According to the latest annual McKinsey Global Survey, the utilization of Generative AI (Gen AI) has become widespread with one-third of organizations integrating it into their business functions. The focus of AI is now a major aspect for corporate leaders, with 40% of them considering increasing their investment due to gen AI advances. Notably, early adopters are harnessing gen AI’s potential and outracing other adopters. Gen AI is anticipated to significantly disrupt businesses, leading to workforce reductions in some sectors and reskilling initiatives.
Gen AI usage spans various seniority levels and is predominant in the tech sector and North America. The most frequent business functions leveraging gen AI are marketing, sales, product development, and service operations, expected to deliver about 75% of the total value. Three-quarters of organizations foresee gen AI causing major changes in their industry competition over the next three years.
Tech companies may see up to 9% of global industry revenue increase due to gen AI, with knowledge-based industries like banking, pharmaceuticals, and education potentially witnessing up to 5% value addition. However, industries like aerospace and automotives might experience less disruption due to gen AI’s proficiency in language-based activities over physical labor.
Few organizations have policies for the use of gen AI technologies, with only 32% actively mitigating inaccuracy risks. Inaccuracy, cybersecurity, and intellectual property infringement are the main risks associated with gen AI. Top-performing companies utilize traditional AI and gen AI to gain significant value, focusing on creating new revenue sources rather than cost reduction.
Investments in AI are substantial among high-performing organizations, dedicating over 20% of their digital budgets. Despite the struggles with monitoring model performance and retraining models, these organizations adopt AI in multiple business functions. They utilize a higher number of AI capabilities, including knowledge graphs and natural language capabilities.
Adopting transformative AI applications may necessitate following high performers’ practices. Staffing for AI-related roles is challenging but has become less so over the past year, perhaps due to tech company layoffs. AI adoption is predicted to dramatically reshape many job roles over the next three years.
AI adoption and impact remain stable, with only a third of organizations using AI in more than one business function. Product and service development, as well as service operations, are the main areas where AI is used. Only 23% of respondents attribute at least 5% of their organizations’ EBIT to AI use, indicating untapped potential.
- One-third of organizations are using generative AI in at least one business function.
- This indicates that AI technology is becoming more mainstream and widely accepted in various sectors.
- 40 percent of company leaders plan to increase their investment in AI.
- This highlights the growing recognition of the potential benefits of AI technology among business leaders.
- Early adopters of AI are exploring generative AI’s potential and outpacing others in adoption.
- Early adopters typically have a competitive edge, demonstrating the importance of staying ahead in tech trends.
- Generative AI is expected to cause significant business disruption, leading to workforce cuts in some areas and reskilling efforts.
- This emphasizes the transformative nature of AI technology and its potential to dramatically alter the workforce landscape.
- Gen AI is most common in the technology sector and North America.
- This shows that the adoption of AI technologies is region and industry-specific.
- The most common business functions using gen AI are marketing, sales, product development, and service operations.
- This underscores the versatility of AI applications across different business functions.
- Tech companies could see up to 9% of global industry revenue increase due to gen AI.
- This suggests that gen AI has a substantial potential to boost economic performance.
- Only 32% of organizations are actively mitigating the risk of inaccuracy associated with generative AI.
- This demonstrates a potential area of improvement for organizations adopting AI technology.
- High-performing organizations are using gen AI to create new businesses or revenue sources, rather than just reducing costs.
- This underlines the strategic benefits of AI technology beyond mere cost-cutting measures.
- AI adoption is predicted to dramatically reshape many job roles over the next three years.
Source Article: The state of AI in 2023: Generative AI’s breakout year
Multiple Choice Questions:
- What proportion of organizations are using generative AI in at least one business function?
- Which of the following sectors is predicted to see up to 9% of global industry revenue increase due to generative AI?
- What percentage of high-performing organizations allocate over 20% of their digital budgets to AI?
D) Not specified
The Bottom Line for Marketers:
Gen AI can dramatically reshape various business functions, especially marketing and sales. Leveraging gen AI could offer a competitive edge and potentially untapped value, as evidenced by only 23% of respondents attributing at least 5% of their organization’s EBIT to AI use. Therefore, investment in AI technologies could offer significant returns.
Multiple Choice Answers:
- B) 33%
- D) Technology
- D) Not specified
Michael J. Goldrich, Vivander Advisors: A leading consultancy enterprise specializing in comprehensive hospitality services, including digital marketing, generative AI consulting, media strategy, and project management. Our aim is to empower hotels and brands to increase their revenue and cut costs through a unique approach to profit optimization.