It’s almost impossible to avoid the barrage of stories about generative AI these days, with a daily firehose of innovations and new products designed to make it easier for individuals and organizations to adopt the game-changing technology.
The economic impact of generative AI will be wide, with McKinsey and Co. saying in a report last year that the technology could add $2.6 trillion to $4.4 trillion annually across 63 use cases the global consultancy analyzed. All industries will realize benefits, with banking, high tech and life sciences among those that will see the greatest jumps in revenues.
About 75% of the value generative AI use cases may deliver will go to customer operations, marketing and sales, software engineering and R&D, McKinsey found.
That said, many business leaders seem to be taking a cautious approach to generative AI. They expect to spend money, but enthusiasm for it appears muted. According to a survey released Friday by Boston Consulting Group (BCG), 85% of the more than 1,400 executives it surveyed said they plan to spend on generative AI, and 89% rank it among their top three priorities for the year.
However, 66% are either ambivalent or dissatisfied with their organizations’ progress to this point, driven by a lack of talented and skilled workers (62%), an unclear roadmap and investment plan for both AI and generative AI (47%), and a lack of strategy for responsible generative AI (42%).
In addition, only 6% have trained more than 25% of workers on generative AI tools, BCG wrote in its study.
No Time for Caution
BCG CEO Christop Schweizer said in a statement he, like almost every other top executive, has run into a steep learning curve with generative AI. That said, he cautioned CEOs against hesitating to begin integrating the technology into their business operations.
“When technology is changing so quickly, it can be tempting to wait and see where things land,” Schweizer said. “But with GenAI, the early winners are experimenting, learning and building at scale.”
Sylvain Duranton, global leader of BCG X – the firm’s unit that combines its consulting expertise with tech building and design – backed that belief, noting that “leading companies on the GenAI front are planning to realize up to $1 billion in productivity gains, and they are already looking at ways to reinvest into new business models and growth. This is a second change for companies who missed the first AI wave.”
Despite this, more than 60% of those surveyed said their organizations are waiting to see how regulations around AI develop.
Other studies are finding similar wary approaches to generative AI among businesses. In a survey of more than 400 executives in the retail industry, Nvidia found that while 98% said they plan to invest in generative AI this year, they are being cautious.
About 77% said they would invest less than $5 million; even among retailers with annual revenues of more than $500 million, 78% said the same thing.
In addition, Nvidia’s survey found that when asked how their organization planned to use the technology, 39% said they were “waiting and watching” and 9% said they didn’t know. That was just above the 6% who said they had no plans to use generative AI.
The Need to Do More
The authors of BCG’s survey wrote that while the uptick in investment is a welcome trend, most organizations are not doing enough to feel all the benefits of AI. That’s illustrated by the 45% who said they don’t yet have guidance or restrictions for using AI and generative AI at work.
“In short, despite realizing the need to increase their investments in AI, too many organizations are slow to embrace the revolution,” the authors wrote, noting that two-thirds said it will take at least two year for generative AI to move beyond the hype and 71% are pursuing limited experimentation and small-scale pilots, with 90% of those surveyed falling into one of those two categories.
BCG calls such executives “observers.”
“But this is not a time to wait and see,” they wrote. “Winners recognize that GenAI is here to stay and that extraordinary opportunities for productivity gains – as well as topline growth – are within reach right now.”
Follow the Winners
Those winners are taking such steps and investing in ways to drive productivity and cost savings – those companies investing more than $50 million in AI this year are 1.5 times more likely to see 10% in cost savings – training staff on generative AI tools, managing costs for implementing the technology, building relationships with software providers and generative AI startups and implementing responsible AI principles.
BCG is recommending that organizations take steps to maximize technology’s potential, including deploying generative AI in everyday tasks to gain 10% to 20% in productivity and reshaping the company to fit with a 30% to 50% jump in efficiency, such as creating new roles and reallocating budgets.
They also should develop generative AI business models – including a strong customer-centric approach – to create long-term competitive advantages.
“The genie is out of the bottle,” they study’s authors wrote. “If 2023 was the year when AI became democratized, 2024 is the year to turn GenAI’s magic into business impact.”