Knowledge-based industries such as banking, pharmaceutical and medical products are among those poised to the see the highest impact from generative AI, a newly-published McKinsey report has revealed.
‘The state of AI in 2023: Generative AI’s breakout year’ has estimated that these industries are likely to add value equivalent to as much as 5 percent of global value based on increased usage of the technology.
Unsurprisingly tech companies take the lead (9 percent), while education (4 percent) is also being touted to experience significant effects on the back of the AI revolution.
By contrast, manufacturing-based industries, such as aerospace, automotives, and advanced electronics, could experience less disruptive effects, the report said.
It points out that a key difference from previous technological waves is AI’s strengths in language-based activities, as opposed to those requiring physical labour.
Alex Singla, Senior partner and global leader of QuantumBlack, AI by McKinsey summarizes in the report: “It’s amazing how quickly the conversation around generative AI has evolved. Just a few months ago, the conversation in the C-suite was pretty rudimentary, focused on trying to understand what it was and seeing what was hype versus what was reality.
“Now in just about six months, business leaders are having much more sophisticated conversations. As we can see from the survey results, almost a third of companies are using generative AI in at least one business function.”
Source: McKinsey
Taking the next step
Among other findings, reported AI use is quite similar across seniority levels but highest among respondents working in the technology sector and those in North America.
The most commonly reported business functions using these newer tools are the same as those in which AI use is most common overall: marketing and sales, product and service development, and service operations, such as customer care and back-office support. In addition, inaccuracy, cybersecurity and intellectual property-infringement are the most-cited risks of generative AI adoption.
According to Singla, “The next question will be how companies will take the next step, and whether generative AI will follow the same pattern we observed with AI more generally, where adoption has plateaued at around the 50 percent mark. We see from the data that the promise of generative AI is leading almost half of companies already using AI to plan on increasing their investments in AI, driven in part by the understanding that broader capabilities are needed to take full advantage of generative AI.
He notes that ensuring generative AI can give strong return on the investment, requires companies to tackle a broad array of issues including governance and operating model, how to best manage third parties (cloud and large language model providers), and what is needed to manage the wide range of risks. Companies must also develop a clear strategy on how to find the balance between banking near-term gains and developing the long-term foundations needed to scale.
“These are complex issues, but they are the key to unlocking the really significant pools of value out there,” he concludes.
