2023 will go down in history as the year generative AI burst onto the business scene.
Just months after ChatGPT’s release, this technology went from a curiosity to a must-have business tool. A recent McKinsey survey shows how quickly companies are embracing these new AI tools, what they expect to gain, and where they might fall short on managing risks.
The Lightning-Fast Adoption of Generative AI
Remember when ChatGPT first appeared, and everyone was playing with it out of curiosity? Those days are long gone. Now, one in three organizations is already using generative AI regularly in at least one part of their business. It’s not just for tech experts anymore—nearly a quarter of company executives say they’re personally using these tools for work.
The areas where companies are putting generative AI to work are not surprising. Marketing, sales, product development, and customer service lead the way. This makes sense because these are the same areas where companies have already been using traditional AI with success.
What’s most striking is how fast all this happened. Most new technologies take years to reach this level of adoption. Generative AI did it in months. This shows just how powerful and user-friendly these tools are.
Big Expectations and Workforce Changes
Business leaders aren’t just playing around with generative AI — they believe it will completely change how companies compete. Three-quarters of survey respondents expect generative AI to disrupt their industries significantly within the next three years.
Some industries are expected to see more significant changes than others. Fields that rely heavily on knowledge work — like technology, financial services, pharmaceuticals, and education — are likely to experience the biggest shake-ups. This makes sense because generative AI excels at tasks that involve processing information, writing, and creative work.
These changes won’t come without workforce challenges. Many companies expect they’ll need to retrain large portions of their staff to work effectively with AI. Nearly 40% of companies using AI expect that more than one-fifth of their workforce will need reskilling. Most companies expect to reduce staff in customer service due to generative AI’s capabilities.
The AI Success Gap Is Growing
Not all companies are equal when it comes to AI. The survey identifies a group of “AI high performers” — companies already making significant money from their AI investments. These companies are pulling even further ahead with generative AI:
- They’re using generative AI in more business functions than other companies
- They focus on creating new revenue streams with AI rather than just cutting costs
- They invest much more of their digital budgets on AI (more than 20% in many cases)
While these leaders worry about technical challenges like keeping their AI models working well over time, other companies still struggle with basics like creating an AI strategy or finding resources to invest in AI.
This suggests that the gap between AI leaders and everyone else might grow even wider as generative AI becomes more critical to business success.
The Risk Management Problem
Despite all the excitement, there’s a concerning trend in how companies manage the risks of generative AI. Only one in five companies have policies about how employees should use these tools.
The biggest worry companies have about generative AI is accuracy — these systems can confidently produce incorrect information (sometimes called “hallucinations”). Yet, only about one-third of companies are actively working to address this risk.
This is a red flag. Companies are rushing to adopt powerful new tools without putting safeguards in place. If not addressed, this could lead to problems with misinformation, security breaches, or even legal issues.
The Future of Work with Generative AI
Generative AI is already changing what skills companies look for. Data engineers, machine learning engineers, and AI data scientists are still in high demand. Interestingly, companies are hiring fewer AI-related software engineers than before.
A new job has emerged: prompt engineers who specialize in crafting adequate instructions for generative AI systems. While only 7% of AI-using companies reported hiring for this role, it’s significant that a job that didn’t exist a year ago is now showing up in hiring reports.
The good news for job seekers is that hiring for AI roles has become slightly more manageable over the past year, possibly due to recent layoffs in the tech industry creating a larger talent pool.
Balancing Opportunity and Responsibility
Generative AI represents an incredible business opportunity, but realizing its full potential requires strategic vision and responsible management. The companies that will benefit most are those that not only implement the technology quickly but also take the time to manage risks, retrain their workforce, and develop thoughtful strategies for using AI to create new value.
The difference between AI leaders and followers may come down to this balance of speed and responsibility as we move forward. The most successful companies will embrace the transformative power of generative AI while ensuring it’s used safely, accurately, and ethically.
This article paraphrases information from McKinsey’s “The state of AI in 2023: Generative AI’s breakout year” survey, which was published on August 1, 2023.
