McKinsey's Survey | Generative AI's breakout year

This guide has been authored as a concise summary of McKinsey’s research titled ‘The State of AI in 2023: Generative AI’s Breakout Year’.

In the ever-evolving landscape of technological innovation, Generative AI, often referred to as ”Gen AI,” stands as a shining beacon of change and transformation. This dynamic branch of artificial intelligence possesses the extraordinary ability to create fresh content, spanning a vast spectrum from text and images to music and code. As we delve into the year 2023, the influence of Gen AI has rippled across industries, leaving an indelible mark on how businesses operate.

The past year has witnessed a remarkable surge in the accessibility and popularity of Gen AI tools, leading organizations to adopt these cutting-edge capabilities for diverse purposes. From fueling creativity to augmenting productivity and unearthing profound insights, Generative AI is reshaping the way companies function. But it doesn’t stop there. Recent advancements have catapulted AI from a topic primarily confined to the realms of tech employees into a central concern for visionary company leaders.

A pivotal shift is underway in the corporate world, as nearly 25% of C-suite executives, as revealed in recent surveys, personally harness Gen AI tools within their professional roles. Beyond the confines of executive offices, more than a quarter of respondents from AI-driven companies confirm that Generative AI now takes center stage in their boardroom discussions.

In the quest to embrace Gen AI, organizations are guided by the experiences of AI high performers who have harnessed traditional AI tools, and we explore the survey results revealing how Gen AI is reshaping the business landscape, including its potential, challenges, and evolving corporate landscape. In this blog, we’ll examine the survey results and how Gen AI is making its mark in the business landscape. We’ll discuss the exciting prospects it offers, the obstacles it presents, and the changing landscape that organizations are navigating in this transformative era.

The Rise of Gen AI

The rise of generative AI is a captivating journey. The latest survey findings vividly show its growing influence on the business landscape. It’s not just a buzz among tech enthusiasts; Gen AI has caught the attention of 79 percent of respondents who have experienced its impact within their work environments or beyond.

The C-suite executives, often seen as the torchbearers of innovation, are still catching up too, with 24 percent personally harnessing Gen AI tools in their professional pursuits. Moreover, in the boardrooms of companies employing AI, 27 percent have already made Gen AI a central part of their strategic discussions. This surge in interest signifies the transformative power of Gen AI and its ability to shape how businesses operate and innovate.

The widespread interest and adoption of Generative AI (Gen AI) are evident across various industries. An impressive 79 percent of survey respondents have had exposure to Gen AI, with 22 percent actively incorporating it into their work. Notably, even C-suite executives are personally engaging with Gen AI tools, with 24 percent using them for work. Furthermore, in companies that already utilize AI, 27 percent have placed Gen AI on their boards’ agendas. This dynamic landscape showcases the diverse adoption of Gen AI, promising transformation and innovation across industries.

How Leading Companies are Winning with Gen AI

The survey results shed light on high-performing AI organizations’ remarkable dedication to the artificial intelligence world. These pioneers have embraced AI and are actively pushing boundaries with groundbreaking generative AI (Gen AI) and more traditional AI capabilities. Here are a few of the strategies employed by high-performing organizations to harness the transformative power of generative A:

1. Comprehensive Integration: High-performing companies are going all in on AI, embracing both Gen AI and traditional AI capabilities across various business functions.

2. Expanded Usage: These leaders actively utilize Gen AI in a wider range of business functions, including product and service development, risk management, and more.

3. Forward-Looking Approach: Rather than focusing solely on cost reduction, high performers target creating entirely new businesses and revenue sources through innovative AI-based features.

4. Significant Investment: High-achieving organizations allocate substantial portions of their digital budgets to AI, reflecting their commitment to AI’s potential.

5. Challenges Reflect Maturity: While challenges persist, they often reflect their advanced AI maturity, with a focus on fine-tuning models and tools, as opposed to more foundational strategic issues.

6. Embracing MLOps: High performers are likelier to adopt machine learning operations (MLOps) approaches, assembling existing components for efficiency and growth.

7. Safeguarding with Live-Model Operations: These organizations are vigilant about implementing live-model operations to ensure the responsible use of Gen AI.

How Gen AI is Changing the AI Talent Landscape and Workforce Composition

Gen AI is creating new content, data, challenges, and opportunities for the AI talent market and workforce. According to the latest annual McKinsey Global Survey on AI, organizations using AI are experiencing shifts in their talent needs and workforce composition due to the impact of Gen AI. The survey results show that:

• The demand for AI-related roles has increased, especially for data scientists, data engineers, and AI researchers. However, the supply of these roles remains limited, and organizations are competing for scarce AI talent.

• The skills needed for AI-related roles have also changed, emphasizing creativity, communication, and collaboration. Gen AI tools require users to understand the domain, the data, and the desired outcomes, as well as the ability to interact with the tools effectively and ethically.

• The impact of Gen AI on the workforce is expected to be substantial, with 54 percent of respondents anticipating workforce cuts in certain areas due to Gen AI and 64 percent foreseeing large reskilling efforts to address shifting talent needs. The areas most likely to be affected are customer service, operations, and administration.

What role does Gen AI play in Overall AI Adoption?

Gen AI tools are swiftly gaining attention and expanding their foothold within organizations. However, the data suggests that while Gen AI is growing, it is not yet the primary catalyst for an overall surge in AI adoption. The statistics reveal that the percentage of organizations embracing AI has remained relatively constant, with 55 percent reporting AI adoption. Less than a third have implemented AI in more than one business function, indicating a limited scope for AI utilization. Despite this, Gen AI is applied increasingly frequently, particularly in product and service development and service operations, demonstrating its value. Although just 23 percent attribute a substantial portion of their organizations’ earnings to AI, there is significant room for future growth. Gen AI is showing organizations the potential of AI. Still, the journey toward broader AI adoption encompasses a more comprehensive strategy, ensuring its role in driving innovation, efficiency, and value across diverse business functions.

The Impact of Gen AI

The impact of Generative AI (Gen AI) on organizations is a multifaceted landscape. The latest McKinsey Global Survey statistics unveil a range of challenges and risks associated with Gen AI adoption, underscoring the need for careful management and governance. In particular, the high incidence of inaccuracy as the most-cited risk, reported by 56 percent of respondents, highlights the potential pitfalls when using Gen AI tools. Regulatory compliance and intellectual property infringement follow closely behind, each cited by a substantial proportion of respondents. These figures emphasize organizations’ need to navigate complex legal and ethical terrain when deploying Gen AI.

The statistics reflect a persistent gap in addressing these risks, with only a small percentage of organizations actively mitigating them. These findings illustrate the urgent need for businesses to embrace responsible and ethical practices as they harness the transformative power of Gen AI, ensuring that its potential pitfalls do not overshadow its benefits.

Here are a few risks that Gen AI poses and how organizations can handle them:

Inaccuracy

Gen AI tools may produce inaccurate or misleading content or data that can harm decision-making or reputation. Organizations should establish quality assurance and validation processes for Gen AI outputs to address this risk and monitor and measure their performance and impact.

Ethical issues

Gen AI tools may generate content or data that violates ethical principles or social norms, such as privacy, fairness, or diversity. To address this risk, organizations should develop and implement principles or guidelines for using Gen AI ethically and educate and train their employees and stakeholders on the benefits and risks of Gen AI.

Legal liability

AI technologies of the future may create material or data that violates proprietary rights or legislation. To address this risk, organizations should be aware of the legal implications of using Gen AI, such as ownership, attribution, consent, and compliance.

Security breaches

Gen AI tools may be hacked or misused by malicious actors to create harmful or fraudulent content or data. To address this risk, organizations should ensure the security and privacy of their Gen AI systems and data and prevent unauthorized access or manipulation.

Social impact

Gen AI tools may affect human behavior or society in unintended or undesirable ways, such as reducing creativity, increasing polarization, or eroding trust. To address this risk, organizations should consider the social and cultural implications of Gen AI, such as its effects on human dignity, diversity, and democracy.

Navigating the Gen AI Frontier for a Better Future

Gen AI stands as a transformative force, offering unparalleled prospects for innovation and value generation, yet simultaneously necessitating vigilant oversight and governance. The latest annual McKinsey Global Survey on AI demonstrates its appeal across the business spectrum, with organizations leveraging it to enhance creativity, boost productivity, and glean valuable insights. However, the survey uncovers a multitude of hurdles and risks, encompassing accuracy, quality, and ethical considerations surrounding the content and data it generates. We believe that gen AI represents a technology capable of unlocking fresh horizons for businesses and society, but its responsible and mindful application is imperative. We encourage you to explore gen AI’s potential and challenges and share your thoughts and experiences with us and others.