The annual McKinsey survey reveals explosive growth in the adoption of generative artificial intelligence (gen AI) tools across various industries during 2023. Organizations are integrating these tools into their business functions, with significant investments and workforce changes anticipated. However, managing the associated risks remains a challenge.
The Breakout Year of Generative AI
In 2023, the rapid deployment of generative AI tools marked a significant shift in the technological landscape. According to the latest McKinsey global survey, one-third of respondents reported regular use of gen AI in at least one business function within their organizations. This increase in adoption reflects the growing recognition of AI's potential beyond tech departments, with nearly a quarter of C-level executives personally utilizing these tools.
Increased Adoption and Investment
Less than a year after the debut of many generative AI tools, their integration into various business functions has been swift. Notably, 40% of respondents indicated that their organizations plan to increase AI investments, driven by advancements in gen AI. This adoption is concentrated in areas where AI has already demonstrated significant value, such as marketing and sales, product development, and customer service operations.
Business Disruption and Workforce Impact
Substantial disruption from generative AI is expected, with respondents predicting significant changes to their workforces. A reduction in the workforce is anticipated in certain areas, along with extensive reskilling efforts to meet shifting talent needs. Despite this, the overall adoption of AI tools has not seen a significant increase, remaining steady since 2022. Although the use of generative AI is spreading rapidly, organizations are still in the early stages of managing the associated risks. Less than half of the respondents reported that their organizations are mitigating the most relevant risk of inaccuracy. Other significant risks include cybersecurity, intellectual property infringement, and regulatory compliance.
High Performers Leading the Way
Organizations that have previously embedded AI capabilities are leading the adoption of generative AI. These high performers, which attribute at least 20% of their EBIT to AI adoption, are using generative AI tools more extensively in business functions. They are also focusing less on cost reduction and more on creating new businesses and revenue sources. The rise of generative AI is redefining talent needs within organizations. There is a notable shift in hiring patterns, with a decrease in the demand for AI-related software engineers and the emergence of roles such as prompt engineers. Respondents expect a significant portion of their workforce to be reskilled over the next three years due to AI adoption.
Future Investment and Adoption Trends
Despite the rapid integration of generative AI tools, the overall adoption of AI across organizations remains steady. However, more than two-thirds of respondents expect their organizations to increase AI investments in the coming years. As generative AI continues to evolve, its potential to transform business operations and create new value is immense, underscoring the importance of strategic investment and risk management in AI technologies.
