Generative AI is shaping business, and driving investment

While ChatGPT has become popular the world over as an AI content generation tool, there are many other tools that are seeing just as much success when it comes to helping businesses boost their productivity and bring their creative ideas to life.?

Top level management focusing on ways to build business through AI

In the latest McKinsey Global Survey on AI, they report that while AI was previously a topic discussed only by tech employees, it has now become a focus for executives, with nearly one-quarter of surveyed C-suite executives saying they are personally using gen AI tools for work.

Alex Singla, Senior partner and global leader of QuantumBlack, AI by McKinsey said that she finds it amazing how quickly the conversation around generative AI has evolved.?

“Just a few months ago, the conversation in the C-suite was pretty rudimentary, focused on trying to understand what it was and seeing what was hype versus what was reality. Now in just about six months, business leaders are having much more sophisticated conversations,” she said.

“We see from the data that the promise of generative AI is leading almost half of companies already using AI to plan on increasing their investments in AI, driven in part by the understanding that broader capabilities are needed to take full advantage of generative AI.”

More than one-quarter of respondents from companies using AI saying that gen AI is already on their boards’ agendas and that AI is being regularly used in at least one business function. Furthermore, 40 percent of those surveyed stated that their organizations plan to invest more in AI as a whole due to advancements in generative AI.

Well-known companies who have made significant investment into AI include Amazon who is using predictive analytics to figure out what to ship to clients before they have even bought it, based on existing buying patterns.? In addition, their convenience store Amazon Go which uses artificial intelligence technology to track what items you take and then charges you through the app on your phone.?

Microsoft is also committed to having smart machines central to everything they do and they are currently incorporating intelligent capabilities into all their products and services including Cortana, Skype, Bing and Office 365.

AI will be a workforce disruptor but could also improve existing skills

While one of the main concerns of many being whether AI will impact the workforce and lead to job losses, the report shows that business disruption could be significant and meaningful change could happen, but that where there are workforce cuts, there will also be efforts to reskill and train to address shifting talent needs.

A recent empirical study released by the National Bureau of Economic Research on the real-world economic effects of new AI systems, showed that AI caused a group of workers to be much more productive - by introducing the use of a popular, interactive chatbot, workers were able to accomplish much more in less time and with greater levels of customer satisfaction.

The McKinsey report also found that service operations is the only function in which most respondents expect to see a decrease in workforce size at their organizations. This finding generally aligns with McKinsey’s recent research which suggests that the percentage of worker activities that could be automated could be up to 60 or 70 percent, but that this doesn’t necessarily translate into the automation of an entire role.

The findings suggest that hiring for AI-related roles remains a challenge, with some respondents saying it is difficult to hire for roles such as AI data scientists, data engineers, and data-visualization specialists.

A look at which industries and departments can expect the most impact

It is also worth noting that the percentage of organizations using AI tools has remained stable since 2022, and these tools are still primarily concentrated in a limited number of business areas. The business areas include marketing and sales, product and service development, as well as service operations, including customer support and back-office functions.?

Previous research by McKinsey shows that while all industries are indeed likely to see some degree of disruption, the level of impact is likely to vary.?

Industries that rely heavily on using knowledge and information, could go through significant changes and potentially gain substantial benefits because of Gen AI. Tech companies are expected to benefit the most, possibly increasing their industry revenue by up to 9 percent. Additionally, sectors like banking (up to 5 percent), pharmaceuticals and medical products (also up to 5 percent), and education (up to 4 percent) might also experience significant shifts.

On the flip side, industries that manufacture physical products, such as airplanes and cars, might not experience as much disruption. This is unlike previous technological advancements that impacted manufacturing the most. The reason is that Gen AI excels in tasks that involve language and thinking, rather than physical labour.

Risks not being addressed?

On the downside, responses from the survey show that many organizations are not yet addressing potential risks from using gen AI. Just 21 percent of respondents say their organizations have established policies governing employees’ use of gen AI technologies in their work.?

Examples of AI causing controversy include Amazon’s Rekognition face search and identification technology which was accused of serious gender bias, while Google faced an internal backlash for helping the US government analyze drone footage using artificial intelligence.?

While inaccuracy, cybersecurity, and intellectual-property infringement are the

most-cited risks of generative AI adoption, most respondents say their

organizations are only mitigating the most commonly cited risk with gen AI which is inaccuracy.

Alexander Sukharevsky, senior partner and global leader of QuantumBlack, AI by McKinsey says there is broad awareness about the risks associated with generative AI, but at the same time, the prevailing anxiety and fear is making it challenging for leaders to effectively address the risks.?

“As our latest survey shows, just a little over 20 percent of companies have risk policies in place for generative AI. Those policies tend to focus on protecting a company’s proprietary information, such as data, knowledge, and other intellectual property. Those are critical, but we’ve found that many of these risks can be addressed by making changes in the business’s technology architecture that reflect established policies.

The real trap, however, is that companies look at the risk too narrowly. There is a significant range of risks—social, humanitarian, sustainability—that companies need to pay attention to as well. In fact, the unintended consequences of generative AI are more likely to create issues for the world than the doomsday scenarios that some people espouse.”

In summary, the rise of Generative AI is reshaping industries, sparking investments, and prompting discussions about both its promise and potential risks. As this technology continues to evolve, organizations will need to strike a balance between harnessing its capabilities and addressing the multifaceted challenges it presents to society and the business world.