AI is changing innovation – here’s how

AI has boosted capabilities in personalisation by moving beyond traditional segmentation and instead learning directly from real-time user behaviour. Rather than relying on broad demographic categories, AI enables companies to tailor experiences at an individual level, offering customers highly personalised products and services.

Popular digital platform TikTok is a powerful example of AI-powered personalisation, and was a case study in a recent article co-authored by Peter Williamson, Honorary Professor of International Management at Cambridge Judge.

Unlike traditional recommendation engines that use search history or demographics, TikTok’s AI-driven algorithm analyses user engagement patterns in real time (such as how long users watch a video, what they skip and their overall interactions) to continuously refine recommendations presented on the platform’s ‘For You’ page. This approach allows TikTok to recommend content more accurately than traditional models and has played a key role in its rapid global success.

“We show how firms can create digital interactions from which information about individuals’ revealed preferences can be imputed,” says the research by Peter. AI can “enable born-digital firms, and potentially other businesses where digitalisation can play a role, to build new kinds of competitive advantages based on data network effects”.

We show how firms can create digital interactions from which information about individuals’ revealed preferences can be imputed.

Peter Williamson, Honorary Professor of International Management

AI’s personalisation capabilities are also having a massive impact on the finance industry. AI’s ability to analyse transaction histories and predict user preferences is shifting finance from a one-size-fits-all model to a highly personalised experience.

Alejandro Reynoso, external lecturer on the Cambridge Master of Finance programme and former Research Fellow at Cambridge Judge, highlights Visa’s recent partnership with Crayon Data, which introduced AI-driven insights that allowed credit card issuers to tailor financial products based on consumer behaviour.

This sort of precision improves customer engagement, reduces churn and enhances financial decision-making. “By integrating human interaction platforms with these potent robots, both retail and institutional clients can gain access to unprecedented speed, precision and sophistication – a realm once limited to only a select few industry leaders,” says Alejandro.

More broadly, AI is transforming cost efficiency in various industries by automating tasks, optimising resource use and cutting down on operational costs. In the finance sector, for example, AI-driven automation is taking over many tasks like trading, risk assessment and fraud detection, which means fewer humans are needed – therefore leading to significant savings.

“Machine learning algorithms can swiftly analyse massive datasets to pinpoint potential risks,” Alejandro says, and this enables “proactive mitigation strategies and more informed decision-making.”

By integrating human interaction platforms with these potent robots, both retail and institutional clients can gain access to unprecedented speed, precision and sophistication – a realm once limited to only a select few industry leaders,

Alejandro Reynoso, MFin External Lecturer

In healthcare too, the effects on AI personalisation is massive. Providers are now able to analyse real-time patient data to create dynamic, responsive and individualised care plans, with AI-driven digital therapeutics already improving outcomes for conditions like diabetes and obesity, helping patients manage their health more effectively while reducing unnecessary hospital visits and lowering medical costs.

“Precision medicine, a data-driven approach, tailors treatments to individual genetic profiles, medical histories and lifestyles…it is reshaping healthcare by focusing on personalised data to create customised treatment plans,” says research co-authored by Vincent Mak, Professor of Marketing and Decision Sciences at Cambridge Judge, which explored how AI and digital health technologies can enhance healthcare efficiency, improve patient outcomes and reduce healthcare costs. A report on this research was published by the UK Parliament’s Food, Diet & Obesity Committee.

Globally, AI approaches have shown impressive cost-effectiveness in managing such chronic conditions. A study on digital health therapeutics in Japan found that AI health interventions could save the country around $159 million a year while also improving health outcomes.

In India, AI now holds out the promise of highly affordable solutions for low-income citizens and consumers in rural areas regarding access to healthcare. Jaideep Prabhu, Vice-Dean for Faculty and Professor of Marketing at Cambridge Judge, cites the Bangalore-based company Sarvam AI, whose work allows rural patients to have phone access in their own language to their personal physician.

“AI is a wonderful tool if applied in a way that recognises the importance of working within environmental and social structures, and this can empower local communities while boosting inclusive growth that benefits large swathes of the population,” says Jaideep.

AI is a wonderful tool if applied in a way that recognises the importance of working within environmental and social structures, and this can empower local communities while boosting inclusive growth that benefits large swathes of the population.

Jaideep Prabhu, Professor of Marketing

The ability for AI-powered tools to gather customer and market data is impacting how companies internationalise. In the past, businesses have relied on costly foreign direct investment (FDI) to learn about local markets, but Peter Williamson’s research on Tik Tok instead identifies a proprietary AI model as a new way to provide a “new, country-agnostic way to enter foreign markets and adapt to differences among consumers”.

“The use of rapidly evolving AI technologies may enable some types of firms to move from a model of internationalisation one country at a time to global expansion one person at a time,” Peter says, citing the study of how TikTok expanded rapidly around the world from its base in China.

The implications of this internationalisation-at-a-distance strategy are extensive. “The new approaches to internationalisation made possible by AI suggests the need to re-think important elements of accepted international business theory,” says the study.

AI is transforming the way businesses approach their sustainability efforts by making energy consumption more efficient, helping in waste management and enhancing decision-making.

A report led by the Cambridge Centre for Alternative Finance (CCAF) at Cambridge Judge dives into the Bitcoin mining sector, where companies are increasingly leveraging existing power contracts and data centre infrastructure to capitalise on the skyrocketing demand for servicing AI workloads. The report titled ‘Cambridge Digital Mining Industry Report 2025’ is co-authored by Alexander Neumueller, Research Associate at the Cambridge Centre for Alternative Finance (CCAF), colleagues from CCAF, and Kamiar Mohaddes, Associate Professor in Economics and Policy at Cambridge Judge.

This increased demand for computing power, however, is spurring innovation elsewhere, with one case study from the report highlighting US-based Crusoe Energy, which addresses natural gas flaring, a major source of greenhouse gas emissions. Crusoe’s technology captures this otherwise-wasted gas to generate electricity on site, a process expected to reduce potent methane pollution more effectively than flaring, which then powers modular data centres that deliver high-performance computing crucial for AI training,

AI is also impacting sustainability efforts in healthcare. Digital health tools are helping to minimise hospital visits and cut down on emissions from unnecessary treatments. A 2023 analysis by PwC indicates that the adoption of artificial intelligence (AI) could reduce global greenhouse gas emissions by 4% and increase global GDP by 4.4% by 2030.

“Thanks to both technological advancement and its more enabling environment, we are entering the next generation of healthcare, which will make our health systems and society more sustainable,” says Vincent Mak.

Thanks to both technological advancement and its more enabling environment, we are entering the next generation of healthcare, which will make our health systems and society more sustainable.

Vincent Mak, Professor of Marketing and Decision Sciences