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The latest McKinsey Global Survey reveals a significant surge in the use of generative AI (gen AI) tools in the business world. Remarkably, within a year of their introduction, one-third of survey participants reported regular use of gen AI in their organisations, spanning various business functions.

The Rise of Generative AI in Business

This trend isn’t limited to tech departments anymore. About a quarter of C-suite executives are personally utilising gen AI tools for work, indicating a shift in focus towards AI at the highest levels of corporate leadership. In fact, gen AI topics have made it to the agendas of over a quarter of the boards in companies that use AI.

The enthusiasm for gen AI is also reflected in investment plans, with 40% of respondents indicating an increase in overall AI funding due to advancements in gen AI. However, there’s still a lot to learn about managing the risks associated with gen AI, especially concerning accuracy.

Organisations with advanced AI capabilities are leading the exploration of gen AI’s potential. Those already benefiting significantly from AI are quickly adopting gen AI tools, staying ahead in the race.

Widespread Adoption Across Industries

The survey, conducted in April 2023, shows that gen AI is poised to disrupt business significantly. It’s expected to lead to workforce restructuring and large-scale reskilling to meet changing talent needs. Interestingly, while gen AI is gaining momentum, the overall adoption rate of AI tools has remained stable since 2022, concentrated in specific business functions like marketing, sales, and service operations.

In summary, gen AI is quickly becoming a staple in the business landscape, with widespread usage and significant potential for industry transformation. The survey indicates that businesses are eager to harness this potential, although they are still navigating the best ways to utilise and manage these powerful new tools.

High Expectations and Emerging Risks of Generative AI in the Business Sector

In the early stages of generative AI’s development, the McKinsey Global Survey reveals substantial expectations for its impact. A staggering 75% of participants predict that generative AI will bring significant or disruptive changes to their industry’s competitive dynamics within three years. This sentiment is particularly strong among those in the technology and financial services sectors.

Sector-Specific Impacts of Generative AI

The survey suggests that while every sector might witness some disruption due to generative AI, the extent of this impact is likely to vary. Industries heavily dependent on intellectual labour, such as technology, banking, pharmaceuticals, medical products, and education, are expected to face more significant disruption and potentially reap greater benefits. For example, technology companies might see value additions amounting to as much as 9% of global industry revenue. Similarly, banking, pharmaceuticals, and education sectors could also experience noteworthy effects. In contrast, manufacturing industries like aerospace, automotive, and advanced electronics may encounter less disruption. This differs from the trends seen in previous technological advancements, which had a pronounced impact on manufacturing, largely because generative AI excels in language-based tasks rather than physical labour.

Preparedness and Risk Mitigation Strategies

However, the McKinsey Global Survey highlights a concerning gap in preparedness for the potential risks associated with the widespread use of generative AI. Only about 21% of respondents from organisations that have adopted AI report having established policies governing the use of generative AI. When it comes to addressing risks, inaccuracy is a prominent concern, more so than cybersecurity and regulatory compliance. Despite this, only 32% of respondents are actively mitigating the risks of inaccuracy, compared to 38% focusing on cybersecurity concerns. This percentage is significantly lower than the 51% who reported addressing AI-related cybersecurity risks last year. The survey indicates that, as seen in previous years, most organisations are not adequately addressing the risks related to AI.

In the next instalment, we will delve into how ‘AI high performers’ are leading the way in generative AI adoption, their unique approaches, and the challenges they face in maximising AI’s value.