August 02, 2023

McKinsey Report: Gen AI Drives Businesses, But Risks Remain

Published: August 02, 2023 at 10:07 am Updated: August 02, 2023 at 10:07 am

Edited and fact-checked: August 02, 2023 at 10:07 am

In Brief

Gen AI, also known as generative AI, is experiencing rapid growth and is already making a significant impact on businesses.

According to a report by McKinsey, one-third of organizations are regularly using gen AI in at least one business function, indicating its widespread adoption.

Managing the risks associated with generative AI remains a challenge, with less than half of respondents mitigating the risk of inaccuracy.

Early adopters are reaping the most benefits from generative AI, but there is still considerable room for growth.

McKinsey Report: Gen AI Drives Business Impact, But Risks Remain

Gen (or generative) AI is a rapidly growing technology that is already having a significant impact on businesses. According to McKinsey’s report “The state of AI in 2023: Generative AI’s breakout year,” one-third of organizations use gen AI regularly in at least one business function.

However, organizations are still learning how to manage the risks associated with generative AI. Less than half of respondents from McKinsey’s survey say their organizations are mitigating the risk of inaccuracy. Early adopters are seeing the most value from gen AI, but there is still a lot of room for growth. The adoption of other AI tools has not increased significantly, suggesting that gen AI is still in its early stages of adoption.

McKinsey’s researchers surveyed from April 11 to 21, 2023. They gathered responses from 1,684 participants from different regions, industries, company sizes, functional specialties, and tenures. In at least one function, 913 respondents reported their organizations had adopted AI.

Generative AI Tools See a Widespread Use

Despite gen AI’s recent availability, many respondents have already experimented with its tools and anticipate these new capabilities will be revolutionary. Gen AI has garnered widespread interest among individuals across regions, industries, and seniority levels, with 79% reporting some exposure to it and 22% regularly using it for work. The technology sector and North America have the highest reported usage.

“One-third of all respondents say their organizations are already regularly using generative AI in at least one function—meaning that 60 percent of organizations with reported AI adoption are using gen AI. What’s more, 40 percent of those reporting AI adoption at their organizations say their companies expect to invest more in AI overall thanks to generative AI, and 28 percent say generative AI use is already on their board’s agenda,”
McKinsey’s research shows.

Organizations primarily use generative AI tools in the same business functions as traditional AI, namely marketing, sales, product development, and customer care, focusing on areas with the most value.

The survey also indicates that only 21% of companies with AI adoption have established policies for gen AI use in their work. In terms of mitigating risks, few respondents address the most commonly cited risk with gen AI, which is inaccuracy. Only 32% are addressing this risk, compared to 38% for cybersecurity. The results highlight a general lack of focus on addressing AI-related risks among organizations.

Rapid Spread of Gen AI Tools Not Significantly Impacting Overall AI Adoption

Gen AI tool usage is increasing rapidly but does not significantly drive overall AI adoption. The survey data shows steady AI adoption at 55% of respondents’ organizations. Less than one-third of respondents report AI adoption in multiple business functions, indicating limited scope. Product and service development, along with service operations, are the most common functions for AI adoption. Only 23% of respondents attribute at least 5% of their organizations’ EBIT to AI use, suggesting untapped potential for capturing value through AI.

AI is delivering value for businesses across various functions, and they intend to invest more in it in the future. Most respondents say that AI has increased their revenues in the areas where they use it. In the next three years, more than two-thirds of respondents expect their organizations to raise their AI spending.

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About The Author

Agne is a journalist who covers the latest trends and developments in the metaverse, AI, and Web3 industries for the Metaverse Post. Her passion for storytelling has led her to conduct numerous interviews with experts in these fields, always seeking to uncover exciting and engaging stories. Agne holds a Bachelor’s degree in literature and has an extensive background in writing about a wide range of topics including travel, art, and culture. She has also volunteered as an editor for the animal rights organization, where she helped raise awareness about animal welfare issues. Contact her on [email protected].

Agne Cimerman