There was so much hype and excitement about Generative AI throughout most of 2023 that most other business innovations were either put aside or occurred in relative silence. It was widely reported by media outlets and sites (including this one) that the mad rush to deploy the unregulated tech was creating potential hazards that we may not understand until it was too late. All the research reports said so, and the hype continued to build. But new research from Boston Consulting Group (BCG) suggests that the mad rush may have been more like walking in circles as the vast majority of leaders are still struggling to convert that hype into reality.
The firm’s new report, BCG AI Radar: From Potential to Profit with GenAI, reveals that two-thirds (66 percent) of executives are ambivalent or outright dissatisfied with their organization’s progress on AI and GenAI so far, citing three primary reasons for their dissatisfaction: a lack of talent and skills (62 percent), an unclear AI and GenAI roadmap and investment priorities (47 percent), and absence of strategy regarding responsible AI and GenAI (42 percent).
“This is the year to turn Generative AI’s promise into tangible business success,” said Christoph Schweizer, BCG’s CEO, in a news release. “Almost every CEO, myself included, has experienced a steep learning curve with GenAI. When technology is changing so quickly, it can be tempting to wait and see where things land. But with GenAI, the early winners are experimenting, learning, and building at scale.”
The report, based on a survey of 1,406 C-level executives in 50 markets and 14 industries, . finds that 71 percent of executives surveyed say they plan to increase tech investments in 2024—an 11-point jump from 2023—and even more (85 percent) plan to increase their spending on AI and GenAI. Fifty-four percent of leaders already expect AI to provide cost savings this year, primarily through productivity gains in operations, customer service, and IT.
“Generative AI is radically reshaping businesses. Leading companies on the GenAI front are planning to realize up to $1 billion in productivity gains, and they are already looking at ways to reinvest into new business models and growth,” said Sylvain Duranton, global leader of BCG X and a coauthor of the research, in the release. “This is a second chance for companies who missed the first AI wave.”
This is not the time to wait and see
Although a small percentage of companies are already reaping the rewards of AI and GenAI, others are either playing catch up or standing on the sidelines. More than 60 percent of executives surveyed say their firms are still waiting to see how AI-specific regulations develop, and just 6 percent of companies have trained more than 25 percent of their people on GenAI tools so far.
According to the report, “winning” companies acknowledge GenAI’s permanence and recognize its potential for both enhanced productivity and topline growth. It outlines several characteristics that set the winners apart from observers, including:
- Winners invest for productivity and top-line growth. Organizations that plan to invest more than $50 million in AI and GenAI this year are 1.3 times more likely to see cost savings in 2024—and 1.5 times more likely to achieve more than 10 percent in cost savings.
- Winners are systematically upskilling. Twenty-one percent of organizations spending upward of $50 million on AI and GenAI this year have already trained more than a quarter of their people.
- Winners are vigilant about GenAI cost of use. Cost of use, which has serious long-term implications, is not commanding the attention it should. Only 19 percent of those surveyed consider cost the top concern when choosing an AI and GenAI solution.
- Winners build intentional relationships. Only 3 percent of executives consider pre-existing partnerships a priority when looking for AI solutions.
- Winners implement responsible AI (RAI) principles. Of the companies surveyed that are investing more than $50 million in AI in 2024, 27 percent put the CEO in charge of their RAI strategy (vs. 14 percent overall).
“To unlock GenAI’s full potential, executives should deploy it to improve efficiency of everyday tasks, reshape critical functions, and invent new business models,” said Schweizer. “Doing so can increase productivity by up to 20 percent, enhance efficiency and effectiveness by up to 50 percent, boost revenue, and create long-term competitive advantage.”
