where AI enhances cancer detection and mental health support.
• Education and recruitment, where AI provides data-driven insights and more personalised experiences .

The refinement of AI models, by aligning them with ethical and moral standards, is critical. This includes ensuring fairness by using diverse training data, regularly auditing algorithms for bias, and promoting transparency in AI operations.

The Path Forward

As AI continues to evolve, its integration with human elements is vital for creating truly effective and ethical solutions.

This involves :

• Focusing on Collaborative Intelligence: Merging human intuition and creativity with AI’s computational capabilities.
• Addressing the Challenges of Integration: Establishing clear boundaries for AI’s role in teams, ensuring that AI complements human decision-making rather than replacing it.
• Emphasising Best Practices for Human-AI Collaboration: Implementing continuous education, and fostering data literacy and promoting blended teams where AI manages repetitive tasks and humans handle creative and strategic work .
  
  

What are your thoughts on compound innovation? How can we best integrate human elements with technology in your field? Please share your ideas in the comments below.